Law:

Section:

Section 271(1)(c), read with section 132, of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1992-93 - Whether where during course of search, assessee admits under sub-section (4) of section 132 that any amount, cash, stock, jewellery or other valuable article found in his possession or control was acquired income or was acquired within undisclosed income and pays tax liability with interest on said amount, he is to be granted immunity from levy of penalty under section 271(1)(c) - Held, yes FACTS A search under section 132 was conducted at the residential premises of 'S', i.e., one of the partners of the respondent-assessee. The partner, i.e., 'S' in his statement recorded under section 132(4) declared an unaccounted transaction in respect of the respondent herein and, accordingly, made a disclosure of Rs. 8 lakhs on account of unexplained stocks in different firms. Subsequently, the assessment was completed on the basis of the revised return which included the aforesaid amount of Rs. 8 lakhs. Since, the Assessing Officer was of the view that the assessee had concealed the particulars of its income for the relevant assessment year, penalty proceedings under section 271(1)(c) were initiated and after affording an opportunity to the assessee penalty was imposed on the assessee. On appeal, the Commissioner (Appeals) deleted the same, inter alia, on the ground that the case of the assessee was covered under the provisions of section 271(1)(c), read with Explanation 5. On further appeal, the Tribunal confirmed the order of the Commissioner (Appeals). On appeal : HELD A bare reading of sub-clause (2) to Explanation 5 makes it clear that if, during the course of search, a statement of the assessee is recorded under sub-section (4) of section 132 in respect of any amount, cash, stock, jewellery or other valuable article or thing which is found in his possession or control and the assessee admits in his statement that such income was acquired income or was acquired within the undisclosed income and pays the tax, together with interest, if any, on the said amount, he is granted an immunity from levy of penalty under section 271(1)(c).…

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