April 2008
Penalty S. 271(1)(c) Explanation 5 : Assessee admitted acquisition of asset in statement u/s.132(4) : Immunity to be granted
By K. B. Bhujle, Advocate
Reading Time 2 mins
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6 Penalty : S. 271(1)(c) Explanation 5 of Income-tax Act,
1961 : A. Ys. 1984-85 and 1988-89 : In statement u/s.132(4), assessee admitted
acquisition of asset in A.Y. 1987-88 and offered income of Rs.3,50,000 spread
over 5 years from A.Y. 1984-85 to 1988-89 : Immunity under Explanation 5 should
be granted.
[CIT v. Kanhaiyalal, 214 CTR 611 (Raj.)]
In the course of a search action, in a statement u/s.132(4)
of the Income-tax Act, 1961, the assessee accepted the acquisition of the asset
of value Rs.3,50,000 in the A.Y. 1987-88 and offered the amount to tax spread
over in the A.Ys. 1984-85 to 1988-89. The Assessing Officer imposed penalty
u/s.271(1)(c) of the Act and refused to grant immunity under Explanation 5, on
the ground that the whole of the amount should have been offered in the A.Y.
1987-88. The Tribunal deleted the addition and held that the assessee is
entitled to immunity under Explanation 5.
On appeal by the Revenue, the Rajasthan High Court upheld the
decision of the Tribunal and held as under :
“Immunity under Explanation 5 of S. 271(1)(c) is not taken
away for the simple reason that income disclosed by assessee in his statement
u/s.132(4) for a particular year was spread over in the returns of several
years, more so, when the Assessing Officer had also made assessment in
assessment years as returned by the assessee, though after making some quantum
reshuffling.”
