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Income Tax Appellate Tribunal, “RANCHI BENCH, RANCHI
Before: Shri Sanjay Garg & Shri Rajesh Kumar
order
: April 28 , 2023 ORDER
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 30.01.2020 of the Commissioner of Income Tax(Appeals)-3, Patna [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
The assessee in this appeal has agitated the confirmation of penalty levied by the Assessing Officer u/s 271(1)(c) of the Act.
At the outset, the ld. Counsel for the assessee has submitted that a search and seizure action u/s 132(4) was carried out on the premises of the assessee and during the search action, no incriminating material was found. However, the search party extracted the statement of surrender of amount of Rs.98,35,251/- from one of the family members of the assessee namely Sri Yogesh Kumar Sahu 1
Assessment Year: 2014-15 Manish Kumar Sahu (HUF) claimed on account of long-term capital gains. The ld. Counsel for the assessee has submitted apart from the said surrender statement there was no incriminating material/document has found during the search action. However, the assessee honoured the statement of its member and offered to tax the aforesaid surrendered income. The ld. Counsel for the assessee has submitted that this is neither the case of detection of concealment income of the assessee nor furnishing of inaccurate particulars of income. The ld. Counsel has further submitted even any addition made by the Assessing Officer on merits would not have been sustainable based only on such surrender of income. The ld. Counsel for the assessee has relied upon the CBDT Instruction F No.286/2/2003-IT(Inv.) dated 10.03.2003 regarding confession of additional income during the course of search and seizure and survey operation. As per the Instruction, the CBDT has instructed that the focus and concentration of the Income Tax Authorities should on collection of evidence of income and further that while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income. The relevant part of the aforesaid Instruction is reproduced as under:
"Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess undisclosed income during the course of the search and seizure and survey operation. Such confession, if not based on credible evidence, are taken/retracted by the concerned assessees while filing return of income. In these circumstances, confession during the search and seizure and survey operation do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax department. Similarly, while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely". 2
Assessment Year: 2014-15 Manish Kumar Sahu (HUF)
The ld. Counsel for the assessee has also relied upon the decision of the Coordinate Bench of Ahmedabad Tribunal in the case of Mukesh D. Manglani vs. ACIT vide order dated 18.12.2019, wherein, the Coordinate Bench of the Tribunal has observed as under:
It was undisputed fact that during the course of search, no incriminating documents were found and seized. The assessee surrendered the additional income under section 132(4) at Rs.15 lacs and requested not to impose penalty under section 271(1)(c). The Assessing Officer imposed the penalty by invoking the Explanation 5A to section 271(1)(c). For imposing the penalty under Explanation 5A on the basis of statement recorded during the course of search, it is necessary to be found incriminating documents and is to be considered at the time of assessment framed under section 153A. As no incriminating documents were found during the course of search, therefore, Explanation 5A to section 271(1)(c) is not applicable. Accordingly, the penalty was to be deleted.
The ld. DR, on the other hand, has relied upon the findings of the lower authorities.
We find merit in the contention of the ld. AR. In this case, the addition has been made by the Assessing Officer not on account of any concealed income detected of the assessee either during the search action or after search action or during any of the assessment proceedings. In this case, the assessee himself voluntarily surrendered certain income which was purely based on the statement of the assessee and no incriminating material was ever found against the assessee. The CBDT vide Instruction No.F No.286/2/2003-IT(Inv.) dated 10.03.2003 has already instructed the concerned Income Tax authorities that while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income. However, in this case, the assessee honoured the statement of his family member and paid due 3
Assessment Year: 2014-15 Manish Kumar Sahu (HUF) taxes on such surrendered income, but it can nonetheless said to be a case of concealment of income or furnishing inaccurate particulars of income warranting penalty u/s 271(1)(c) of the Act. Therefore, the impugned penalty levied by the Assessing Officer is ordered to be deleted.
In the result, the appeal of the assessee stands allowed.