DURAIPANDI Vs. ASSISTANT COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The present batch of Appeals and Cross Appeals filed by the Assessees Duraipandi and S.Thalavaipandian, Association of Persons and by the Revenue giving rise to the substantial questions of law, which are framed below arise from the order of the learned Income Tax Appellate Tribunal dated 06.01.2017 for the Assessment Years 2002-2003; 2003-2004; 2004-2005; 2005-2006; 2006-2007; 2007- 2008; and 2008-2009 respectively, whereby the learned Tribunal in the Cross Appeals filed by both the parties dealt with the issues of imposition of penalty under Section 271(1)(c) of the Income Tax Act 1961 and granted partial relief to the Assessee by setting aside penalty on one issue but also restored the penalty under Section 271(1)(c) of the Act on another issue.

(2.) The facts in brief leading to the filing of the present Appeals by both the sides are narrated in brief as under.

(3.) A search was carried out at the business place of the Assessee on 16.05.2007 and inter alia cash of Rs.1.65 crores was found at the residential house and in the Bank locker of the Assessee. Cash of Rs. 2 crores was also found in the place of a third party, Smt. Jaya Krishnamurthy, who also stated in the course of statements that the said cash was borrowed as loan from one of the Assessee, namely, Duraipandi. The Assessee filed its returns after search in the capacity of an AOP for the first time claimed in the course of the present penalty proceedings under Section 271(1)(c) of the Act that they had also derived agricultural income during the Assessment Years in question from the Agricultural lands taken on lease from the agriculturalists during these years in question. However, we are not concerned with the assessment of tax liability in the present set of Appeals, but are only concerned with the questions of penalty under Section 271(1)(c) of the Act. While defending during the penalty proceedings before the Assessing Authority, the Assessee claimed the immunity from penalty in view of Explanation 5(2) of Section 271(1)(c) of the Act on the ground that he had made the disclosure of his undisclosed income in the statements recorded under Section 132(4) by the authorities during the course of search and had also specified the manner in which such income was derived from his real estate business and had also paid tax though belatedly together with interest in respect of such income and therefore claimed such immunity under the exception in clause (2) to Explanation 5 which mainly enacts a presumption of concealment against the Assessee. Besides the aforesaid immunity claimed by the Assessee, the Assessee claimed that part of his undisclosed income represented agricultural income, not liable to tax.