Commissioner of Income Tax vs Chhabra Emporium

This appeal by the Revenue u/s 260A of the Income Tax Act, 1961 (for short "the Act"), is directed against the order dated December 28, 2001, passed by the Income Tax Appellate Tribunal, New Delhi, in is No. 6468/Delhi of 1995 pertaining to the assessment year 1992-93, affirming the order passed by the Commissioner of Income Tax (Appeals), New Delhi. The Commissioner (Appeals) has deleted the penalty levied on the assessed u/s 271(1)(c) of the Act.

Briefly stating the background, the facts are that a search u/s 132 of the Act was conducted at the residential premises of Sudesh Chhabra, one of the partners of the respondent/assessed. During the course of this search, a diary was found and seized. In his statement, recorded u/s 132(4) of the Act, the said Sudesh Chhabra stated that the diary reflected unaccounted transaction in respect of Chhabra Emporium, the respondent herein, Chhabra Trading Co., Chhabra Saree Sadan and Chhabra Silk and Saree, for the assessment year 1991-92. He accordingly made a disclosure of Rs. 30,00,000 on account of unexplained stocks in different firms. An amount of Rs. 8,00,000 was disclosed in respect of the present assessed.

The return of income for the relevant assessment year furnished on November 5, 1993, declaring an income of Rs. 5,04,380 was revised by including the aforenoted amount of Rs. 8,00,000, surrendered during the course of search. On July 22, 1992, assessment was completed on the basis of the revised return, which included the aforenoted amount of Rs. 8,00,000. Since the Assessing Officer was of the view that the assessed had concealed the particulars of its income for the relevant assessment year, penalty proceedings u/s 271(1)(c) of the Act was initiated and after affording an opportunity to the assessed, penalty of Rs. 1,71,299, which was the minimum penalty imposable at the rate of 100 per cent, of the amount alleged to have been concealed, was imposed on the assessed.

Aggrieved, the assessed preferred appeal to the Commissioner (Appeals), who as noticed, had deleted the same, inter alia, on the ground that the case of the assessed was covered under the provisions of Section 271(1)(c), read with Explanation 5 in Sub-clause (2). The Revenue carried the matter in further appeal to the Tribunal. By means of the impugned order, the Commissioner (Appeals) order has been affirmed. Hence, the present appeal.

We have heard Mr. R. D. Jolly, learned senior standing counsel for the Revenue. Strenuously urged by Mr. Jolly that the alleged surrender by the assessed during the course of search on July 22, 1992, cannot be that the assessed is not entitled to claim the benefit of the aforenoted Explanation inasmuch as the surrender on behalf of the assessed of the aforenoted amount was after the detection of concealed income by the search party.

We are unable to persuade ourselves to agree with learned senior counsel for the Revenue. A bare reading of Sub-clause (2) to Explanation 5 makes it clear that if, during the course of search, a statement of the assessed 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 assessed admits in his statement that such income was acquired income or was acquired with the undisclosed income and pays the tax, together with interest if any on the said amount, he is granted an immunity for levy of penalty u/s 271(1)(c) of the Act.

The Tribunal while affirming the order of the Commissioner (Appeals) has recorded in no uncertain terms that the surrender of the aforenoted amount of Rs. 8,00,000 was made on the date of the search itself and such a surrender falls within immunity of Explanation 5 to Section 271(1)(c) of the Act. From the order of the Assessing Officer levying penalty, it is correct that there is no dispute that the statement of the assessed was recorded on the very first day. It is pertinent to note that in respect of the other two assesseds, namely, Chhabra Saree Sadan and Chhabra Trading Co., similar penalty levied by the Assessing Officer, was deleted by the Commissioner (Appeals) and the said order was accepted by the Revenue inasmuch as it was not taken in further appeal in the Tribunal.

In this view of the matter, no fault can be found with the impugned order. In our opinion, no question of law, much less a substantial question of law, arises from the order of the Tribunal.

We accordingly decline to entertain the appeal.