Research › Search › Judgment

Karnataka High Court · body

2011 DIGILAW 1018 (KAR)

Commissioner of Income-Tax v. Mukta Sridhar

2011-10-19

ARAVIND KUMAR, MANJULA CHELLUR

body2011
Judgment :- 1. I.T.A. Nos. 513/2008, 512/2008, 514/2008, 664/2008, 667/2008, 670/2008, 673/2008 and are directed against the common order of the Income Tax Appellate Tribunal, Bangalore B dated 13.12.2007 passed in ITA Nos. 659 to 666/B/06. The above appeals pertain to differen of the same joint family for different assessment years as detailed below: ITA Nos. 565, 567, 570, 572, 574, 589, 592, 594, 598, 600, 601, 602, 605, 609, 611, 614, 622, 625, 628, 632, 630, 637, 641, 596, 582 of 2008 are directed against the common ord Income Tax Appellate Tribunal, Bangalore Bench ‘B’ dated 13.12.2007 passed in ITA No 747/Bang/06, the details of which are as under: 2. In the above batch of appeals, the following substantial question of law have been form adjudication: 1. Whether the Appellate Authorities were correct in holding that the penalty levied by the A Officer under section 271(1)(c) of the Act, is not sustainable in law in respect of an amount s gift received in the original return, which was found to be incorrect as per material detect search and was the undisclosed income of the assessee? 2. Whether the Appellate Authorities were correct in deleting the penalty levied as the asses revised return declaring part of searched income in order to buy peace with the departmen penalty will not be levied by relying on the judgment of the Apex Court in 251 ITR 9 confi judgment of M.P. High Court in 241 ITR 124 which was applicable to assessment year 19 1986-87 based on the law declared by Apex Court in 168 ITR 705, which is held to be not after insertion of Explanation to Sec.271(1)(C) of the Act by the Apex Court in 251 ITR 99? 3. Whether the Appellate Authorities were correct in accepting the explanation offered by the that the entire income detected was declared in the revised return which was factually incorre addition of entire undisclosed income was made by the Assessing Officer and consequently re perverse finding? 3. Apparently all the respondents – assesses had filed their returns under Section-139 of the to the assessment. From the records, it is noticed that a search of the premises was conduct Section-132 of the Act which commenced on 6.1.2004 and went up to 27.2.2004 when statem Section-132 of the Act came to be recorded and so also panchanama was drawn. Apparently all the respondents – assesses had filed their returns under Section-139 of the to the assessment. From the records, it is noticed that a search of the premises was conduct Section-132 of the Act which commenced on 6.1.2004 and went up to 27.2.2004 when statem Section-132 of the Act came to be recorded and so also panchanama was drawn. Subseque search proceedings, the respondents – assesses filed revised returns twice surrendering th brought to tax, during the course of search. After assessment of revised returns, the a authority proceeded with the assessment and passed orders in the year 2005. Subsequentl proceedings came to be initiated. The Assistant Commissioner of Income Tax rejecting the taken by the respondents – assesses proceeded to impose of penalty on all the assesses un 271(1)(c). 4. Aggrieved by the order of imposing penalty, appeals came to be filed before the Commis Income Tax (appeals) for the above assessment years and the first appellate authority by order dated 16.5.2006 held that as the assesses proceeded to declare the entire amoun B income pursuant to search in order to buy peace with the department and for the reasons sta order, held levying of penalty was not justified. All the appeals filed by different assesses ca allowed and penalty order came to be set aside. 5. Aggrieved by the same, the Revenue went in appeal before the Income Tax Appellate T ITA NOs.659-666/B/06. The Tribunal held that penalty in respect of commission paid by the a for securing the gifts was leviable. However in respect of the gift amounts, which were found income of the assessees pursuant to the search, the Tribunal upheld the finding of the Commissioner by a common order dated 13.12.2007. Aggrieved by the said order, the Re before us raising the above substantial questions of law. 6. According to the learned counsel for the Revenue Mr. Sheshachala, once the amount show received in the original return was found to be incorrect as per material detected in the se which was undisclosed by the assessee in their return of income, the Assessing Officer was j levying penalty under Section 271(1)(c) of the Act. 6. According to the learned counsel for the Revenue Mr. Sheshachala, once the amount show received in the original return was found to be incorrect as per material detected in the se which was undisclosed by the assessee in their return of income, the Assessing Officer was j levying penalty under Section 271(1)(c) of the Act. According to the learned counsel, after in explanation to Section 271(1)(c) of the Act in the light of the judgment of the Apex Court in 25 the law relied upon by the Tribunal and the Appellate Authority in 251 ITR 9, 241 ITR 124 and 705 is not good law. According to Mr. Seshachala, the appellate authority committed an accepting the explanation offered by the assessees that the entire income detected was decla revised return, which was factually incorrect. According to the learned counsel, the defen respondents – assesses was different from time to time, which is evident from the defen before the first appellate authority and the new defence raised by them before the Tribunal. explanation-5 to Section 271(1)(c) is not to the satisfaction of the Assessing Officer, qu extending the benefit would not arise. Therefore the orders of the Commissioner of Inc (Appeals) and, the order of the Tribunal deserves to be set aside confirming the order of the A Officer. 7. As against this, the learned counsel Mr. Chaitanya appearing for the respondents – a contends that once statement is recorded while conducting search as provided under sub-sec Section-132 and when all the questions were answered and when the letter dated 26.2.2004 all the assesses is referred to in the statement, the object and the purpose with which Explan of Section 271(1)(c) giving immunity to such persons has to be extended and object c frustrated. When perversity in appreciating the material on record by the appellate authorities the ground of challenge, the Revenue cannot question the same is his contention. Accordin application of Explanation (5) is not a question of law, which entirely depends on question of the same is dealt with by a final fact finding authority and Revenue cannot agitate the same a again. According to him, search team having chosen to take the statement in the format o which they have taken i.e. by putting question and answer, it is binding on all the members w signed confirming that they abide by the same. According to him, search team having chosen to take the statement in the format o which they have taken i.e. by putting question and answer, it is binding on all the members w signed confirming that they abide by the same. The questions and answers do not relat individual person i.e Mr. Sridhar and all the questions were answered for the entire amount during the search relating to entire family. The entire amount disclosed by Mr. Sridhar was and subjected to tax. Therefore, there is no ground available to the appellant – revenue to the same in the present appeals. 8. In reply, the learned counsel for the Revenue Mr. Sheshachala has taken us through parag 26 and 27 of the order of the Tribunal to contend that deprival or origin of undisclosed explained by one individual Mr. Sridhar could be at the most accepted for himself and it can explanation or answer in respect of others. Therefore there is non-compliance of Section 132 Act so far as all other assesses except Mr. Sridhar. He strenuously contends that explanatio Section 271(c) is not application to other assessees except Sridhar if no reason is disclo statement of the party relating to the business affair is part of return of income. Till revised retu income was not shown as income, but they were purposely shown as gift. Therefore the deserve to be allowed. 9. Learned counsel for the respondents – assessees in reply further contends that as notice w to Prakash Tea Agency Group, Mr. Sridhar on behalf of all the persons of group has g statement on 27.2.2004 after oath being administered to him. Therefore it is as good as expla behalf of all the persons pertaining to Prakash Tea Agency group. He further contends th Shashindra, Smt. Vani Shashindra, Mr. Muktha Sridhar have stated that statement given by Sridhar was in their absence and they abide by what has been stated by Mr. V.N. Sridhar. T according to him, the statement recorded under section 132(4) of the Act is as good as stat others and even otherwise letter dated 26.2.2004 has been signed by all the assessees and Explanation (5) is applicable to them also. 10. V.N. Sridhar. T according to him, the statement recorded under section 132(4) of the Act is as good as stat others and even otherwise letter dated 26.2.2004 has been signed by all the assessees and Explanation (5) is applicable to them also. 10. From the material placed before the Court and also the submissions of the learned appearing for the Revenue and the respondents – assessees, two provisions of the Act are re considering the substantial questions of law raised in the above appeals. They are sections-13 271(1)(c) Explanation-(5). It is useful to extract the said provisions here: Section-132: (1) Where the [Director General of Director] or the [Chief Commissioner or Commiss Additional Director or Additional Commissioner] [or Joint Director or Joint Commiss consequence of information in his possession, has reason to believe that – (a) xxx (b) xxx (c) any person is in possession of any money, bullion, jewellery or other valuable article or such money, bullion, jewellery or other valuable article or thing represents either wholly income or property [which has not been, or would not be disclosed] for the purposes of t Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the un income or property). (4) The authorised officer may, during the course of the search or seizure, examine on person, who is found to be in possession or control of any books of account, documents bullion, jewellery or other valuable article or thing and any statement made by such person du examination may thereafter be used in evidence in any proceeding under the Indian Income 1922 (11 of 1922), or under this Act. [Explanation. – For the removal of doubts, it is hereby declared that the examination of an under this sub-section may be not merely in respect of any books of account, other docu assets found as a result of the search, but also in respect of all matters relevant for the purpos investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of under this Act.] 271. (1) If the [Assessing] Officer or the [***] [Commissioner (Appeals) [or the Commission course of any proceedings under this Act, is satisfied that any person – (a) xxx (b) xxx (c) Has concealed the particulars of his income or [* * * ] furnished inaccurate particulars income, (d) xxx He may direct that such person shall pay by way of penalty – [Explanation 5. – Where in the course of a [search initiated under section 132 before the 1 June, 2007], the assessee is found to be the owner of any money, bullion, jewellery or other article or thing (hereafter in this Explanation referred to as assets) and the assessee claims assets have been acquired by him by utilizing (wholly or in part) his income. – (a) For any previous year which has ended before the date of the search, but the return of in such year has not been furnished before the said date or, where such return has been furnish the said date, such income has not been declared therein; or (b) for any previous year which is to end on or after the date of the search, then, notwithstan such income is declared by him in any return of income furnished on or after the date of the s shall, for the purposed of imposition of a penalty under clause (c) of sub-section (1) of this se deemed to have concealed the particulars of his income or furnished inaccurate particulars income, [unless,- (1) such income is, or the transactions resulting in such income are recorded, - i) in a case falling under clause (a) before the date of the search; and (ii) in a case falling under clause (b), on or before such date, in the books if account, if any, m by him for any source of income or such income is otherwise disclosed to the [Chief Commis Commissioner] before the said date; or (2) he, in the course of the search, makes a statement under sub-section (4) of section 132 money, bullion, jewellery or other valuable article or thing found in his possession or under hi has been acquired out of his income which has not been disclosed so far in his return of inco furnished before the expiry of time specified in [***] sub-section (1) of section 139, and also sp the statement the manner in which such income has been derived and pays the tax, toge interest, if any, in respect of such income.] 11. The department launched action against Prakash Tea Agency group of cases in purs search conducted under Section-132 of the Act between 6.1.2004 and 27.2.2004. Th mentioned respondents – assessees filed revised return of income once and again anothe return of income was filed. Some of the assessees had filed returns in their individual capacity as members of Hindu Undivided Family. Assessment orders in favour of the above respo assessees also came to be passed. Amounts represent credits in the capital account of during the previous year alleged to have been received by way of gifts. Some of the assessees had filed returns in their individual capacity as members of Hindu Undivided Family. Assessment orders in favour of the above respo assessees also came to be passed. Amounts represent credits in the capital account of during the previous year alleged to have been received by way of gifts. During the course of was established that such gifts are not genuine and the assessees agreed to offer the same treating them as income. As already stated above, additional income also came to be de revised returns.] 12. During the course of hearing before the Assessing Officer, the main person of Prakash Te group by name Sri V.N. Sridhar had admitted paying commission for organizing the gifts. The the returns subsequently filed, the expenditure in the nature of commission to an extent obtaining such gifts was also revealed. Taking into consideration all these facts, assessme came to be passed and the gifts were treated as undisclosed income of the assessee an brought to tax. Quantum proceeding has reached finality and same has been accepte assessees. 13. Subsequently, penalty proceedings under Section 271(1)(C) of the Act came to be initiate the respondents – assessees. Before the authority concerned, the assessees denied furn inaccurate particulars or concealment of income and further contended that though the dono gifts are all identifiable and available to confirm the gifts, only with a view to buy peace department, the same was declared as undisclosed income. According to the representativ respondents – assessees, imposition of penalty cannot be automatic as there being no me guilty mind on the part of the respondents to conceal the income. 14. Ultimately rejecting all the contentions, the authority concerned passed an order hol statements recorded during the course of search reveal that gifts were agreed as not gen therefore the income has been offered to tax. It was further opined that the assessee group ha established the existence of the donors or their creditworthiness. It was also opined that the group has organized non-genuine gifts for the purpose of converting unaccounted income and the same into the books without payment of tax only with an intention of avoiding payment of authority opined that the material confirms the state of mind, which is guilty of evasion of tax. 15. It was also opined that the group has organized non-genuine gifts for the purpose of converting unaccounted income and the same into the books without payment of tax only with an intention of avoiding payment of authority opined that the material confirms the state of mind, which is guilty of evasion of tax. 15. The respondents – assesses went up in appeal before the Commissioner of Income Tax ( The respondents – assesses contended that gift amounts were already disclosed to the depa the respective returns filed before the date of search and during the assessment proceedings a view to end the proceedings and on the understanding that no penalty will be levied, they a subjecting all the amounts to tax. By placing reliance on 251 ITR 9 (SC) and also 276 ITR 1 the appellate authority held that no penalty under Section 271(1)(c) could be levied in a ca income returned in revised returns is accepted even though revised returns were filed after se subsequent to inquiries. The material for this conclusion was disclosure of gifts to the departm returns filed before the date of search and appellate authority accepted the defence that only i buy peace and with an understanding that no penalty would be levied, the assesses had agre revised returns. According to the first appellate authority, no enquiries were conducte department and it was due to candid admission on the part of the respondents – assessees t were brought to tax as income. The Appellate Authority opined that all the particulars are ava the return and to buy peace, the respondents filed revised returns of income and therefore in of the observations made in the above decisions, it held that the imposition of penalty was not 16. Challenging the order of the first appellate authority, the Revenue went in appeal b Appellate Tribunal. The Appellate Tribunal has gone into all the material facts with reference t precedents relied upon by both Revenue and respondents – assessees and ultimately op unexplained gifts have been found to be recorded in the regular books of account and such g disclosed in the returns filed, therefore Explanation 5(2) to Section-271(1)(c) is complied hence there cannot be imposition of penalty on the gifts. It further opined that commission for gifts was also surrendered in the revised returns and same is subject to penalty as per Explana 17. It further opined that commission for gifts was also surrendered in the revised returns and same is subject to penalty as per Explana 17. So far as imposition of penalty on the amount surrendered as commission, the respo assessees have not challenged and the said finding has reached finality. So far as the oth that no penalty could be imposed on the unexplained gifts in view of surrendering the sam revised returns which was already recorded in the books of accounts, the Revenue has co these appeals. 18. Explanation – 5 to Section-271(1)(c) depends upon the particulars found with the assess time of search under Section-132 of the Act. As a matter of fact, Explanation – 5 to Sub-sect Section 271 was inserted by amendment. This new explanation is a special provision app cases when assessee is found to be the owner of any money, bullion, jewellery or other valua or thing revealed in the course of a search under Section-132 of the Act. If the assessee as claims that the abovementioned assets were acquired by him by utilizing (wholly or in part) h for the previous year which has ended before the date of the search, but the return of income year has not been furnished before the said date or, where such return has been furnished b said date, such income has not been declared in the return, the assessee shall be liable for pa penalty under section 271(1)(c) of the Act and such income is deemed to have been con inaccurately furnished. However the income referred to above if declared by the assessee in a of income furnished by him, on or after the date of search will not provide any immunity to the unless the conditions indicated in clause-(2) of Explanation-5 are fulfilled. 19. Learned counsel for the Revenue emphasizes that in the present case, the conditions in to Explanation-5 of Section 271(1)(c) of the Act are not completely fulfilled. Therefore appellate authorities were not justified in setting aside the order of imposition of penalty. 20. Learned counsel for the Revenues relies upon the decision of the Apex Court in the K.P.Madhusudhanan Vs. 19. Learned counsel for the Revenue emphasizes that in the present case, the conditions in to Explanation-5 of Section 271(1)(c) of the Act are not completely fulfilled. Therefore appellate authorities were not justified in setting aside the order of imposition of penalty. 20. Learned counsel for the Revenues relies upon the decision of the Apex Court in the K.P.Madhusudhanan Vs. Commissioner of Income Tax – (2001) 251 ITR 99 to contend that assessee is put to notice under Section-271 of the Act that if he does not prove, in the circu stated in the Explanation, that his failure to return his correct income was not due to fraud o then deemed provision regarding concealing the particulars of his income or furnishing in particulars of income could be drawn. In the said case, Their Lordships opined that introduction of Explanation-5, there is no question of proof of mens rea. He also places relian decision of the Honourable Supreme Court in the case of Union of India & Others .Vs. Dh Textile Processors & Others – (2008) 306 ITR 277 to contend that provisions of Section-11AC with the intention of imposing mandatory penalty on persons who evaded payment of tax c read to contain mens rea as an essential ingredient and there is no discretion with the competent to impose penalty to levy penalty below the prescribed minimum. Their Lordship opined that the object behind enactment of Section 271(1)(c) read with Explanation indicate said section has been enacted to provide for a remedy for loss of revenue and penalty u provision is a civil liability. They further opined that willful concealment is not an essential ingr attracting civil liability as is the case in the matter of prosecution under Section-276C of the A context, they proceeded to hold that in the case of Dilip N. Shroff. Vs. Jt. C CIT & Another – (2 CTR (SC) 228 the conceptual and contextual difference between Section 271(1)(c) and secti of the Act was lost sight of. Vs. Jt. C CIT & Another – (2 CTR (SC) 228 the conceptual and contextual difference between Section 271(1)(c) and secti of the Act was lost sight of. He places reliance on the decision in the case of Ashok Kumar G Commissioner of Income Tax – (2006)287 ITR 376 (P&H) to contend that concession Explanation-5 to Section 271(1)(c) is meant for the persons who after surrendering the un income pay the amount of tax along with interest, if any, on such income before the due date benefit cannot be extended to an assessee where he comes up with a plea of non-availability for payment of tax on surrendered income. Their Lordships further opined that only circumsta could be explained for absolving the payment of penalty are indicated in Explanation-5 itself relies on the decision in the case of P.R.Metrani .VS. Commissioner of Income Tax, Bangalo 2007 SC 386 to contend that Section-132 being a complete code by itself, it cannot intrude other provisions of the Act. Similarly, other provisions of the Act cannot interfere with the sche working of Section-132 or its provisions. The learned counsel places reliance on this de contend that the statement given by Mr. V.N. Sridhar if accepted could be accepted o statement given by him and it cannot be held as a valid statement in so far other membe family. In that context, learned counsel contends that there has to be strict compliance of Se of the Act. He places reliance on the unreported decision of this Court in the case of The Com of Income Tax. Vs. J. Alexander in ITRC 64/1999 disposed of on 19.6.2008. In this case, the not administered as required under Section-6 of the Oaths Act. Therefore Their Lordships hel statement of the Officer concerned, which is recorded without administering oath has no ev value and in the eye of law, it is not at all an evidence and hence there is no evidence to conc the amount of the fixed deposits belonged to the assessee therein. He also places reliance o unreported decision of this Court in the case of Commissioner of Income Tax Vs. The Sunrise Syndicate in ITRC 246/1998 disposed of on 14.2.2005 to contend that if an addition is ma there is no proper explanation for such addition, it would amount to concealment of income authorities under the Act are justified in levying penalty. 21. The Sunrise Syndicate in ITRC 246/1998 disposed of on 14.2.2005 to contend that if an addition is ma there is no proper explanation for such addition, it would amount to concealment of income authorities under the Act are justified in levying penalty. 21. According to the learned counsel for Revenue Mr. Seshachala, after the decision Madhusudhanan’s case – 251 ITR 99 (SC), the Supreme Court has clearly distinguished a fact observed that the observations made in the case of Sir Shadilal Sugar & General Mills another Vs. Cit – (1987) 168 ITR 705 (SC) was prior to the introduction of Explanation to Se of the Act, therefore the said decision do not come to the aid of assessee after introd Explanation to Section-271 of the Act. From K.P. Madhusudhanan’s case – 251 ITR 99, what is after Shadilal’s case – 168 ITR 705, Explanation to Section-271 was introduced and ther Revenue was no longer required to prove the mens rea of a quasi-criminal offence rega intentional or deliberate concealment of the amount. As a matter of fact, the word, ‘delibe removed from sub-section (c) of Section-271(1). It only says, concealing the particulars of h or furnishing inaccurate particulars of such income. The assessee would get the immunity fro the penalty if he is able to explain the causes as stated in clauses (1) or (2) of Explanation-5. 22. The respondent’s counsel relied on various decisions so far as Clause-2 of Explana Section-271 of the Act. 23. He places reliance on the decision in the case of Commissioner of Income Tax-1, Jod Mishrimal Soni – (2007)289 ITR 77 to contend that expression ‘possession’ used in clau Explanation 5 to Section 271 is not confined to physical possession, but extends to othe possession which is capable of being held. It was further held that as long as the assessee co a clean breast of his undisclosed income represented by assets found to be in possessio assessee, he is not deemed to have concealed his income or concealed particulars thereof. 24. It was further held that as long as the assessee co a clean breast of his undisclosed income represented by assets found to be in possessio assessee, he is not deemed to have concealed his income or concealed particulars thereof. 24. He also places reliance on the decision in the case of Commissioner of Income Tax Balashanmugham – (2006)286 ITR 626 (Mad) to contend that the statements made by the during the course of search under Section-132 of the Act can be taken note of and the ex offered by the assessee in such statement in the opinion of the officer concerned is ac question of imposing of penalty would not arise. In other words, it means in the opinion of the the explanation is acceptable, imposition of penalty is not justified. 25. He also places reliance on the decision in the case of Commissioner of Income Tax v Chandru – (2004) 136 Taxman 537 (Mad) to contend that the statement of the assessee under Section 132(4) of the Act followed by filling of Returns by the assessee for th assessment year admitting large income and also praying the tax together with interest, suc will get immunized from the levy of penalty. 26. He also places reliance on the decision in the case of Commissioner of Income Tax V Kishan Goel – (2005) 278 ITR 454 (All). In this case, Revenue contended that though the made the statement recorded under Section 132(4) that unexplained cash and unexplained were undisclosed income, the manner in which such income was derived has not been disclos statement and therefore immunity under Explanation 5 to Section 271(1)(c) was not applica Lordships held that in case there is nothing to the contrary in the statement recorded under Se (4) of the Act, in the absence of any specific statement about the manner in which such inc been derived, it can be inferred that such undisclosed income was derived from the business assessee was carrying on or from other sources. They further opined that much importance s be attached to the statement about the manner in which such income has been derived. 27. He also places reliance on the decision in the case of Gebilal Knahaialal (HUF) Vs. Commissioner of Income Tax – (2004) 270 ITR 523. They further opined that much importance s be attached to the statement about the manner in which such income has been derived. 27. He also places reliance on the decision in the case of Gebilal Knahaialal (HUF) Vs. Commissioner of Income Tax – (2004) 270 ITR 523. In this case it was held that when on statement under Section 132(4), the assessee has disclosed particulars of concealed inc surrendered it for tax and tax has been paid along with interest, imposition of penalty warranted. 28. He places reliance on the decision in the case of Commissioner of Income Tax vs. Mah Shah – (2008) 299 ITR 305 (Guj.) It was held in this case that there is no prescription as to time when tax has to be paid qua amount of income declared in statement made under Sectio of the Act. It was held that it would be sufficient compliance of provision if tax is shown to h paid before assessment was completed. It was further held that explanation -2 of explanatio specifies payment of tax together with interest, if any indicating that Legislature did not stip specified time limit for payment of tax. Referring to Radha Kishan Goel’s case – (2005) 278 (All), Their Lordships proceeded to hold that once income is declared and tax thereon is paid amount to substantial compliance not warranting any denial of benefit under Explanation 5 o 271(1)(c) of the Act. 29. He further places reliance on the decision in the case of Commissioner of Income Manmohan goel – (2005) 149 Taxman 578(All.). In this case, a search was conducted in the r as well as business premises of the assessee in which cash, jewellery and other valuable art things were found and seized and subsequently, assessee declared his income under Sectio and moved application for settlement. Assessment was completed on disclosed incom assessee and thereafter penalty proceedings were initiated. Held on facts conditions laid Explanation 5(2) to Section 271(1)(c) were fulfilled and no penalty was leviable. Their Lords that the basic idea or intention behind providing Explanation 5(2) of Section 271(1)(C) is litigation by the Department and to get the maximum tax at the earliest from the perso business as well as residential premises are searched. This was also a cause of whole gro had made an application for settlement, a little more than the original surrender and far less subsequent surrender. This was also a cause of whole gro had made an application for settlement, a little more than the original surrender and far less subsequent surrender. In that context, Their Lordships held that imposition of penalty was not 30. He also places reliance on the decision in the case of Commissioner of Income Tax, Ka Mahesh Chand Agarwal – (2006) 157 Taxman 539 (All.) wherein relying on the earlier de Radha Kishan Goel’s case – 278 ITR 454 (All.), held that no penalty was leviable. 31. He places reliance on the decision in the case of Sudarshan Silks & Sarees Vs. Commis Income Tax – (2008) 300 ITR 205(SC). In this case, Their Lordships held that Tribunal being Court of fact, decision of the Tribunal on facts can be gone into by the High Court only if a que been referred to it which says that findings arrived at by the Tribunal on facts are perverse, that no reasonable person could have taken such a view. 32. A reference is also made to the decision in the case of Dilip N. Shroff .Vs. Joint Commis Income Tax, Special Range, Mumbai – (2007) 291 ITR 519 (SC) on the aspect of concea income and furnishing of inaccurate particulars, wherein it is held as under: 67. ‘Concealment of income’ and ‘furnishing of inaccurate particulars’ are different. Both con and furnishing inaccurate particulars refer to deliberate act on the part of the assessee omission or negligence would not constitute a deliberate act of suppression veri or sugges Although it may not be very accurate or apt but suppression veri would amount to conc suggestion falsi would amount to furnishing of inaccurate particulars. 83. It is of some significance that in the standard proforma used by the Assessing Officer in notice despite the fact that the same postulates that inappropriate words and paragraphs w deleted, but the same had not been done. Thus, the assessing Officer himself was not s whether he had proceeded on the basis that the assessee had concealed his income o furnished inaccurate particulars. Even before us, the learned Additional Solicitor General whi the order of assessment laid emphasis that he had dealt with both the situations. 84. The impugned order, therefore, suffers from non-application of mind. It was also f application of mind. It was also bound to comply with the principles of natural justice. [See Industrial Co. Even before us, the learned Additional Solicitor General whi the order of assessment laid emphasis that he had dealt with both the situations. 84. The impugned order, therefore, suffers from non-application of mind. It was also f application of mind. It was also bound to comply with the principles of natural justice. [See Industrial Co. Ltd., v. CIT [2000]2 SCC 718]. 33. He also places reliance on the decision in the case of Commissioner of Income Tax, Ah Vs. Reliance Petroproducts (P) Limited – (2010) 322 ITR 158, wherein it is held as under: 8. xxx xxx The basic reason why decision in Dilip N. Shroff’s case (supra) was overruled by t in Dharamendra Textile Processor’s case (supra), was that according to this Court the e difference between section 271(1)(c) and Section 276C of the Act was lost sight of in case o Shroff (supra). However, it must be pointed out that in Dharamendra Textile Processors’ case no fault was found with the reasoning in the decision in Dilip N. Shroff’s case (supra), where explained the meaning of the terms “conceal” and “inaccurate”. It was only the ultimate inf B Dilip N. Shroff’s case (supra) to the effect that mens rea was an essential ingredient for th under section 271(1)(c) that the decision in Dilip N. Shroff’s case (supra) was overruled. 34. He also places reliance on the decision in the case of New Sorathia Engg. Co. Vs. commis Income-Tax – (2006) 282 ITR 642 (Guj) wherein when the order of the authority concerned that no clear-cut finding had been reached as to whether penalty under section 271(1)(C) w levied for concealment of particulars of income by assessee or whether any inaccurate part income had been furnished, order of penalty could not be sustained. 35. According to the learned counsel for the Revenue, clause-2 to Explanation 5 of Section 2 can be divided into five parts as mentioned below: 1. He (assessee) in the course of search makes a statement under sub-section 4 of section-13 2. That any money, bullion, jewellery or other valuable article or thing found in this possession his control has been acquired out of his income. 3. Which (income) has not been disclosed so far in the return of income to be furnished b expiry of time specified in sub-section 1 of Section 139. 4. That any money, bullion, jewellery or other valuable article or thing found in this possession his control has been acquired out of his income. 3. Which (income) has not been disclosed so far in the return of income to be furnished b expiry of time specified in sub-section 1 of Section 139. 4. And also specifies in the statement the manner in which such income has been derived. 5. And pays the tax together with interest if any in respect of such income. 36. Learned counsel for the Revenue contends that if tax together with interest, if any in r such income is not paid, as stated above, no benefit could be extended. In order to underst exactly explanation given by the assessee, one has to see 132(4) statement given by the a According to the learned counsel, 132 statement was given by one Mr. V.N. Sridhar is applic to him and not to other family members as the said statement does not cover the statemen family members. 37. On perusal of this statement recorded under section-132(4), we note that oath was admin the deponent Mr. V.N. Sridhar on 27.2.2004. It is in the form of question and answers. The of a question to him in a particular way and the deponent gives the answer. The statement of Sridhar dated 27.2.2004 is placed on record. The notice for recording this statement is dated 2 wherein it is stated that Mr. V.N. Sridhar was required to personally attend in respect of proce the case of M/s. Prakash Tea Agency Group. Question No.4 in the statement pertains to un income of Sri V.N. Sridhar, his business and his family members. He has given the details relating to himself, but also other family members. He also refers to a joint letter dated signed by all the family members which was already submitted to the concerned authorities that all the details are already mentioned. He has stated in the statement the manner in w income was derived i.e. the tea business of the family. He has also disclosed the details of th were shown in the respective returns and it is offered for taxation in the respective years in t of the concerned persons. He has stated in the statement the manner in w income was derived i.e. the tea business of the family. He has also disclosed the details of th were shown in the respective returns and it is offered for taxation in the respective years in t of the concerned persons. He also answers the question No.6 saying that the amount show M/s Prakash Tea Agency is out of the income of the tea business of the firm and the income him and Mr. Shashindra is the professional income of tea testing and similarly the income re others is on account of undisclosed income earned by them. 38. Apparently the oath would be administered to the deponent by the officer concerned department. It is at the option of the concerned officer such statement would be record statement is recorded under section 132(4) of other persons, there is no procedure to co officer to record statements of all other persons. Though learned counsel for Revenue cont individual notices were sent, we do not have such records before us. The very questions and under section 132(4) indicate the deponent was asked details pertaining not only to himself b other family members. It is not the case of the department that other than the statement of Sridhar, any other statement was recorded under Section 132(4) and it is in existence. The one statement of Mr. V. N. Sridhar recorded under Section 132(4) and endorsed by 3 other a As a matter of fact, Mr. N. Shashindra, Smt. Vani Shashindra and Smt. Muktha Sridhar at th the statement of Mr. V.N. Sridhar have also stated that the said statement was given in their and they abide by what has been stated by Mr. V.N. Sridhar. During the search proceedings 6.1.2004 and 27.2.2004, the statement of V.N. Sridhar was recorded. The manner in w questions were put to this deponent indicates that he was expected to answer for himself a family members. It would be at the option of the officer what has to be asked by way of quest would be at the option of the deponent what should be deposed. If the deponent had made statement was only on his behalf and not for other family members, he would not have made s explaining the details of others. It would be at the option of the officer what has to be asked by way of quest would be at the option of the deponent what should be deposed. If the deponent had made statement was only on his behalf and not for other family members, he would not have made s explaining the details of others. Once the concerned officer of the department chose to re statement in the above fashion indicating that Mr. V.N. Sridhar had to answer all the question of Prakash Tea Agency Group, now they cannot turn round and say the details given in the s of Mr. V.N. Sridhar under Section 132(4) holds good only for Mr. V.N. Sridhar and not for othe the concerned officer who recorded this statement who has to explain why he did not choose the statement of others. Having chosen to discharge the duty of recording the statement unde 32(4) in the above fashion, now the Revenue cannot find fault with the respondents – a contending it would not bind others. Even otherwise, letter submitted on 26.2.2004 by all the which has been referred to in the statement is signed by all the family members and a ref made to this letter not at one place but at several places in the statement recorded under se (4). 39. It is now well settled that the mens rea regarding concealing and inaccurate particulars ne established by the department. It is also not in dispute that the immunity from imposing available under two clauses of Explanation (5) can be expended to the respondents – a depending upon the facts and circumstances of each case if the explanation offered satisfaction of the officer concerned. This Court can refer to the facts only if the Tribunal on proceeded to give a perverse finding. In the present case, we are not faced with such a situa facts have to be referred because of the stand of the Revenue in these appeals contending benefit of statement of Mr. V.N. Sridhar cannot be extended to other respondents – assesse concluding the search, a declaration was obtained from this group on 26.2.2004 and sur undisclosed income was made vide the statement dated 27.2.2004 recorded under section the Act. The search commenced on 6.1.2004 and the statement under section 132(4) of the obtained. V.N. Sridhar cannot be extended to other respondents – assesse concluding the search, a declaration was obtained from this group on 26.2.2004 and sur undisclosed income was made vide the statement dated 27.2.2004 recorded under section the Act. The search commenced on 6.1.2004 and the statement under section 132(4) of the obtained. Under these circumstances, naturally the assessee would start thinking that if a dec made under section 132(4) along with the taxes together with interest payable is paid, no pena be imposed. The department would also be keen to get declaration under section 132(4) collect tax and avoid litigation. Only with this view, the exception was created in Explana Section 271(1)(c) under clauses (1) and (2) to give immunity to assessee from levy of penalt the course of search, if the assessee surrendered the income agreeing to pay the tax and int if explanation is given to the satisfaction of the officer concerned, assessee would be u impression that no penalty would be levied which would be subject to explanation offere present case, records reveal that the unexplained gifts were treated as income and referenc gifts is recorded in the regular books of accounts which were disclosed in the returns filed. As of fact, after surrendering the income, they offered the said income to tax along with interest a they have paid the tax and interest on such income. We also note that apart from surrendering so received as income, the assessees have surrendered the expenditure incurred in the commission for arranging such gifts. This resulted in imposition of penalty on the amount sur as commission and the assessees have not challenged the same. 40. In view of the above discussion and reasoning, we are of the opinion that all the amounts to as gifts were surrendered by assessees offering to pay tax. Subsequently tax was also p with interest and the revised returns were filed. In that view of the matter, we are of the op substantial questions have to be answered against the Revenue and in favour of the respo assessees. Accordingly, appeals are dismissed.