Penalty cannot be levied u/s 271(1)(c) by invoking Explanation 5 merely on account of late payment of tax and interest on additional income disclosed during search:

Assessee declared certain income as undisclosed income during the course of search on which AO levied penalty u/s 271(1)(c) by invoking Explanation 5 by not granting the immunity provided under clause 2 to Explanation 5. Hon’ble ITAT observed that the assessee had made a statement u/s 132(4) as to his undisclosed income. Assessee had also substantiated the manner in which such income was derived. Assessee had also paid tax on such income along with interest. The only count on which AO didn’t grant immunity from penalty was that the tax and interest were paid late and not at the time of filing return of income. Hon’ble ITAT, relying on the decision of the Hon’ble Apex Court in the case of “ACIT vs. Gebilal Kanhaialal HUF – 348 ITR 561 (SC)”, held that no time limit has been prescribed in law for payment of tax with interest for claiming immunity. Accordingly, the penalty was deleted.

[SHRI KAMLESH JAIN Vs. ACIT – ITA No.2525/Ahd/2010]