Block assessment penalty under section 158BFA(2) applies when undisclosed income exceeds the return and quantum addition is final.

Penalty under section 158BFA(2) follows the statutory scheme of block assessment where undisclosed income determined exceeds the amount disclosed in the block return. The Tribunal noted that the assessee filed a nil block return, the Assessing Officer determined undisclosed income in excess of that return, and the quantum addition attained finality because no appeal was filed. It further held that this penalty is not contingent on proving concealment, inaccurate particulars, or mens rea in the manner associated with section 271(1)(c). On those facts, the penalty was sustained.

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Issues: Whether penalty under section 158BFA(2) of the Income-tax Act, 1961 was leviable where the assessee filed a nil block return, the Assessing Officer determined undisclosed income in excess of the returned figure, and the assessee did not challenge the quantum addition.

Analysis: Section 158BFA(2) operates on the basis of undisclosed income determined in block assessment proceedings. The first proviso grants relief where the assessee furnishes a block return, pays the tax and does not dispute the returned income, but the second proviso withdraws that concession where the Assessing Officer determines undisclosed income in excess of the amount shown in the return. The Tribunal held that the assessee had filed a nil return, the additions resulting in undisclosed income had attained finality as no appeal was filed against the assessment, and the penalty was therefore attracted on the excess undisclosed income determined. It further held that penalty under this provision is not dependent on proving concealment, inaccurate particulars, or mens rea in the manner applicable to section 271(1)(c).

Conclusion: The penalty under section 158BFA(2) was rightly sustained and the challenge to its levy failed.

Ratio Decidendi: Where undisclosed income determined in block assessment exceeds the amount disclosed in the block return, penalty under section 158BFA(2) follows on the statutory scheme of the provision, and proof of concealment or mens rea is not required.

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