2012 (2) TMI 235 - AT - Income Tax

Tribunal dismisses Revenue's appeal, upholds deletion of penalty for undisclosed jewellery.

The appeal filed by the Revenue was dismissed, confirming the deletion of the penalty imposed on the assessee for undisclosed jewellery worth Rs. ... Penalty - Search - Block assessment - Jewelery worth RS 12,77,635 added as Undisclosed Income - CIT(A) deleted entire additions - Tribunal: duplicate bills were neither found at the time of search nor were produced before the Investigating Authority - AO on tribunal findings levied penalty - Held That:- It is not the case of Department that the duplicate bills produced by the assessee were false or the parties who issued those bills were not existent parties. Minor variation in the description cannot be conclusive proof for coming to the conclusion that the bills were not genuine. Therefore, it cannot be said that the assessee’s explanation was, in any case, malafide. Penalty un-justified. Issues Involved:1. Deletion of penalty under Section 158BFA(2) for undisclosed income from jewellery.2. Whether the imposition of penalty under Section 158BFA(2) is mandatory.Issue-wise Detailed Analysis:1. Deletion of penalty under Section 158BFA(2) for undisclosed income from jewellery:The Department filed an appeal against the order of the Commissioner of Income-Tax (Appeals), who had deleted the penalty imposed on the assessee for undisclosed jewellery worth Rs. 9,06,430/-. The case originated from a search action on 07.02.2011 at the premises of the assessee, resulting in the discovery of jewellery worth Rs. 4,78,04,539/-. The block assessment determined an undisclosed income of Rs. 12,16,80,542/-, including jewellery worth Rs. 12,77,635/-. The CIT(A) deleted most of the additions, retaining only Rs. 25,00,000/-. The Tribunal confirmed the deletion of Rs. 25,00,000/- but retained Rs. 9,06,430/- as undisclosed jewellery.The Assessing Officer levied a penalty of 200% on the tax sought to be evaded, citing that the duplicate bills for the jewellery were submitted late and did not match the DVO's report. The CIT(A) deleted the penalty, arguing that the explanation provided by the assessee was bona fide and the bills were not proven false. The Tribunal upheld this decision, noting that the penalty cannot be imposed merely because the explanation was not accepted, and there was no positive evidence of concealment.2. Whether the imposition of penalty under Section 158BFA(2) is mandatory:The Department contended that the penalty under Section 158BFA(2) is mandatory. However, the CIT(A) and the Tribunal held that the penalty is discretionary, as supported by various case laws, including the Hon'ble Bombay High Court's decision in CIT vs. Dodsal Limited, which clarified that the imposition of penalty under Section 158BFA(2) is not automatic but depends on the discretion of the Assessing Officer.The Tribunal dismissed the Department's appeal, affirming that the penalty under Section 158BFA(2) is not mandatory and that the explanation provided by the assessee was not found to be false. The Tribunal emphasized that for penalty purposes, there must be positive evidence of concealment, which was lacking in this case.Conclusion:The appeal filed by the Revenue was dismissed, confirming the CIT(A)'s order that deleted the penalty imposed on the assessee for undisclosed jewellery. The Tribunal held that the penalty under Section 158BFA(2) is discretionary and not mandatory, and the explanation provided by the assessee was bona fide and not proven false.