2018 (10) TMI 371 - HC - Income Tax

Penalty Upheld for Undisclosed Income: Income Tax Act Section 158BFA(2)

The court upheld the levy of penalty under Section 158BFA(2) of the Income Tax Act for the block period 01.04.1989 to 22.03.2000. It was determined that ... Levy of penalty u/s 158BFA(2) - computation of the undisclosed income for the purpose of invoking the Second Proviso to Section 158BFA - Held that:- We find that more than 19 hearings took place before the assessment was drawn. It may not be necessary for this Court to refer to all the statements, which were recorded and the materials, which were called for and placed before the Assessing Officer but, it would suffice to state that there are abundant references in the assessment order to show as to how the undisclosed income was computed. On facts, the Assessing Officer clearly recorded the finding that the undisclosed income has been properly computed based on the seized materials as well as the details furnished by the assessee. The assessee seeks to dispute the fixation by contending that the fixation is based on the letter given by the assessee, which according to the assessee is voluntary. The first appellate authority has considered the issue independently, especially the contention now put forth before us and noted that the undisclosed income has been properly computed. The Tribunal also has examined the factual position and noted the particulars of the undisclosed income and then rendered a finding confirming the orders passed by the first appellate authority and the Assessing Officer. Thus, we find that the three authorities have concurrently appreciated and re-appreciated the factual position and held that the undisclosed income has been determined based on the documents and other materials and information available at the time of search. For the above reasons, the assessee has not made out any case for interfering with the order passed by the Tribunal. - Decided against assessee. Issues:Levy of penalty under Section 158BFA(2) of the Income Tax Act.Analysis:The appeal was filed challenging the order passed by the Income Tax Appellate Tribunal Madras 'A' Bench regarding the levy of penalty under Section 158BFA(2) of the Income Tax Act for the assessment year Block Period 01.04.1989 to 22.03.2000. The substantial question of law was whether the Tribunal was correct in confirming the levy of penalty under the said section.The main issue to be determined was whether the computation of undisclosed income for invoking the Second Proviso to Section 158BFA of the Act was proper and justified. The appellant argued that the undisclosed income computation was not based on materials recovered from the search but on a letter provided by the assessee. The appellant relied on a decision of the High Court of Delhi to support their contention.The respondent, represented by the Junior Standing Counsel, argued that the Assessing Officer, the first appellate authority, and the Tribunal had all concluded that the penalty and surcharge were leviable as per the Second Proviso. It was contended that the undisclosed income was properly computed based on seized materials and details furnished by the assessee following the search.The court examined whether the undisclosed income for the block period was determined based on evidence discovered during the search. The Assessing Officer's penalty order stated that the block assessment was finalized after considering seized materials, details provided by the assessee, and conducting inquiries. The assessment order under Section 158BC of the Act provided detailed information.The court noted that numerous hearings took place before the assessment was finalized, and the undisclosed income computation was based on seized materials and details furnished by the assessee. The appellant disputed this computation, claiming it was based on a voluntary letter provided by them. However, the court rejected this argument, stating that the undisclosed income determination was based on materials available during the search and information provided by the assessee.The first appellate authority and the Tribunal independently considered the issue, confirming that the undisclosed income was properly computed. They examined the factual position and upheld the orders of the Assessing Officer. The court concluded that the undisclosed income determination was based on documents, materials, and information available during the search. Consequently, the appeal was dismissed, and the substantial question of law was answered in favor of the Revenue.