2006 (4) TMI 236

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....missions in the light of material placed before us and precedents relied upon. The assessee is a firm comprising of 4 partners. It is engaged in the business of real estate. The firm is constructing and selling flats at Trichy. Search and seizure operations under section 132 of the Act were conducted in the business premises of the assessee as well as the residential premises of its partners. During the course of search certain books of account and diaries were found and seized. In response to notice issued under section 158BC on 4-1-1999 assessee filed its block return on 15-3-2000 declaring undisclosed income at Rs. 59,07,160/-. Assessing Officer finalized the block assessment proceedings on 29-7-2000 determining the total undisclosed inc....

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....07,160/- as declared in the Block Return remained the assessed income as on date. 4. For the entire block period assessee claimed aggregate loans to the extent of Rs. 2,65,85,000/- out of which loans to the extent of Rs. 1,36,75,000/- were stated to have been paid. Assessing Officer gave credit to the balance claims of loans to the extent of Rs. 1,29,10,000/- as on the date of the search. Assessee has claimed in the return of income a sum of Rs. 1,18,75,607/- as outstanding loans as on 31-3-1998. The assessee has not claimed the loan taken from 1-4-1998 to the date of search to the extent of Rs. 14,45,000/- since this period was outside the purview of the block assessment as submitted by the assessee earlier. 5. Assessee furnished the nam....

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....caused due to the ignorance of law. It was not intentional. It was not wilful act of the assessee-firm. Assessee proved the bona fide of the transaction and genuineness of the credits. On these facts the non-acceptance of loan by cheque or draft amounts to only technical or venial breach. 8. Based on the dictum de minimis non curat lex (the law takes no notice of trivialities), it was submitted that it is only a technical or venial mistake. Assessee should therefore be exonerated from the rigour of penalty. Adverting our attention to the healing aspects of justice, it was prayed that lenient view be taken in the matter. Reliance was placed on some precedents. 9. In the case of Asstt. Director of Inspection v. Kumari A.B. Shanthi [2002] 25....

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....ed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." The power to impose penalty has to be exercised judicially with due regard to all the facts and circumstances. It cannot be exercised mechanically. 12. It is all very wel....