TaxTMI 
TaxTMI 
2010 (7) TMI 500
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....minating documents were found. Proceedings under section 158BC r/w section 158BD under the provisions of IT Act (hereinafter, referred to as "the Act", for short) were initiated. The assessee filed return of income declaring an undisclosed income of Rs. 21,00,525. The AO considering the material on record, determined the undisclosed income at Rs. 21,76,160. He computed the tax payable on Rs. 13,07,496. Thereafter, the AO initiated penalty proceedings under section 158BFA(2) of the Act and a show-cause notice was issued and the assessee also replied to the same. The AO found from the reply that the assessee had not satisfied the conditions imposed under the first proviso and second proviso. Therefore, he proceeded to levy penalty of Rs. 10,4....
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....2) of the Act and holding that it is ambiguous, capable of giving more than one meaning, does not bring out a charge, vests AO with the unbridled discretion and powers and therefore, no penalty under such a section can be imposed. (iii) Whether the Tribunal was correct in holding that the AO has been vested with powers of levying more than 120 per cent to 240 per cent penalty which is obnoxious and has never been the intention of the legislature and amounts to harassment of the taxpayer and therefore the provisions have to be read down as the AO has miserably failed to exercise the discretion in favour of the assessee by being reasonable since the assessee has filed the return belatedly by only a fortnight and the assessee had co-o....
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....osition of penalty is illegal ?" 6. From the aforesaid facts, it is clear that there was a search and seizure and consequently, a notice came to be issued to the assessee to file a return declaring undisclosed income. The assessee had filed a return declaring Rs. 21,00,525 as the income. After the assessment the AO declared Rs. 21,76,160 as the undisclosed income. The reason for imposing penalty by the AO was because the assessee had not complied with the requirement mentioned in the first proviso to section 158BFA(2). According to the AO the second proviso was also attracted to the facts of the case and therefore, he imposed the penalty. However, according to counsel for respondent, if the conditions prescribed in the first proviso to s....
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....le in respect of the undisclosed income determined by the AO under cl. (c) of section 158BC : Provided that no order imposing penalty shall be made in respect of a person if- (i) such person has furnished a return under cl. (a) of section 158BC; (ii) the tax payable on the basis of such return has been paid or, if the assets seized consist of money, the assessee offers the money so seized to be adjusted against the tax payable; (iii) evidence of tax paid is furnished along with the return; and (iv) an appeal is not filed against the assessment of that part of income which is shown in the return : Provided further that the provisions of the preceding proviso shall not apply where the und....