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TaxTMI 
TaxTMI 
TaxTMI 
2011 (4) TMI 930
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.... the returned income and the total income assessed was Rs. 1,32,89,530. However, in appeal, the Commissioner (Appeals) reduced the addition to the returned income to Rs. 23,32,026. We are informed that assessment appeal has become final and the addition to the returned income assessed is Rs. 23,32,026. Besides completing the assessment on the undisclosed income, which comprises the income returned by the assessee and the addition made thereto by the officer, the Assessing Officer proceeded to levy penalty under section 158BFA(2) of the Act. The Assessing Officer noticed that the assessee though disclosed Rs.79,10,187 as undisclosed income by filing return in Form No. 2B pursuant to notice issued by the officer under section 158BC, the assessee did not pay the tax on the admitted undisclosed income returned either prior to or along with filing of return as required under the proviso to section 158BFA(2) to get immunity from payment of penalty at least in respect of tax on such undisclosed income returned by the assessee. Therefore, penalty was levied at equal amount of tax on the entire undisclosed income assessed under section 158BC(c) of the Act, which comprises the undisclosed in....
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....ee. 3. Since we have to only consider the scope of section 158BFA(2) of the Act, we extract hereunder the said provision : "158BFA. Levy of interest and penalty in certain cases.-(1) . . . (2) The Assessing Officer or the Commissioner (Appeals) in the course of any proceedings under this Chapter, may direct that a person shall pay by way of penalty a sum which shall not be less than the amount of tax leviable but which shall not exceed three times the amount of tax so leviable in respect of the undisclosed income determined by the Assessing Officer under clause (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 clause (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 prece....
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....the Tribunal. 6. In short the question to be considered is whether the assessee forfeits immunity available to it from penalty on the undisclosed income returned on account of non-payment of the admitted tax along with the return filed declaring undisclosed income. While the Revenue's counsel submitted that satisfaction of the conditions in the first proviso is mandatory to get immunity from penalty with reference to the undisclosed income, the learned counsel for the assessee relied on the decision of the Rajasthan High Court in CIT v. Satyendra Kumar Dosi reported in [2009] 315 ITR 172 (Raj) and contended that the penalty under section 158BFA(2) itself is discretionary and when the Commissioner of Income-tax (Appeals) as well as the Tribunal exercised the discretion in favour of the assessee, then there is no scope for interference by this court on the reduction granted by the Commissioner of Income-tax (Appeals). 7. Even though learned counsel for both sides relied on several decisions, we do not think there is any need to consider those decisions which are on general principles applicable to penalty matters and not on the special provision above referred. Further, we h....
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....payment based on the return of undisclosed income filed. Apart from the requirement of payment of tax prior to or along with filing the return the assessee should also confirm to the Assessing Officer that no appeal will be filed challenging the assessment on the income voluntarily disclosed by the assessee in the return filed. In other words, if the assessee files appeal challenging the assessment of undisclosed income returned by the assessee, the benefit of exemption from penalty will not be available under the first proviso to the said section. The second proviso is a further condition qualifying the first proviso which says that if the assessment under section 158BC(c) of the Act includes income other than the undisclosed income returned by the assessee then the immunity from the penalty in respect of the undisclosed income returned by the assessee will be lost to the assessee. In other words, the absolute immunity from penalty on the tax payable in respect of the undisclosed income is available only if the Assessing Officer accepts the return filed by the assessee declaring the undisclosed income, which is the undisclosed income assessed under section 158BC(c) of the Act. In ....
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....es (i) to (iv) of the first proviso as stated above. This is because the assessee in such a case will be treated as partly dishonest and partly honest and, therefore, the penalty will certainly in the discretion of the Assessing Officer. Of course, if the addition made when compared to the undisclosed income returned by the assessee is relatively small and if the assessee had complied with the conditions of the proviso on the undisclosed income returned by the assessee then certainly the officer will not be justified in levying penalty with reference to the tax payable on the total income assessed under clause (c), which includes tax on undisclosed income returned by the assessee. On the other hand, if on final assessment under clause (c) of section 158BC it is found that the addition made to the undisclosed income returned by the assessee is very high, i.e., substantial either in absolute terms or in relation to the income returned by the assessee, then the officer should consider penalty on the total income assessed including undisclosed income returned by the assessee, no matter the assessee has complied with the conditions of the first proviso above referred to in respect of th....