TaxTMI 
TaxTMI 
2015 (5) TMI 2
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....ng the penalty of Rs. 12,83,290/imposed u/s.158BFA(2) of the IT Act, 1961 more particularly when the Assessee has failed to pay the tax in its entirety on the undisclosed income?" 4. Before adverting to the provisions of law, it would be relevant to advert to the factual scenario, which emerges as follows; 5. A search and seizure was carried out in the case of assessee under Section 132 of the Income Tax Act, 1961 ('the Act', for short) on 02.07.2002. Pursuant thereto, the assessee was issued a notice under Section 158BC of the Act on 30.12.2002, requiring him to file block return in respect of undisclosed income. The assessee filed the same on 26.07.2004, declaring total income for the block period at Rs. 20,36,971/-. The tax payable on the aforesaid income was worked out at Rs. 12,83,293/-. The assessee filed block return with proof of payment of tax to the tune of Rs. 7,36,000/-. Since, according to the Revenue, the assessee had failed in making full payment of the tax, penalty proceedings under Section 158BFA(2) came to be initiated against the assessee and the assessee was issued a penalty notice on 30.07.2004. The assessee, hence, approached the CIT(A) by way of a....
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....e of concealment, and hence, the appeals require to be allowed. 7. In this background, per contra, Mr. Soparkar, learned Advocate for the respondent-assessee in each appeal, submitted that the findings of facts recorded by both the authorities below support the case of the assessee, which also turns out from the factual scenario, as it emerges from Para-11 of the order of the Tribunal, that the assessee paid the tax in its entirety along with interest. 8. Mr. Soparkar, in support of his case, placed reliance on a decision of the Delhi High Court in the case of "CIT v. Harkaran Das Ved Pal " [2011] 336 ITR 8 (Delhi), in that case the Delhi High Court held that the computation of undisclosed income by the AO could not be construed as 'undisclosed income determined by the AO under clause(c) of section 158BC" and the undisclosed income had been computed merely on the basis of surrender made by the assessee in the court of the block assessment proceedings. The Delhi High Court, further, held that de hors the surrender, there was no evidence which could have been said to have been found as a result of search. Therefore the Tribunal was correct in law in canceling the penalty impo....
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....the Tribunal for fresh consideration and disposal in accordance with law." 10. Mr. Soparkar, therefore, prayed that the present appeal be dismissed as being without merit. 11. Heard, Mr. Parikh, learned Advocate for the appellant, and Mr. Soparkar, learned Advocate for the assessee in each appeal, and also perused the material on record, including the orders of the CIT(A) and the Tribunal. 12. Going through the provisions of Section 158BFA of the Act, it appears that the penalty, which is envisaged and which can be imposed, though, is different from the penalty under Section 271(1)(c) of the Act, under sub-Section (2) of Section 158BFA of the Act, the requirements of Section 271(1)(c) are not to be looked into. The Tribunal while dismissing the appeal of the Revenue, in Paragraph-11 of its order held in favour of the assessee, by interpreting the provisions of Section 158BFA. The findings are as under; "11. Now coming to the appeal filed by the assessee, as pointed out earlier, the facts are not in dispute. It was submitted by assessee before AO that out of total sum of Rs. 12,83,293/-(being total tax payable with respect to block period return) a sum of Rs. 7,36,000/- was ....
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....roduce creditors but only one day's time was given. Be that as it may, additions are now confirmed and we are concerned with imposition of penalty under s. 158BFA. Assessee relied on Tribunal judgment in the case of Nemichand v. Asst. CIT (Inv.) (supra), and Smt. Mala Dayanidhi v. Dy. CIT (supra). Tribunal has taken a view that s.158BFA is not mandatory but discretionary and the assessee's explanation has to be considered. We find merit in the contentions of the learned counsel that this penalty proceeding is akin to s.271(1)(c) proceedings, main clause and in sum and substance Department has to prove factum of concealment. Quantum and penalty proceedings are distinct and separate and while deciding the issue of penalty, facts can be reconsidered. In the given facts and circumstances, assessee's explanation to confirmations, etc. have been rejected on assumptions drawing adverse inference based on probabilities, i.e., existence of insertions and corrections and probability of accountant knowing facts of cash credit. Since we hold that it was burden of the Department, AO should have separately investigated matter in penalty proceedings by calling these parties and accoun....