TaxTMI 
TaxTMI 
2015 (5) TMI 348
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.... a search and seizure action u/s. 132 of the I.T. Act was carried out in Shyam Telecom Group of cases on 13.1.2000. Papers relating to the assessee were also seized during the search operation. As there was no search warrant in the name of the assessee company, hence, the case was covered u/s. 158BD of the I.T. Act, 1961. Notice u/s. 158BC, read with Section 158BD of the I.T. Act, 1961 was issued to the assessee on 16.11.2000. In response thereto, the assessee company filed its return declaring income of Rupees NIL on 29.1.2001. The assessee company was having business of investment and finance. 4. During the course of search operation at the corporate office of Shyam Group at A-60, Naraina Industrial Area on 13.1.2000 papers were found indicating a planning to book long term capital gains. The long term capital gain to be booked in the case of the assessee was Rs. 19,88,140/-. In reply to a question regarding the nature of the profit earned by the assessee, Sh. Rajiv Mehrotra, Chairman of the group replied that the company has earned a long term capital gain of Rs. 19,88,140/- during the A.Y. 1999-00, but in the absence of documents evidencing the transactions in time, the tax ....
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....(A), who vide impugned order dated 1.2.2013 has deleted the penalty by allowed the appeal of the Assessee. 6. Against the order of the Ld. CIT(A), now the Revenue is in appeal before the Tribunal. 7. At the time of hearing Ld. Departmental Representative has relied upon the order of the Assessing Officer and reiterated on the contentions raised in the grounds of appeal filed by the Revenue. 8. On the other hand, Ld. Counsel of the assessee relied upon the order of the Ld. CIT(A) and submitted that the order of the Ld. CIT(A) may be upheld. Ld. Counsel of the assessee in support of his contention filed a Brief Synopsis, which is reproduced hereunder for the sake of ready reference:- The present appeal filed by the Revenue is against the order of the CIT(A) dated 1st February, 2013, deleting the penalty of Rs. 12,93,085 imposed by the assessing officer under section 158BF A(2) of the Income-tax Act, 1961 ("the Act"). The brief facts in respect of the aforesaid are as follows: During the previous year relevant to the assessment year 1999-2000, falling in the block period 01.04.1989 to 13.01.2000, the assessee had earned income from transfer of shares in a company cal....
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....g officer vide order dated 19th May, 2011, imposed penalty of Rs. 12,93,085 in respect of undisclosed income assessed on account of non-filing of return of income before the due date prescribed in section 139(1) of the Act. On further appeal by the assesse, the CIT(A) vide order dated 1 st February, 2013, deleted penalty imposed by the assessing officer. The pertinent findings of the CIT(A) are for the sake of convenience reproduced hereunder: "4.3 Now looking into the facts of the present case it is observed that: i) The investment in shares (which were sold during the year and on which long term has been earned) were duly been reflected in the financial account of the year in which they were purchased. ii) The sale consideration/gain which has been received during the year under consideration has duly been deposited in the declared bank account of the appellant. iii) The unaudited profit and loss account and balance sheet which were found during the search, duly contains the recording of the transaction of sale of these shares, on which the capital gain of Rs. 19,88,140 has been earned and iv) The return of income for Assessment year 1999- 2000 though was not fi....
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....is not leviable if the return of income is not filed by the due date, but the income be assessed as undisclosed income within the meaning of section 158BB(1)(c): "If the assessee had not furnished its belated return immediately after the search, the assessee would have definitely offered the capital gains for taxation in its blockreturn. If that amount is offered through the block return there would be no case of action to impose penalty. Therefore it is to be seen that the only mistake committed by the assessee is that it acted little oversmart and over-cautious, even though the endeavor of the assessee was not productive. " 4.7 Here, I would also like to take strength from the decision dated 12.11.2008 of Delhi High Court in the case of CIT vs. Harkaran Das Ved Pal (ITA No.1005/2007) Delhi where Hon'ble Court has held that the penalty imposable under section 158BFA(2) is not mandatory, and AO must use his judicial consideration before imposing the penalty. The foot notes of the said decision read as under: "We have already noted that because the assessee had surrendered the amount bonafide and for the purposes of buying peace and avoiding protracted litigation, it di....
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....decision of the Delhi Bench of the Tribunal in the case of DCIT v. AT Invofin India Pvt. Ltd. in IT(SS)/12/DeV13 dated 13th January, 2015 [copy attached as Annexure. In the said the Tribunal, on identical facts, held as under: "7. We have heard rival submissions and perused the material on record. The uncontroverted facts of the case as noticed by the CIT(A) are as follows:- (i) the investment in shares (which were sold during the year and on which long term has been earned) were duly been reflected in the financial account of the year in which they were purchased. (ii) the sale consideration/gain which has been received during the year under consideration has duly been deposited in the declared bank account of the appellant. (iii) the unaudited profit and loss account and balance sheet which were found during the search, duly contains the recording of the transaction of sale of these shares, on which the capital gain of Rs. 18, 94, 080 has been earned and (iv) the return of income for Assessment Year 1999-2000 thoughwas not filed by the due date i.e. 31.12.1999, but the same was filed on31.03.2000 i.e. the time allowed as per the provision of section 139(4),and in t....
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....eversed the order of the Commissioner of lncome-tax (Appeals) and this court also dismissed the appeal of the assessee, the Supreme Court has remitted the case back to this court and the issue stands admitted. Once the appeal, i.e., I.T.A. No. 612 of 2004 preferred by the assessee has been admitted that would show that substantial question of law on the interpretation is involved. The issue is thus clearly debatable. " 7.3 A similar view has been held by another judgment of Hon'ble High Court in the case of CIT Vs. Devsons Logistics (P) Ltd. (329ITR 483). Therefore, following the dictum laid down by the Hon'ble Jurisdictional High Court in the cases of CIT Vs. HB. Leasing and Finance Co. Ltd. reported in 334 ITR 367 and CIT Vs. Devsons Logistics (P) Ltd. reported in 329 ITR 483, we hold that the penalty is not imposable on facts and circumstances of this case. In view of the aforesaid reasoning, we uphold the order of the CIT(A) as correct and in accordance with law, and no interference is called for. It is ordered accordingly. 8. In the result, appeal of the Revenue is dismissed. " (emphasis supplied) It may be pertinent to mention here that in the quantum proceed....
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....ings under the income-tax law may not be criminal in nature, they are still quasi-criminal requiring the Department to establish that the assessee has concealed his income. 9.2 Ld. CIT(A) further observed that: (i) the investment in shares (which were sold during the year and on which long term has been earned) were duly been reflected in the financial account of the year in which they were purchased. (ii) the sale consideration/gain which has been received during the year under consideration has duly been deposited in the declared bank account of the appellant. (iii) the unaudited profit and loss account and balance sheet which were found during the search, duly contains the recording of the transaction of sale of these shares, on which the capital gain of Rs. 19,88,140 has been earned and (iv) the return of income for Assessment Year 1999-2000 though was not filed by the due date i.e. 31.12.1999, but the same was filed on 31.03.2000 i.e. the time allowed as per the provision of section 139(4), and in their return of income the long term capital gain have duly been reflected. 9.3 We find considerable cogency in the observations of the Ld. CIT(A) that since the se....
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....on dated 12.11.2008 of Hon'ble Delhi High Court in the case of CIT vs. Harkaram Das Ved Pal {117 Taxman 398} Delhi where Hon'ble Court has held that the penalty imposable under section 158BFA{2} is not mandatory, and AO must use his judicial consideration before imposing the penalty. The foot notes of the said decision read as under: "Section 158BFA of the Income-tax Act, 1961 - Block assessment in search cases - Levy of interest and penalty in certain cases - Block period 1-4-1999 to 6-7-2000 - Whether Legislature did not intend imposition of penalty under section 158BFA{2} by itself to be mandatory; rather it intended same to be left to discretion, which of course has to be exercised upon judicial considerations of Assessing Officer - Held, yes - Whether a pre-condition for imposition of penalty under section 158BFA{2} is that there must be a determination of undisclosed income by Assessing Officer under clause {c} of section 158BC - Held, yes - Whether where undisclosed income had been computed merely on basis of surrender made by assessee in course of block assessment proceedings and de hors surrender, there was no evidence which could have been said to have been found a....