TaxTMI 
TaxTMI 
2014 (2) TMI 1235
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....ct was carried out the residence/office premises of Assessee on 31.03.1999. In response to the notice under section 158BC, Assessee filed return of income showing total undisclosed income of Rs. 20,38,608/- for the Block Period under reference. The Assessment was thereafter framed under section 158BC(c) r.w.s. 158BG (b) of the Act vide order dated 07.07.2000 and the total undisclosed income for the block period was determined at Rs. 71,34,196/- by making various additions. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A) where some of the additions made by A.O. were deleted. The details of the additions made and confirmed/deleted by CIT(A) are as under:- Amount Additions confirmed by CIT(A)....
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.... the block period agricultural income of Rs. 35,72,353/-. However, the appellate authorities accepted, on the basis of evidences filed, agricultural income of Rs. 23,11,092/- only. Subsequently in the penalty proceedings, the assessee has furnished other evidences in the form of confirmations. This was not considered by the A.O. As per the decision of jurisdictional Bench of the ITAT in Gandhi Station vs. ACIT, 100 TTJ 1143, the same ought to have been considered. The A.O. has disallowed the agricultural income by treating it as business income. No instance has been put forth to show that the income in question was business income and no agricultural income. No evidence has also been uncovered during the search or otherwise to show that the....
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....is possible. In any case, the fact of incurring expenditure of Rs. 11 lacs has not been doubted or disputed. The difference has arisen only with respect to the year in which the expenditure should be charged. In my opinion penalty would not be sustainable on a debatable issue as mentioned above. Accordingly, penalty in respect of disallowance of Rs. 11 lacs is cancelled. 5.3 Gross Profit: In a very large number of cases, the courts have consistently held that penalty may not be levied in respect of GP addition made purely on the basis of estimate, as in the instant case. In this regard, the decisions cited by the Id. AR (supra) are relevant. Following the decision of the jurisdictional Bench of the IT AT in the case of Allarakha I. Vohra....
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.... penalty stage but the A.O. did not verify the same. He further submitted that there is no much variation in the holding of land by Assessee wherein the Assessee had been allowed the agriculture income for A.Y. 1999-2000. With respect to disallowance of professional fees, it was submitted that Assessee had agreed to pay Rs. 11 lacs towards professional fees but it was not allowed by the A.O. under section 158BC for the reason that the professional fees were paid and accrued after 31.03.1999 that is after the block period. He therefore submitted that the addition was on account of difference of opinion. With respect to the addition of gross profit ld. A.R. submitted that on the turnover of Rs. 3,81,089/-. A.O. considered the G.P. disclosed b....
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....he basis of estimate and therefore no penalty was leviable. Before us, the Revenue could not controvert the findings of CIT(A) by bringing any contrary material on record. 8. We also do not agree with the submission of Revenue that penalty u/s. 158BFA is mandatory in view of the decision of Rajasthan High Court in the case of CIT vs. Satyendara Kumar Dosi (2009) 315 ITR 172 where the Hon'ble High Court has held that levy of penalty u/s. 158BFA(2) is discretionary and not mandatory. 9. In the case of CIT vs. Becharbhai Parmar (Supra) the Hon'ble Guj. High Court has held as under:- "Sub-section (2) of Section 158BFA makes it clear that it is well within the discretion of the A.O, while framing the assessment for the block period, whe....