2016 (7) TMI 957

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....he learned Tribunal dismissed an appeal preferred by the revenue. Aggrieved revenue has come up in appeal. The following question of law was formulated on 17th December, 2009 when the appeal was admitted:- " Whether on the facts and circumstances of the case the Income Tax Appellate Tribunal is justified in not considering the penalty is leviable under Section 158BFA(2) of the Income Tax Act, 1961 on the quantum of undisclosed income determined by the Commissioner of Income Tax (Appeals) ?" The search and seizure took place on 5th July, 2002. The respondent-assessee and its director Shri S.M.Shroff were both required to furnish returns. Shri S.M.Shroff furnished a return showing an undisclosed income of Rs. 2,02,66,971/- whereas....

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....urn for the same amount and as the consequence of this, the appellant company was bound to declare NIL undisclosed income. Later, the basis of determination undisclosed income was changed by the Assessing Officer of Shri S.M.Shroff and the appellant company, after giving all appeal affects, finally arrived at the picture of undisclosed income, in which Shri S.M. Shroff has the income of Rs. 2,02,66,971/- and the appellant company has Rs. 37 Lacs of this nature. The aggregate amount of Rs. 2,39,66,971/- is close to the original disclosure u/s 132(4) of Rs. 2.16 Crore by Shri S.M.Shroff." In the aforesaid facts, the CIT(Appeals) was of the opinion that: "When the Assessing Officer was unable to decide that the undisclosed income r....

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....on. Subsequent development in the course of assessment proceedings does not appear to modify the quantum of undisclosed income. It modifies the proportionate of distribution of the same between the appellant and its Managing Director. Therefore, levy of penalty, entirely technical ground that the appellant company declared Nil undisclosed income in the return u/s 158BC and there was some positive income in the nature of undisclosed income after appellate decision, is not justified. Considering the totality of circumstances, the judicial discretion restricting that the Assessing Officer permits him not to levy penalty and omission of exercise it appears unjustified. Accordingly, the order of penalty is cancelled and the appeal allowed." T....