TaxTMI 
TaxTMI 
2013 (8) TMI 1039
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.... i.e. A.Y. 1999-2000 to 2001-02. While arriving at this loss, the assessee had claimed accrued interest of Rs. 90,77,000/- on advances received from the members of the society. The Assessing Officer completed the assessment on 29-08-2002 determining the total undisclosed income at Rs. 58,67,526/-. In the said order the Assessing Officer disallowed accrued interest of Rs. 90,77,000/- claimed by the assessee in toto, charged to tax the notional income of Rs. 10,21,815/- and disallowed the administration and office expenses. 3.1 In appeal the Ld.CIT(A) allowed interest to the extent of Rs. 9,07,700/-, deleted the notional income of Rs. 10,21,815/- and allowed administrative expenses of Rs. 22,49,790/- and depreciation of Rs. 5,69,170/-. The Revenue filed an appeal before the Tribunal. The Tribunal confirmed the deletion of notional income of Rs. 10,21,815/-, disallowed the interest totally and gave directions to allow the expenses incurred by the assessee for earning undisclosed income. The Assessing Officer thereafter computed the revised income of the assessee at Rs. 16,38,620/- vide his order dated 07-05-2008. 3.2 The Assessing Officer thereafter initiated penalty proceedings u/s....
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....interest income has been utilised by the assessee for investment in his personal assets worth Rs. 59,78,282/-. Rejecting the various decisions cited before him the Assessing Officer levied penalty of Rs. 61,67,600/- u/s.158BFA (2) of the Income Tax Act. 5. In appeal the Ld.CIT(A) upheld the action of the Assessing Officer by holding as under : "5. I have carefully considered the contention of the appellant in the light of the facts of the case and provisions of law. The appellant's contention that his claim of interest of Rs. 90,77,000/- was bonafide and genuine based on the contractual obligation of the plot holders does not appear to be acceptable. As observed by the Assessing Officer in para 6 of his order that there is no evidence found at the time of the search with regard to the liability of the assessee for making any payment of interest to the plot holders. Copies of letter, on the basis of which, the appellant has claimed the existence of the said liability of interest of Rs. 90,77,000/-, were not found at the time of the search and therefore, no cognizance could be taken of the fresh evidence filed by the appellant during assessment proceedings of the block period.....
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....d by the assessee and not based on any document found during the course of search. Referring to the provisions of section 158B(b) he submitted that the words "or any expense, deduction or allowance claimed under this act which is found to be false" were inserted by the Finance Act, 2002 with retrospective effect from 01-07- 1995. He submitted that the date of search in the instant case is 29-08-2000 and the block period starts from A.Y. 1991-92 to part of 2001-02. Referring to the decision of the Mumbai Bench of the Tribunal (Third Member) in the case of Super Metal Industries Vs. DCIT reported in 119 ITD 153 he submitted that the Tribunal in the said decision has held that the expression "or any expense, deduction or allowance claimed under this act which is found to be false" not being there in section 158B(b) at the time of filing of the return on 31-05-2001, penalty u/s.158BFA(2) could not be validly imposed on the basis of certain disallowances of expenditure claimed and rejection of claim of set off of business loss. 6.1 Referring to the decision of the Kolkata Bench of the Tribunal in the case of Enfield Industries Ltd. Vs. DCIT reported in 107 ITD 1 he submitted that when ....
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.... from 01-07-1995 whereas the assessment years involved in the case of the assessee relates to block period 1991-92 and part of 2001-02 and the date of search is 29-08-2000 and the assessee filed return of income on 23-03-2001. Therefore, in view of the decision of the Mumbai Bench of the Tribunal (Third Member) in the case of Super Metal Industries (Supra) penalty u/s.158BFA(2) cannot be levied under the facts and circumstances of the case. 8.2 We find merit in the above submission of the Ld. Counsel for the assessee. We find the Mumbai Bench of the Tribunal (Third Member) in the case of Super Metal Industries (Supra) has observed as under (Short notes) : "First of all, a discretion is given to the AO to levy or not to levy the penalty. The reasoning of the AM that mere failure on the part of the assessee or the explanation given by the assessee was not satisfactory to the officer and that itself is sufficient to levy the penalty, particularly on the basis of facts in the instant case, is difficult to accept. As rightly noted by the JM, at the time when the assessee filed the return on 31st May, 2001, the section as it stood then was materially different from, as it exists now. ....