TaxTMI 
TaxTMI 
2005 (9) TMI 63
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....oppressive and punitive. The learned single judge dismissed the writ petition since the assessee had already challenged the penalty proceedings before the Assistant Commissioner. The learned single judge felt, the validity of section 158BFA also could be raised before the Commissioner, if so advised. The assessee took up the matter in appeal and obtained a stay of the proceedings. While the matter was pending before this court the appellate authority has already passed a final order imposing total penalty of Rs. 25 lakhs. The assessee has already taken up the matter before the Tribunal and the same is pending consideration. We are in this case concerned only with the legality of sub-section (2) of section 158BFA of the Income-tax Act ....
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....section 158BFA(2) of the Act was initiated on March 5, 1999, at the time of assessment for the block period April 1, 1986 to March 21, 1997. The Assistant Commissioner of Income-tax in the show-cause notice issued under section 158BFA(2) has stated as follows: "(a) You had claimed in your wealth statement that there was a cash balance of Rs. 11,50,000 as on April 1, 1986. It has now been established and has held by the Income-tax Appellate Tribunal that you had only a cash balance of Rs. 7,00,000 as on that date. The difference being the amount you claimed as available as cash balance, with an intention of evading tax payments, I propose to hold this amount as liable for penalty. (b) The interest income earned from bank deposits which....
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....ion extract section 158BFA(1) and (2) for easy reference. "158BFA.(1) Where the return of total income including undisclosed income for the block period, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of January, 1997, as required by a notice under clause (a) of section 158BC, is furnished after the expiry of the period specified in such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent. of the tax on undisclosed income, determined under clause (c) of section 158BC, for every month or part of a month comprised in the period commencing on the day immediately following the ....
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....e determined which is in excess of the amount of undisclosed income shown in the return." Counsel appearing for the assessee submitted that sub-section (2) of section 158BFA which provides for penalty on heavier terms is illegal and burdensome. Counsel submitted since block assessment covers a period of 10 years income assessed the tax demanded would be on the higher side and therefore if the assessee is compelled to pay huge disproportionate penalty at triple the tax demanded the financial equilibrium of the assessee's business would be affected. So also his right to carry on free trade and business. Counsel submitted that the levy is wholly burdensome and oppressive and punitive. Counsel also submitted that when penalty proceedings und....
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....IV-B consists of sections 158B to 158BH which was inserted by the Finance Act, 1995, so as to provide for an assessment of the undisclosed income detected as a result of the search, and is devised to operate in the separate field of undisclosed income and in addition to the regular assessments covering previous years in the block period. We are not prepared to accept the contention of the assessee that sub-section (2) of section 158BFA is oppressive or in any way violative of any article of the Constitution of India. There is no basis in that contention nor has he explained in the writ petition as to how article 25 is attracted in this case. Section 158BFA has been introduced in Chapter XIV-B which deals with special procedure for assess....