TaxTMI 
TaxTMI 
2009 (1) TMI 240
X X X X Extracts X X X X
X X X X Extracts X X X X
....d ITSSA No. 15/JDPR/2007 in respect of the block period for the assessment years 1996-97 to 2001-02, whereby the appeals preferred by the Revenue against separate but similar orders dated October 18, 2005, passed by the Commissioner of Income-tax (Appeals) (in short "CIT(A)" hereinafter) in the case of each of the respondent-assessees deleting the penalty imposed under section 158BFA(2) by the Assessing Officer (in short "AO" hereinafter), stands confirmed. 2. The respondent-assessees and one Shri Virendra Kumar Dosi are brothers, who are engaged in money-lending business jointly at Banswara. A search was conducted at their residential premises on January 3, 2002. The assessees filed their respective returns for the block period in respo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e finding that the difference between the assessed income and the returned income is not because of any concealment of income by the assessees or because of any inaccurate particulars of the income furnished by the assessees. According to the Commissioner of Income-tax (Appeals), the difference in opening capital claimed by the assessees and allowed by the Commissioner of Income-tax (Appeals) (in quantum appeals) was on account of different method and different calculation followed by the assessees. According to the Commissioner of Income-tax (Appeals), the assessees did not disturb the actual concealment of the income and accordingly offered undisclosed income on the basis of Neelgagan Diary seized during the course of search. Accordingly,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l involved prior to the block period and in the block assessments while computing the undisclosed income for the block period, capital possessed by the assessees prior to the block period as revealed from the ledger and the material seized during the search could not be treated as undisclosed income of the first assessment year in the block period. Accordingly, the order passed by the Commissioner of Income-tax (Appeals) deleting the penalty in case of each of the assessees has been confirmed by the learned Income-tax Appellate Tribunal by the order impugned in these appeals. 5. In these appeals, the appellants have suggested that the following substantial question of law arise out of the order passed by the learned Income-tax Appellate ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... learned counsel submitted that section 158BFA(3) only provides for reasonable opportunity being granted to the assessees before imposition of penalty but, in no manner it can be inferred from the provision that no penalty is leviable if the reasonable cause is shown, as it is in certain cases covered by the provisions of section 273B. Accordingly, it is submitted by the learned counsel that the penalty under section 158BFA in respect of undisclosed income determined by the Assessing Officer is automatic. 8. We have considered the submissions of the learned counsel for the appellant and also perused the record. 9. Since the controversy involved in these appeals rolls round the provisions of section 158BFA(2), it will be beneficial to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed with the power to direct the assessee to pay the penalty as specified in respect of the undisclosed income determined by the Assessing Officer under clause (c) of section 158BC, however, the Assessing Officer or the Commissioner of Income-tax (Appeals) is not empowered to impose the penalty in respect of the person who fulfils the conditions enumerated in the first proviso to section 158BFA. It is to be noticed that in the main provision providing for imposition of penalty, the word "may" has been used. It is settled law that the penal provision in the taxing statutes shall be construed strictly. From the plain reading of section 158BFA(2), it does not appear that in all the cases where the undisclosed income is determined by the Assessi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in holding that the provisions of section 158BFA(2) providing for imposition of penalty in respect of the undisclosed income determined by the Assessing Officer under clause (c) of section 158BC is discretionary and not mandatory. 13. Moreover, in the instant case, after due examination of the facts and the material on record, the Commissioner of Income-tax (Appeals) and learned Income-tax Appellate Tribunal have concurrently found that the difference of the undisclosed income assessed and the undisclosed income shown in the return does not relate to the block period as such. The Income-tax Appellate Tribunal has arrived at the finding that the assessees had claimed to give reduction of amounts calculated on reasonable basis on account o....