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2006 (8) TMI 232 - ITAT CALCUTTA-DBlock Assessment in search case - penalty imposed u/s 158BFA(2) - search and seizure operation - difference between the loss declared in the return u/s 158BC and the income determined in the block assessment order - whether the direction of the CIT(A) for enhancing penalty and Assessing Officer's passing of consequential order giving effect of the said order was justified or not? - HELD THAT:- It is established without any ambiguity that in the instant case the Department was not able to establish either conscious and deliberate concealment of income or deliberate furnishing of inaccurate particulars of income by the assessee. The block assessment was made primarily on the basis of income disclosed in the disclosure petition. The Assessing Officer only made some intangible/ad hoc additions. Undoubtedly the income was disclosed by the assessee after considering all the relevant books and documents including the voluminous seized material could at the time of search. But for the co-operation extended by the appellant by voluntarily disclosing its correct income, it would have been extremely difficult for the Department, if not impossible, to determine the correct income from the loads of seized papers. Thus, it could not be said that the appellant-company deliberately concealed particulars of its income or deliberately furnished inaccurate particulars thereof. In order u/s 158BFA(2), which we have quoted earlier, the Assessing Officer categorically stated that the assessee did not deliberately conceal his correct income to the extent of Rs. 14,25,052 implying thereby the correctness of the aforesaid assertion of the appellant, which the CIT(A) doubted for the unfounded reasons discussed above. In the order, the CIT(A) did not give any cogent reasons for not accepting such finding of the Assessing Officer. The other officials of the Department also appeared to accept the fact of conditional disclosure made by the appellant through their various actions. The penalty order was passed by the Assessing Officer with the approval of the Addl. CIT. The CIT, had also acknowledged the contents of the disclosure petition submitted to him, as his letter apparently implies. Thus, apart from the CIT(A), all other concerned officials of the Department accepted the letters of the appellant, addressed to the Dy. CIT and the CIT, respectively, as incorporating the conditional disclosure of income made by the assessee. Merely because the Department did not reply to the letters referred to above would not negate the fact that the assessee did make a conditional disclosure, which was acted upon by the Department. As far as the fourth ground is concerned, as the cost of repetition, the appellant never said that the disclosure petition filed by it should be construed as a revised return. All it sought to do by filing the disclosure petition was to make good the deficiencies in the block return filed by it, which crept in because of non-completion of accounts due to frequent searches by various Government agencies, non-receipt of the copies of the voluminous seized material and resultant complexity in determining the true income. From the conduct of the assessee and evidentiary documents placed on record, it is established that the declaration of additional income was to co-operate the Department to complete error-free block assessment at the best possible manner. Thus, we have no hesitation to hold that the CIT(A) was not justified in enhancing the quantum of penalty.
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