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2014 (10) TMI 140 - AT - Income TaxComputation of income in block period – Undisclosed income and computation - Imposition of penalty u/s 158BFA(2) r.w. section 271(1)(c) – Held that:- Relying upon CIT vs. Ravi Kant Jain [2001 (3) TMI 52 - DELHI High Court] - undisclosed income in block assessments has to be determined on the basis of the seized material - for assessing an assessee for a block period there should be a search conducted u/s 132 - penalty impossible u/s 271(1)(i)(c) and penalty impossible on the undisclosed income in the block period, income for the block period has to be determined on the basis of material seized during the course of search - This material was to be supplied to the assessee before he could be asked to submit his return in response to the notice issued u/s 158BC meaning thereby the material goads any person to compute true undisclosed income - From that very material, true and undisclosed income has to be computed by the assessee and to be disclosed in the block return in response to the notice received u/s 158BC - there is a perceptional difference in the operative force of section 271(1)(i)(c) vis-à-vis section 158BFA(2) - The charge against the assessee u/s 158BFA(2) could be, why they failed to compute true disclosed income out of the seized material - whether the assessees have made a deliberate attempt to disclose nil undisclosed income or they have sufficient reasoning for forming belief that no undisclosed income is available in their hands which is to be disclosed in response to the notice received u/s 158BC. Whether at the time of filing the return, a man of ordinary prudence can form a belief that he has no undisclosed income on the basis of seized material supplied to him - Whether such formation of belief is a bonafide one having regard to the material on the record or it is merely a Performa explanation - It is to be kept in mind that if a claim was not made in the return, then the assessee would be foreclosing his right to dispute the claim and would accept the stand of the Revenue – in COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] making incorrect claim does not amount to concealment of particulars, because the assessee wants to take a particular stand on the given facts. It is true that admissions being a declaration against an interest are good evidence, but they are not conclusive and parties always at liberty to withdraw the admission by proving that they are either mistaken or untrue - In law retracted confession even may form the legal basis of addition, if the AO is satisfied that it was true and was voluntarily made - It is not strict rule of law but it is only a rule of prudence - As a general rule of practice, it is unsafe to rely upon the retracted confession without corroborative evidence - This situation is to be visualized in the background of intellectual compatibility of these two persons vis-à-vis the authorized officer who recorded the statement and who has cross examined the assessee being a trained Revenue Officer and a businessmen engaged in construction and development of properties - when he treated this income in the hands of the assessee on protective basis – AO himself was not sure that these are the income only assessable in the hands of the assessee and in the hands of payer it is to be allowed as business expenditure. When Revenue is not sure whether the payer has actually incurred the expenditure towards purchase of land, whether the capital gain is conclusively to be assessed in the hands of the assessee or it is a protective addition, then how it be expected from the layman to compute true undisclosed income equivalent to the amount ultimately determined by the AO in the assessment order – Decided in favour of assessee.
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