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2017 (5) TMI 709 - AT - Income TaxLevy of penalty u/s 158BFA(2) - assessment u/s 158BC - whether the penalty is not legally tenable as the expenses were not covered in the definition of undisclosed income prior to the amendment of undisclosed income in section 158B(b) of the Act by the Finance Act, 2002, retrospective from July 1, 1995? - Held that:- In sub-section 158B(b) of the Act, the last phrase inserted by the Finance Act, 2002 with retrospective effect from July 1, 1995, "or any expense, deduction or allowance claimed under this Act which is found to be false", whereas the block return was filed by the assessee only on June 7, 2000 when the definition of undisclosed income did not include any item pertaining to expense, deduction or allowance which is found to be false. These items got included in the undisclosed income only by the Finance Act, 2002 though retrospective from July 1, 1995, but on the day the assessee filed its return of income the amended provision did not exist. According to us the amended provision will not apply to the present case. As at the time of filing of the block return by the assessee, the assessee was not obliged to declare the expenses in the return particularly when no material or evidences was found relating to these expenses (except the statement of the CEO which was retracted) in the course of search on the business premises of the assessee. Thus we reverse the orders of the lower authorities and the penalty levied under section 158BFA(2) of the Act on this jurisdictional issue. - Decided in favour of assessee.
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