Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 1000 - AT - Income TaxPenalty levied u/s.158BFA(2) - additions towards undisclosed income has been sustained in the hands of the assessee purely on estimated basis - whether penalty u/s 158BFA(2) is justified where alleged undisclosed income was finalized on the basis of estimation alone - Whether the payment of interest under s.158BFA(1) is mandatory, levy of penalty is discretionary? - whether penalty u/s 158BFA(2) is justified where alleged undisclosed income was finalized on the basis of estimation alone? - whether penalty should be levied must be considered on the basis of the judicial determination? - HELD THAT:- Authority concerned is vested with the discretion towards levy of penalty. It is trite position of law that any discretion vested in an authority has to be exercised in a reasonable and rational manner depending upon the facts and circumstances of each case. It is also trite that the process of imposition of penalty is not automatic in the eventuality of estimated income. All the attendant circumstances of the case requires to be carefully scrutinized. The question whether penalty should be levied must be considered on the basis of the judicial determination. It must be proved beyond the shadow of doubt that there was actually income and further such income was not disclosed. The mere fact of addition on estimated basis particularly when the undidsclosed income is concluded on the inference flowing from the inability of the assessee to establish the case pleaded by him, will not be sufficient for the purpose of imposition of penalty. An estimation so made may be correct or may not be correct. The degree of proof required for imposition of penalty is quite different from and is on a much higher pedestal, then required for the purpose of making additions on estimated basis and de hors sufficient evidence, penalty cannot be levied. Such view has been expressed in CIT vs. Dr.Giriraj Agarwal Giri [2012 (8) TMI 617 - RAJASTHAN HIGH COURT] and CIT vs. Becharbhai P.Parmar [2012 (4) TMI 418 - GUJARAT HIGH COURT] relied upon on behalf of the assessee. Undisclosed income has been ultimately determined purely on estimated basis shorn of adequate reference to underlying material. The estimation has been made with caveats like “ to put an end to the litigation “ and “meet the ends of justice in the given peculiar facts etc”. Such basis of addition, in our view, cannot entail onerous burden in the form of penalty. In the circumstances, the statutory discretion vested with the revenue authorities, in our opinion, requires to be exercised in favour of assessee. Therefore, we set aside the order of the CIT(A) and direct the AO to cancel the penalty imposed under s.158BFA(2) - Appeal of the assessee is allowed.
|