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2008 (7) TMI 449 - AT - Income TaxPenalty levied u/s. 158BFA(2) - Assessment made after search and seizure operation - Income earned over and above the income recorded in the books of account - ingredients of s. 271(1)(c) can be read into s. 158BFA(2) - HELD THAT:- The argument that the penalty cannot be levied on estimated income, it may be mentioned that the assessee did not furnish the particulars of undisclosed income on the basis of seized material and only nil income was returned. The facts of the case of Smt. Bitoli Devi are quite distinguishable as she had estimated the income at 3.3 per cent against 4 per cent determined by the learned CIT(A). Thus, it was a case of enhancement of the estimate rather than one of making an estimate on the basis of available facts against the nil income returned by the assessee. The Tribunal relied, inter alia, the decision in the case of Smt. Mala Dayanithi, in which it was held that the assessee had co-operated with the AO in the course of assessment leading to the inference that no fault could be found with her. Such is not the case here. In absence of the possibility of correctly computing the income, the authorities will have no alternative but to estimate the income, which is permitted by the statute. In fact, there is no difference in this matter in an assessment made under s. 143(3) or made in the manner provided under s. 144. In this case, such estimate was also put to test and the order of the Tribunal in this case has become final. The penalty has been levied on the basis of the order of the Tribunal. Therefore, we are of the view that on the facts and in the circumstances of the case, penalty could be levied on increase in the undisclosed income even if it was on account of estimation made by the Revenue authorities and the Tribunal. There is a clear finding of the Tribunal that the assessee earned income over and above the income recorded in the books of account. The evidence to this effect was found in search and yet the assessee filed nil return. Therefore, the Revenue authorities were justified in computing the undisclosed income. Obviously, the assessment was made after search and seizure operation and the assessee was aware of the evidence available against it. Yet, the assessee chose to file nil return, which shows that the return was not bona fide. Therefore, even if it is assumed that all ingredients of s. 271 (1)(c) are applicable, such ingredients are satisfied in the instant case. Therefore, it is held that the levy of penalty was justified in this case. Accordingly, the appeal of the assessee is dismissed.
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