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2016 (7) TMI 957 - HC - Income TaxPenalty leviable under Section 158BFA(2) - whether the penalty proceedings initially started by the assessing officer for an undisclosed income of a sum of ₹ 491.50 lakhs should be allowed to continue for the sum of ₹ 37 lakhs which has ultimately been found to be the undisclosed income of the assessee? - Held that:- There was some sort of understanding between the department and the director of the assessee company as to the person who should disclose the income on the basis of the documents seized. The picture which emerges is that after the search and seizure, the revenue itself was unable to make up its mind as to whether the undisclosed income belonged to the company/assessee or to the director Sri S.N. Shroff. There was in those circumstances an understanding arrived at between the parties on the basis whereof the director made a disclosure of ₹ 2.16 crores whereas the company filed a nil return. Ultimately the undisclosed income of the director was assessed at ₹ 2.02 crores approximately and undisclosed income of the company was assessed at ₹ 37 lakhs. Both the CIT(A) and the Tribunal were of the opinion that in the facts of the case no penalty should be levied upon the company. The understanding arrived at between the revenue, the company and the director has not been disproved nor is that finding assailed. Imposition of penalty, when returns of undisclosed income were filed in consultation with the revenue, would certainly have been inequitable. Question formulated at the time of admission of the appeal is answered in the affirmative and in favour of the assessee
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