TMI Blog2007 (4) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... een brought on record by the AO that the assessee concealed any particulars of income. In our view, unless any positive concealment is found, no penalty is leviable on the addition made on estimate basis. While taking such a view, we are fortified by the decision in the case of CIT vs. Prem Das.[ 1999 (5) TMI 10 - PUNJAB AND HARYANA HIGH COURT] . In our opinion, the penalty u/s 158BFA(2) is almost in pan materia to s. 271(1)(c) of the IT Act, 1961, which relates to the concealment of income. The various Benches of the Tribunal have held that unless any positive concealment is found, no penalty is leviable on the addition made on estimate basis. In the case of Hari Gopal Singh vs. CIT [ 2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT] , held that where the assessment is made on estimate basis, no penalty u/s. 271(1)(c) can be imposed. Thus, we are of the considered view that, no penalty u/s 158BFA(2) of the IT Act, 1961 can be levied in this case. Accordingly we cancel the penalty levied by the AO and confirmed by CIT(A). In the result, the appeal is allowed. - H.L. KARWA J.M. AND S.V. MEHROTRA A.M. For the Appellant : Rakesh Garg For the Respondent : Anil K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fact, no paper was found at the time of search suggesting any profit earned or likely to be earned on undisclosed sales or in respect of net profit rate. He also submitted that no paper relating to expenses incurred was found at the time of search Shri Rakesh Garg, learned Counsel for the assessee also submitted that the AO has levied penalty on the difference between the income returned and income assessed. It was also stated by learned Counsel for the assessee that the CIT(A) has confirmed levy of penalty holding that the provisions of Section 158BFA(2) are mandatory. Shri Rakesh Garg, learned Counsel for the assessee submitted that the provisions of Section 158BFA(2) are not mandatory and automatic since the word may has been used in Section 158BFA(2) in contrast to the word shall used for levy of interest under Section 158BFA(1) of the IT Act, 1961. Reliance was placed on the following cases: (i) Smt. Mala Dayanithi v. Dy. CIT (2005) 92 TTJ (Bang) 270. In the above case it has been held that penalty under Section 158BFA(2) is not mandatory. The Tribunal further held that if the assessee offers a convincing reason or if a reasonable cause is demonstrated for non-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the income of the assessee has been confirmed upto the Tribunal level therefore, the AO was fully justified in levying the penalty under Section 158BFA(2) of the IT Act, 1961. He also relied on the following decisions: (i) Addl. CIT vs. Swatantra Confectionary Works (1976) 104 ITR 291 (All); (ii) CIT vs. Kedar Nath Ram Nath 1975 CTR (All) 13 : (1977) 106 ITR 172 (All); (iii) Addl. CIT vs. Lakshmi Industries Cold Storage Co. Ltd. (1983) 32 CTR (All) 195 : (1984) 146 ITR 492 (All). In view of the above, learned senior Departmental Representative submitted that the levy of penalty may be upheld. 7. In rejoinder, the learned Counsel for the assessee submitted that the decision relied upon by learned Departmental Representative are distinguishable on facts and, therefore, not applicable to the facts of the present case. He further submitted that recently the Hon'ble Allahabad High Court, in the case of CIT v. Raj Bans Singh (2005) 276 ITR 351 (All) held that from the findings recorded by the Tribunal that the assessee had not deliberately concealed the income, no penalty under Section 271(1)(c) of the Act was imposable. In the said case, the Tribunal held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timated by the DVO, there was no concealment attracting penalty under Section 158BFA(2) of the IT Act, 1961. In the instant case there was an estimate at the level of the AO as well as at the level of CIT(A) in respect of net profit rate. From the entire facts of the present case, it would be clear that the income of the assessee was estimated and nothing has been brought on record by the AO that the assessee concealed any particulars of income. In our view, unless any positive concealment is found, no penalty is leviable on the addition made on estimate basis. While taking such a view, we are fortified by the decision of Hon'ble Punjab Haryana High Court in the case of CIT v. Prem Das (supra). The relevant observations of Hon'ble High Court (at p. 236) are as under: We have heard learned Counsel for the Revenue and the assessee. It appears that the assessee had claimed deduction of expenses from the gross freight receipts in respect of his own trucks on estimate basis and had shown income from commission at 7 per cent of the gross receipts in respect of the trucks owned by others. The AO had allowed expenditure at 80 per cent. The CIT(A) allowed expenditure at 84 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (c) of Section 271(1) of the IT Act, 1961. In the instant case, the assessee applied a different net profit rate and the AO and CIT(A) adopted different estimates and, therefore, it could not be said that the assessee had concealed the particulars of his income so as to attract penalty under Section 158BFA(2) of the IT Act, 1961. The decisions relied upon by learned Departmental Representative are distinguishable on facts and, therefore, are of no help so far as Revenue's case is concerned. In the case of Raj Bans Singh (supra), the Tribunal came to the conclusion that it was a case of estimate against an estimate and there was no concealment and accordingly it was held that no penalty was imposable. On a reference, the Hon'ble Allahabad High Court held that no penalty under Section 271(1)(c) of the Act was imposable. 10. In view of the above discussion, we are of the considered view that on the facts and in the circumstances of the present case, no penalty under Section 158BFA(2) of the IT Act, 1961 can be levied in this case. Accordingly we cancel the penalty levied by the AO and confirmed by CIT(A). 11. In the result, the appeal is allowed. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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