TMI Blog2010 (7) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... was in instalments in pursuance to the notice issued, as there is a cash crunch, he has paid the tax subsequently. When the tax payable on the undisclosed income under section 113 of the Act is 60 per cent it takes care of many factors. - Tribunal in his jurisdiction was justified in setting aside the order of penalty. Though we do not agree with the reasoning of the Tribunal that the provision does not contemplate the nature of the offence for coming to the conclusion that penalty is not leviable, in this case it is not necessary for us to go into the correctness or the legality of the said finding as the assessee is entitled for relief on the merits of the case. - 2571 OF 2005 - - - Dated:- 21-7-2010 - N. KUMAR AND MRS. B.V. NAGARATHN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the AO. Aggrieved by the same, the assessee preferred an appeal before the Tribunal, Bangalore Bench. The Tribunal held that the penalty proceedings are not legal as sub-section (2) of section 158BFA does not provide for circumstances justifying levy of penalty. The proviso which deals with imposing penalty is in the nature of exception. The entire provision does not contemplate the nature of the offence and therefore, no penalty could be imposed under section 158BFA(2) of the Act and therefore, the appeal was allowed. Penalty imposed was set aside. Aggrieved by the said order, the Revenue is in appeal. 3. The appeal came to be admitted on 2nd Jan., 2007 to consider the following substantial questions of law : "(i) Whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable to the facts of the present case which would result in cancellation of penalty and that the proviso granting exceptions cannot act as a main rule imposing penalty. (v) Whether the Tribunal was correct in holding that since the Budget Speech of the Finance Minister while introducing the Finance Bill, 1995 and also the CBDT Circular No. 717, dt. 14th Aug., 1995 [1995] 127 CTR (St) 21 do not throw any light on the nature of offence on which penalty is imposable under section 158BFA(2) of the Act and therefore, no penalty can be levied. (vi) Whether the Tribunal was correct in interpreting the provisions of section 158BFA(2) of the Act in such a manner that it would nullify the provisions and make it otiose when such a jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome for the block period in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of January, 1997, as required by a notice under cl. (a) of section 158BC, is furnished after the expiry of the period specified in such notice, or is not furnished, the assessee shall be liable to pay simple interest @ one per cent of the tax on undisclosed income determined under cl. (c) of section 158BC for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time specified in the notice, and (a) where the return is furnished after the expiry of the time aforesaid, ending on the date of fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If the condition prescribed under the first proviso is complied with by the assessee, the question of exercising discretion would not arise and the AO has no power to impose penalty. The second proviso is attracted in a case where, if the undisclosed income as assessed by the AO is more than the undisclosed income as declared by the assessee, the penalty is payable only on the difference amount. 8. In the instant case, the question is as to whether, in the facts of the case, a penalty is liable to be imposed or not. 9. In the order passed by the AO, no reasons are assigned for imposing penalty. Penalty is imposed because the assessee has not complied with the conditions stipulated in the first proviso. That cannot be the reason for imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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