TMI Blog2011 (11) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDGMENT Akil Kureshi J.- 1. The assessee has challenged the judgment of the Income-tax Appellate Tribunal, Ahmedabad ("the Tribunal" for short), dated May 14, 2010, wherein, the following substantial questions of law are raised for our consideration : "(A) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in confirming the penalty of Rs. 1,83,600 levied under section 158BFA(2) of the Income- tax Act, 1961, in respect of addition of Rs. 3 lakhs towards unaccounted investment directed by the Appellate Tribunal in quan- tum appeal ? (B) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in confirming t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclared by the assessee by Rs.18.71 lakhs, the Assessing Officer also initiated penalty proceedings under section 158BFA(2) of the Act. Notice for such purpose was issued. 4. While the penalty proceedings were going on, the assessee carried the additions made by the Assessing Officer in further appeal. Ultimately, the Tribunal, by order dated March 6, 2009, maintained the addition of Rs. 3 lakhs over and above what was declared by the assessee in the return. 5. On the basis of such addition confirmed by the Tribunal, the Commis- sioner of Income-tax (Appeals) passed the final order of penalty under sec- tion 158BFA of the Act on October 29, 2009. He imposed minimum penalty of 100 per cent. as provided under section 158BFA of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account at Rs. 3 lakhs. Though this income has been estimated but estimate made is fair and reasonable looking to the amount of sales made, which is not recorded in the books of account. In our considered opinion, the income, which is detected as a result of search operation under sec- tion 132 is undisclosed income of the assessee within the meaning of section 158BFA(2) of the Act. With regard to the contention of the assessee that the assessee has correctly disclosed the total sales, we may point out that the assessee has not disclosed the initial invest- ment as undisclosed income. Therefore, the correct income of the assessee cannot be computed without making the addition on account of cost incurred by the assessee in making init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The penalty could not have been sustained in view of such changed circumstances since the initiation was on some other basis. In this regard, reliance was placed on the decision of a Division Bench of this court in the case of CIT v. Lakhdhir Lalji reported in [1972] 85 ITR 77 (Guj). 8. From the record, however, we find that pursuant to search operation, block assessment proceedings were initiated in the case of the assessee- firm. The assessee made certain disclosure of income for the block period, which income was hitherto not offered to tax. While framing the assess- ment, certain further additions were made by the Assessing Officer. Portion of additions were confirmed by the Tribunal. The Tribunal confirmed the additional income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income determined which is in excess of the amount of undisclosed income shown in the return." 10. If we analyse the provisions contained in sub-section (2) of section 158BFA, it would appear that penalty not less than the amount of tax leviable but not exceeding three times the amount of tax so leviable in respect of the undisclosed income determined by the Assessing Officer under clause (c) of section 158BC of the Act is envisaged. The first proviso to sub-section (2) of section 158BFA, however, provides that no order imposing penalty shall be made if the conditions (i) to (iv) therein are satisfied. In essence, no penalty would be imposed if the assessee furnishes return of income ; pays or offers tax by way of adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. We may recall that under section 158BFA(2) of the Act, penalty proceedings would arise while the Assessing Officer had assessed income for the block period in excess of the income declared by the assessee. 13. In the present case, as already noted, addition of Rs. 3 lakhs was con- firmed by the Tribunal over and above the income declared by the assessee for the block period in question. The Assessing Officer, therefore, imposed penalty which was confined to such addition. We do not find the Assessing Officer committed any error in imposing such penalty or the Tribunal in confirming the same. 14. The decision of this court in the case of Lakhdhir Lalji [1972] 85 ITR 77 (Guj) was rendered in the background of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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