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2015 (11) TMI 1440 - ITAT DELHI

2015 (11) TMI 1440 - ITAT DELHI - [2015] 44 ITR (Trib) 11 (ITAT [Del]) - Levy of penalty u/s 158BFA(2) - Held that:- When there is a bona fide surrender, undisclosed income is computed merely on the basis of such surrender, that too in the block period on lump sum basis, no penalty would be imposable u/s 158BFA(2) of the Act because there is no determination of undisclosed income by the assessee under clause (c) of Section 158BC which is the requirement for imposition of penalty. See CIT vs Hark .....

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m the undisputed facts and circumstances of the case, it is proved that when the assessee has voluntarily accepted the undisclosed income bona-fidely for the purpose of buying peace of mind and to avoid protracted litigation, no independent determination of undisclosed income as per Section158BF(c) and Section 158BB(1) of the Act has been a made, there is no question of imposing penalty u/s 158BFA(2) of the Act. - Decided in favour of assessee. - I.T. (SS). No.14 /Del/2011 - Dated:- 13-10-2015 - .....

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t: The Ld. CIT(A) has erred both on facts and in law in confirming the levy of penalty of ₹ 2,27,491/- u/s 158BFA(2) of the I. T. Act, 1961. 2. Briefly stated, the facts of this case are that the assessee, Director in various companies running in the name and style of M/s. Shri Gopal Vanaspati Ltd., M/s. Shyam Sunder Vanaspati Ltd. and M/s. Sagar International (P) Ltd. was searched u/s 132 of the Act on 13th Feb., 2003. Incriminating material in the shape of electricity bills, purchase bil .....

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(2) of the Act. 3. The assessee challenged the penalty order by filing appeal which has been dismissed vide the impugned order. Feeling aggrieved, the assessee has come up before the Tribunal by filing the present appeal. 4. The Ld. Authorized Representative for the assessee, challenging the impugned order contended inter alia that the penalty proceedings have been completed by the A.O. in a haste manner i.e. within a period of 23 days and sufficient time has not been given to the assessee for c .....

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has been a regular assessee in ward No.32(3) in Calcutta where he has been filing his income tax return from the Assessment Year 2001-02 onwards and that when the assessee has explained the seized material the burden of the assessee stands discharged and to initiate penalty proceedings u/s 158 BFA(2) of the Act income of each of the Previous year needs to be computed separately but the A.O. has computed the undisclosed income in lump-sum without identifying the income of the relevant Assessment .....

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come, he is not entitled to claim shortage of time as a ground to file the return; that the assessee has not challenged the finding of facts and as such appeal is liable to be dismissed. 6. We have heard Ld. authorized representatives of both the parties, gone through documents relied upon in the light of facts and circumstances of the case. 7. Primarily, the Ld. A.R. concentrated his arguments on the fact that the A.O. has not given sufficient time to the assessee for compliance to file the ret .....

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nd assessee was confronted with the seized material on 25.05.2005. Application for providing photocopies of seized documents was filed on 16.08.2005 and consequently copies were supplied on 06.10.2005. 9. No doubt, A.O. u/s 158BC(2) is empowered to serve a notice in respect of search initiated to such person requiring to furnish within such time not being less than 15 days but not more than 45 days, but the chronology of the facts of this case goes to prove that 12 documents / things were seized .....

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t 2 years to complete the assessment and expected the assessee to file return within 15 days. Not only this, copies of seized record by the A.O. have been supplied to the assessee on 06.10.2005 i.e. after 8 months after the expiry of period of filing the return as recorded in para 5.4 of Ld. CIT(A) s order. So it is improbable to expect the assessee to file the return within a period of 15 days. 10. So, we are of the considered view that the A.O. has not given sufficient time to the assessee to .....

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there is no reasonable cause for non imposition of penalty. 12. The contention of Ld. D.R. that when the assessee voluntarily accepted the undisclosed income, he is not entitled to claim paucity of time to file return of income, is not tenable, in view of the settled principle of law that penalty proceedings u/s 158 BFA(2) are akin to Section 271(1)(c) proceedings and the burden is on the Department to prove the factum of concealment, though the assessee has voluntarily accepted the undisclosed .....

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of ₹ 1,00,000/-. In the face of the fact that undisclosed income was assessed to ₹ 3,61,097/-, such items appear to have lost sight of assessee to bring the same to tax as the same have been purchased within a period of about eight years as the last payment of ₹ 70,000/- as per seized documents was paid in cash in August, 1995. 13. Ld. Counsel for the assessee by relying upon the judgement cited as Chain Sukh Rathi Vs CIT 270 ITR 0368 contended that tax exemption limit has to b .....

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ase has arbitrarily computed he undisclosed income of the block period at ₹ 3,61,097/- on lump-sum basis in a single block period whereas he was required to compute the year-wise income in the assessment order as well as in the penalty order, which is not permissible under law. 15. Hon ble jurisdictional High Court in the judgement cited as CIT vs Harkaran Das Ved Pal in I.T.A. No. 1005 of 2007 decided on 12th November 2008 held in para 22 as under: 22. In the present case, we find that th .....

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irst instance for the transactions of the whole year. The Tribunal also found that even the estimate of 1% net profit was mere guesswork. On the basis of these facts it is apparent that the undisclosed income has been computed merely on the basis of the surrender made by the assessee in the course of the block assessment proceedings. De-hors the surrender, there is no evidence which could have been said to have been found as a result of the search and, therefore, the computation of undisclosed i .....

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puted merely on the basis of such surrender, no penalty would be imposable under Section 158 BFA (2) of the said Act. This would be because there is no determination' of undisclosed income by the assessee under clause (c) of Section 158 BC which is the requirement for imposition of penalty. The sum and substance of all this is that, had there been no surrender, the Assessing Officer could not have determined the undisclosed income inasmuch as the Tribunal has returned a finding of fact that .....

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u/s 158BC(c) or by 158BB of the Act. So, when there is a bona fide surrender, undisclosed income is computed merely on the basis of such surrender, that too in the block period on lump sum basis, no penalty would be imposable u/s 158BFA(2) of the Act because there is no determination of undisclosed income by the assessee under clause (c) of Section 158BC which is the requirement for imposition of penalty. 17. Even a bare perusal of seized material referred to in para 3 of the penalty order, sho .....

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