TMI Blog2016 (1) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso to section 158BFA(2). In the present case, the undisclosed income finally assessed at ₹ 42,59,151/- as per the consequential order passed by AO, giving effect to ITAT order. The assessee admitted a undisclosed income of ₹ 35,00,000/- in the block return. Thus, there was difference of ₹ 7,59,151/- in the assessed income in excess of returned income. The CIT(A), after considering the factual position and also considering the third member decision of ITAT Cochin bench in the case of DCIT vs. Heera Constructions Co P. Ltd [2009 (8) TMI 120 - ITAT COCHIN ], confirmed the penalty on this portion of undisclosed income. CIT(A) rightly deleted the penalty levied u/s 158BFA(2) by the AO on undisclosed income declared by the assessee in the block return and confirmed the penalty on undisclosed income determined by the AO in excess of undisclosed income shown in the block return. Hence, we inclined to up held the order of CIT(A). - Decided against revenue - I.T.(SS)A.No.2/Vizag/2013 - - - Dated:- 29-10-2015 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Appellant by : Shri G.V.N. Hari, AR For The Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returned income before filing the return of income. The A.O. further observed that the assessee firm could not adduce any reasonable cause for its failure to disclose the entire undisclosed income and pay taxes, therefore it is a fit case for levy of penalty. The assessee preferred appeal before the CIT(A) and challenged the levy of penalty. Before CIT(A), the assessee reiterated the submissions made before the Assessing Officer and argued against levy of penalty on assessed income and has not argued that penalty is not leviable at all on the merits of the case. During the appellate proceedings before the CIT(A), the assessee draw the attention of the CIT(A) on the second proviso to section 158BFA(2) and argued that penalty can be levied only on the undisclosed income determined over and above the undisclosed income declared in the block return. In support of its claim, the assessee relied upon the judgments of CIT vs. harkaran Das Ved Pal 222 CTR 38 and DCIT vs. Heera Constructions Co P. Ltd 125TTJ 589. The CIT(A) after considering the submissions, directed the Assessing Officer to levy penalty only on the undisclosed income assessed in excess of the undisclosed income declared i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l (2011) 336 ITR 8 (Delhi HC) DCIT vs. Heera Constructions Co P. Ltd 125TTJ 589 6. We have heard both the parties and perused the materials available on record. We also considered the case laws cited by the parties. The Assessing Officer levied the penalty u/s 158BFA(2) on the whole assessed income for the reason that the assesse failed to file the return for the block period within the date specified in the notice issued u/s 158BC and not paid the entire tax due on the admitted income before filing the return of income. The CIT(A) appeal deleted the penalty on the undisclosed income declared by the assessee and confirmed the penalty on undisclosed income over and above the returned and assessed income. The revenue contention is that, the first proviso to section 158BFA(2) is applicable, as the assessee does not fulfilled the two conditions stipulated by the section. The assessee contention is that no penalty can be levied on the undisclosed income assessed based on estimation basis, if at all penalty is leviable, it can be levied only on the portion of undisclosed income assessed over and above the returned income. Therefore, the CIT(A), rightly deleted the penalty on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The period of 30 days expired on 1-8-2003 but, the return was filed on 11-08-2003. Though there was marginal delay of 10 days in filing the return, the same was considered by the AO and completed the assessment based on such return and the assessee paid the taxes on the assessed income which is evident from the order giving effect to ITAT order. The assessee pleaded that, the delay in late filing of return and payment of taxes is unintentional. The assessee filed a letter along with return and requested for time to pay taxes as it is unable to mobilise funds for payments of taxes, the fact was not disputed by the revenue. The question whether there was a reasonable cause because of which, the requirement of relevant provisions could not be complied with is primarily essential question of fact and it has to be decided in each case on consideration of material placed before the concerned authority. Levy of penalty under s. 158BFA(2) is not automatic. Before levying penalty, the concerned officer is required to find out that even if there was any failure referred to in the concerned provision the same was without a reasonable cause. The initial burden is on the assessee to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , discussion of question whether conditions are satisfied or not will not serve any purpose. For this reason, I am not referring to the detailed reasoning adopted by the learned CIT(A) and learned AM for holding that on facts conditions of first proviso should be taken to be satisfied. Second proviso to s. 158BFA(2) is applicable to cases where the provision of the preceding first proviso shall not apply. Therefore, both provisos cannot apply to the case. However, the learned CIT(A) and learned AM tried to apply both the provisos. As they had allowed the benefit of sum of ₹ 79,10,182 shown by the assessee as undisclosed income in the return, the matter in my view is fully governed under second proviso to the statutory provision. There is no question of application of main provision of sub-s. (2) for imposing penalty even on the undisclosed income shown in the return in Form No. 2B. The case before me is fully covered by the second proviso to the sub-section. It is settled law that penal provisions are required to be construed strictly and nothing, which is not provided, can be assumed. The conditions/circumstances required to be satisfied for application of first proviso cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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