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TMI Blog2013 (9) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income assessed on the basis of Exts. 12 and 13 of page Nos. 238 and 306 respectively the amount stands credit in the account of Prashant Jewellers in the books of Shri Sohan Lal Prakash Chand showing sales amount which represented amount of unexplained investment in purchases and profit earned thereupon as discussed on page Nos. 1 and 10 1998-99 7,44,947 1999-2000 1,26,989 (3) Undisclosed income assessed on the basis of Ext. 1 Annex. A page Nos. 3, 4 and 12 as discussed on page No. 10 1999-2000 4,08,077 Undisclosed profit on estimate basis as discussed on page No. 11 1999-2000 15,00,000 Total undisclosed profit 27,95,013 3. Since undisclosed income assessed was in excess to the undisclosed D. income shown in the return of income filed in Form No. 2B, therefore, penalty proceedings under sec. 158BFA(2) of the Act were initiated and the assessee was asked to show cause as to why an order for imposing penalty under sec. 158BFA(2) of the Act should not be made after giving effect to the appellate order of Tribunal, Jodhpur Bench, Jodhpur. In response to the above, assessee submitted to the AO as under : "(A) Before submitting against the levy of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hpur had decided one of the issues in favour of the Department i.e. confirmed the addition by the AO but it appears that true and correct facts were not brought and properly explained before the Tribunal. Specifically the fact that this income had already been assessed in the hands of search persons also. Aggrieved with the order of the Tribunal, the assessee has preferred to file MA (miscellaneous application) against such order before the Tribunal, as well as the assessee has also preferred to approach the High Court in the manner : (B) Under the above facts and circumstance of the case the penalty proceedings at your end is being objected on the following legal grounds as well as on merits : (1) The penalty under sec. 158BFA(2) cannot be imposed in this case on the basis of notice issued on 21st March, 2002. The issue of notice for levy of penalty under sec. 158BFA(2) before finalization of quantum of income and without recording of satisfaction of deliberate concealment of income or furnishing of inaccurate particulars by the assessee. As no satisfaction about concealment being found recorded in the order of assessment served on the assessee, an order imposing penalty under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actually earned by the assessee. Therefore, whatever might be the claim of the AO in the assessment no part of sustained addition could be regarded real undisclosed income of the assessee, which would qualify for levy of penalty under sub-s. (2) of sec. 158BFA of the Act. (iv) In this case, the learned CIT(A) has rightly deleted the additions, but there is no doubt certain additions, which were made by the AO in the assessment order were upheld by the Tribunal. The penalty under sub-s. (2) of sec. 158BFA is optional unlike the interest chargeable under sub-s. (1) since the word used in sub-s. (2) is 'may' unlike the word 'shall' used in sub-s. (1). Hence, levy of penalty is unwarranted in this case looking the overall facts and circumstances of the case. The discretion may be used in favour of assessee judiciously. (v) The levy of penalty by now is barred by limitation of time allowed of such levy. (C) Without prejudice to our above legal arguments against the levy of penalty on merits too we have to respectfully submit as under : As regards the addition sustained by the Tribunal on account of unexplained investment, the learned AO has not in assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de its appellate order dt. 22nd Sept., 2006. These were to be disclosed by the assessee in his return of income. (b) The difference in block return cannot be said due to inadvertence in taking up the photocopies of the seized papers. As a result of addition sustained of Rs. 8,71.935 to the declared undisclosed income at nil after giving appeal effect to the order of Hon'ble Tribunal penalty under sec. 158BFA(2) is leviable. The relevant portion of section is as under : SECTION 2 '..........Where the undisclosed income determined by the AO is in excess of the income shown in the return and in such cases the penalty shall be imposed on that portion of undisclosed income determined which is in excess of the amount of undisclosed income shown in the return.' On careful analysis of sec. 271(l)(c) vis-a-vis sec. 158BFA, it transpires that objective satisfaction of AO requiring concealment of income is necessary in proceedings under sec. 271(1)(c). The words 'if the AO in the course of any proceeding under the Act is satisfied that any person has concealed......' as prevalent in sec. 271(l)(c) are missing in sec. 158BFA of the Act. The only requirement for levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006, finally the undisclosed income was determined at Rs. 8,71,935, which was considered by the AO as concealed income and penalty of Rs. 5,23,160 being 100 per cent of the tax leviable was imposed. He further observed that the only requirement for levy of penalty under sec. 158BFA(2) of the Act was that non-disclosed income determined by the AO was in excess of the income shown in the return. He further observed that AO had correctly held that the assessee had concealed the income to the extent of Rs. 8,71,935 and was justified in imposing penalty of Rs. 5,23,160. Accordingly, penalty levied by the AO was confirmed. Now, assessee is in appeal. 6. Learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that against the order of Tribunal dt. 22nd Sept., 2006, assessee preferred a miscellaneous application, wherein mistake relating to the addition on account of total sales out of the books of account was rectified and only GP rate on the undisclosed sales was directed to be added on estimate basis. It was also submitted that now the addition remained only on estimate basis, therefore, the penalty under sec. 158BFA(2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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