TMI Blog2013 (9) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... ner in the firm Prashant Jewellers, which was engaged in the business of trading in gold and silver ornaments. The assessment in this case was framed under sec. 158BFA(2) (sic-158BC) of the Act on total undisclosed income of ₹ 27 95,013. The year-wise income was determined as under : Particulars Asst. yr. Amount (1) Undisclosed income from business as discussed at p. 14 1989-90 15,000 (2) Undisclosed 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 Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) Central had also appreciated the fact that the assessee had declared and offered undisclosed income for taxation during the course of survey in the relevant assessment year. Further, the income in question arrived at by appreciating the noting on registers (Exts. 12 and 13) and diary (Ext. 1 of the Annex. A) found during the course of search from the possession of searched persons have already been considered in the hands of search persons also as is reflected from their assessment under sec. 158BC of both persons. The addition of income in the hands of the assessee tantamounts to double taxation of the same income once in the hands of searched persons and secondly in the hands of the assessee. No doubt, the Hon'ble Tribunal, Jodhpur Bench, Jodhpur 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 orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at both assessment and penalty proceedings are scparate and independent proceedings though the reasoning given in the assessment order constitutes evidence and base for levy of penalty under sec. 158BFA(2). However, the findings recorded in the assessment are not conclusive for the purpose of levy of penalty under sec. 158BFA(2). In the present case the true and real facts were not brought before the notice of Tribunal. The assessee is prepared to explain the true and real facts in the penalty proceedings to your Goodself. Quantum proceedings and penalty proceedings being altogether different penalty under sec. 158BFA(2) cannot be levied simply on account of the fact that an addition has been sustained in quantum appeal. According to us, there was no such income 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty under sec. 158BFA(2). The very expression of concealment implies that it must show mala fide intent on the part of the assessee to hide or suppress his income with a view to evade tax. Hence, this also appears to be a bona fide Explanation and penalty was not leviable in this case. Therefore, the penalty under sec. 158BFA(2) is not excisable/leviable in this case even on merits. Therefore, it is respectfully requested that the penalty proceedings so initiated may please be dropped. 4. The AO, however, did not find any merit in the Explanation given by the assessee and observed as under : (a) The addition made to the extent of ₹ 7,44,947 for asst. yr. 1998-99 and ₹ 1.26,989 for asst. yr. 1999-2000 as stated above were confirmed by the Hon'ble Tribunal vide 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 ₹ 8,71.935 to the declared undisclosed income at nil after giving appeal effect to the order of Hon'ble Tribunal penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income and liable for penalty under sec. 158BFA(2) of the Act. The penalty imposable is @ 100 per cent of amount of tax leviable i.e. ₹ 5,2j3,160 to 300 per cent i.e. ₹ 15,69,480 in the facts of the case. I impose penalty of ₹ 5,23,160 which is equal to amount of tax leviable as per provisions of sec. 158BFA(2) of IT Act after providing him due and reasonable opportunities of being heard to the assessee as discussed above in this penalty order. Charge penalty of ₹ 5.23,160 under sec. 158BFA(2) of the Act for asst. yrs^ 1989-90 to 1998-99 and upto 18th Dec, 1998. 5. Being aggrieved, assessee carried the matter to the learned CIT(A), who observed that after travelling through the appeal channel and giving effect to the order of Tribunal, Jodhpur Bench, Jodhpur dt. 22nd Sept., 2006, finally the undisclosed income was determined at ₹ 8,71,935, which was considered by the AO as concealed income and penalty of ₹ 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO imposed the penalty on so-called three items of so-called concealed income. Each item was examined, thoroughly and in detail, by the CIT(A) as well as the Tribunal and by a reasoned order, both came to a conclusion that additions are based on estimation only. A fact or allegation based on estimation, cannot be said to be correct only, it can be incorrect also. Therefore, in the facts and circumstances of the case, penalty was wrongly imposed by the AO. In these circumstances, we find that the judgment of Hon'ble Apex Court, referred by the learned counsel for appellant, is not applicable, in the facts and circumstances of the present case. 9. On a similar issue, the Tribunal, Jaipur Bench, Jaipur in the case of Sadhu Ram Goyal (supra) held that the Tribunal having confirmed the addition made by the AO on account of estimated gross profit merely on the basis that the entries found in the ledger account found in the possession of the third party pertains to the assessee and not on the basis of any material found in the possession of the assessee during the search, penalty under sec. 158BFA(2) of the Act was not leviable. In the present case also, since the remaining add ..... X X X X Extracts X X X X X X X X Extracts X X X X
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