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2016 (7) TMI 55 - GUJARAT HIGH COURT

2016 (7) TMI 55 - GUJARAT HIGH COURT - TMI - Penalty u/s 158BFA (2) - Held that:- The levy of penalty u/s.158BFA(2) in the context of the facts discussed above is not justified. The facts are on record. The appellant makes certain claims about deductions, exemptions and inclusions in the declared undisclosed income. These claims are to be processed in the course of assessment proceedings resulting in acceptance and rejection of claims. The rejection of claim does not make it mandatory to levy pe .....

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by the ITAT in ITA No.30/RJT/2005 whereby the appeal of the revenue came to be dismissed and confirmed the order dated 28/01/2005 passed by the CIT (Appeals), Rajkot. 2. The short facts of the case are that respondent was doing business of gold and a search operation was carried out under Section 132 of the Income Tax Act at the business and residential premises on 12/01/1999 and during the said search operation, gold weighing 28,116 Kg valued at ₹ 1,24,85,982/- was recovered from the resi .....

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eferred an appeal against the order passed by A.O. before the Commissioner of Appeals which was partly allowed. 2.2 Against the said order of CIT (Appeals), the assessee as well as the revenue have also preferred an appeal before the ITAT wherein appeal of the revenue was dismissed and appeal of the assessee was partly allowed, however the ITAT confirmed the addition of ₹ 42,15,287/- . 2.3 That thereafter since the A.O. found that the assessee had concealed the income and furnished inaccur .....

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A.O., the assessee preferred an appeal before the CIT (Appeals) which came to be allowed and penalty imposed upon the assessee came to be deleted by order dated 28/01/2005. 2.5 The Revenue, being aggrieved by the said order dated 28/01/2015 preferred an appeal before the ITAT which has dismissed the appeal of the revenue by order dated 27/03/2008 which has given rise to the present tax appeal. 3. While admitting the appeal, the following substantial question of law has been framed: Whether on t .....

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nclusion that it has been established that the assessee did not disclose the true and correct income by not filing the regular return of income and further the assessee has never filed his return of income and therefore the penalty proceedings under Section 158BFA(2) are attracted. 5. Learned Counsel for the respondent has submitted that the CIT (Appeals) while considering the issue has discussed the issue in detail at paragraph Nos.6.1 and 6.2 which has been confirmed by the ITAT and therefore .....

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concealment of the income, since the assessment order is based on facts which cannot be concealed an are in fact not concealed in the return for the block period filed by the appellant. It appears that the penalty order is passed with the presumption that penalty is leviable as soon as the undisclosed income determined by the Assessing Officer exceeds the undisclosed income declared by the appellant. In my opinion, the penalty u/s. 158BFA(2) is not automatic and cannot be levied in a mechanical .....

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6.2 The relevant fact is that the appellant was found in possession of gold bars, writs watches an Indian currency valued at ₹ 40,34,898/- by the Customs department and that in response to the show cause notice for explaining the source of investment in the above items confiscated by the Customs department the appellant made a declaration offering the entire amount as unexplained investment. The appellant has not concealed and was in no position to conceal the relevant facts. However, in t .....

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applicable to the facts of the case and supports the claim of the appellant for deduction of business loss against the income from illegal business. According to the Assessing Officer and in the light of several amendments in the Income-tax Act, the claim is not sustainable. Out of the total addition of ₹ 42,15,287/- continued by the ITAT, ₹ 40,31,698/are on account of the rejection of the claim of the business loss as above. The other major amounts are ₹ 76,683/- in respect o .....

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