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2016 (7) TMI 957 - CALCUTTA HIGH COURT

2016 (7) TMI 957 - CALCUTTA HIGH COURT - [2017] 394 ITR 444 - Penalty leviable under Section 158BFA(2) - whether the penalty proceedings initially started by the assessing officer for an undisclosed income of a sum of ₹ 491.50 lakhs should be allowed to continue for the sum of ₹ 37 lakhs which has ultimately been found to be the undisclosed income of the assessee? - Held that:- There was some sort of understanding between the department and the director of the assessee company as to .....

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. Ultimately the undisclosed income of the director was assessed at ₹ 2.02 crores approximately and undisclosed income of the company was assessed at ₹ 37 lakhs. Both the CIT(A) and the Tribunal were of the opinion that in the facts of the case no penalty should be levied upon the company. The understanding arrived at between the revenue, the company and the director has not been disproved nor is that finding assailed. Imposition of penalty, when returns of undisclosed income were fi .....

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passed by the learned Income Tax Appellate Tribunal C Bench, Kolkata in I.T.(S.S.)A. No.85/Kol/2008 pertaining to the block period commencing from 1st April, 1996 to 5th July, 2002, by which the learned Tribunal dismissed an appeal preferred by the revenue. Aggrieved revenue has come up in appeal. The following question of law was formulated on 17th December, 2009 when the appeal was admitted:- Whether on the facts and circumstances of the case the Income Tax Appellate Tribunal is justified in .....

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inion that the undisclosed income of the company was ₹ 491.50 lakhs. In an appeal preferred by the assessee company the sum of ₹ 491.50 lakhs was reduced by the CIT(A) to a sum of ₹ 37 lakhs. The CIT did not direct commencement of any penalty proceedings. The assessing officer as already indicated had on the basis of seized documents assessed the undisclosed income of the company at a sum of ₹ 491.50 lakhs and had also started penalty proceedings. When the amount of undis .....

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ssessee. This question was answered in the negative by the CIT(A) for the following reasons:- According to the discussion with the Department, the entire income on the basis of seized document was to be declared in the case of the Managing Director of the company Shri S.M.Shroff. He, accordingly, made the disclosure of ₹ 2.16 Crore u/s. 132(4) and gave a detailed working in his petition dt.20.09.2002. He, accordingly, filed his return for the same amount and as the consequence of this, the .....

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132(4) of ₹ 2.16 Crore by Shri S.M.Shroff. In the aforesaid facts, the CIT(Appeals) was of the opinion that: When the Assessing Officer was unable to decide that the undisclosed income reflected in the seized document belongs to appellant company or its Managing Director, the question of concealment becomes irrelevant. For the purpose of concealment, there has to be a clear finding that the income treated as concealed income, belong to the appellant company. 17. It is true that the penalt .....

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se, the direction about penalty proceedings can be initiated only in the course of assessment proceedings under Chapter XIVB. If the income finally determined by the Appellate Authority is different from the determination of undisclosed income in the original block assessment order, penalty proceedings originally initiated cannot be revised after giving effect to the order of Appellate Authority. 18. These are technical arguments but the penalty appears uncalled for because there is no differenc .....

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Nil undisclosed income in the return u/s 158BC and there was some positive income in the nature of undisclosed income after appellate decision, is not justified. Considering the totality of circumstances, the judicial discretion restricting that the Assessing Officer permits him not to levy penalty and omission of exercise it appears unjustified. Accordingly, the order of penalty is cancelled and the appeal allowed. The learned Tribunal was of the following opinion: We are of the considered view .....

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