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2018 (10) TMI 736

Levy of penalty u/s 158BFA(2) - block assessment - additions towards unexplained cash and unexplained income - Held that:- Penalty under section 158BFA of the Income Tax Act is to be imposed on all together different grounds than the one imposed under section 271(1)(c) for concealment of income or furnishing inaccurate particulars of income. - When the AO issues notice under section 158BC of the Act, inviting the assessee to file return of the undisclosed income, he would supply copies of seized material on the basis of which the assessee has to compute true undisclosed income. In other words, material on the basis of which income of an assessee has to be determined for the purpose of block period is common. It is the material collected during the course of search. In these circumstances, the allegations or the charge against an assessee could be why he failed to compute true undisclosed income. - The assessee does not deserve to be visited with penalty under section 158BFA in the given circumstances. We allow the appeal of the assessee and delete penalty. - IT(SS)A.No.168/Ahd/2015 - Dated:- 10-10-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOU .....

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No.306 of 2012 and question of law relating to both the issue stand admitted. He placed on record copy of interim order passed by the Hon ble High Court dated 28.6.2012. The AO has imposed a penalty under section 158BFA(2) of the Act on this addition of ₹ 10,10,435/-. Appeal to the CIT(A) did not bring any relief to the assessee. 4. With the assistance of the ld.represnetatives, we have gone through the record carefully. Penalty under section 158BFA of the Income Tax Act is to be imposed on all together different grounds than the one imposed under section 271(1)(c) for concealment of income or furnishing inaccurate particulars of income. Recently, the Hon ble High Court has considered this issue and propounded the distinction elaborately in the judgment rendered in the case of CIT Vs. Beecharbhai P.Parmar, 341 ITR 499. Before embarking upon an inquiry on the facts of the present case, we deem it appropriate to take note of the finding recorded by the Hon ble Gujarat High Court in the case of CIT Vs.Beecharbhai P. Parmar. The Hon ble Court has taken note of section 158BFA, and thereafter expounded the meaning and interpretation of this section. The discussion made by the Hon b .....

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ys tax on the basis of such return, or offers for adjustment any money seized, or produces evidence of having paid such tax, and also does not file appeal against assessment on that part of the income which is shown in the return. In other words, in cases of proceedings for block assessment, the assessee would have an additional chance to avoid penalty by furnishing a return, paying tax on such undisclosed return and accepting finality with respect to the same. 8.2 Further proviso to sub-s. (2) of s. 158BFA is merely in nature of clarification and provides that the first proviso would not apply where undisclosed income determined by the AO is in excess of the income shown in the return and in such cases, penalty shall be imposed on that portion of the undisclosed income determined, which is in excess of the amount of undisclosed income shown in the return. 8.3 Closely seen, sub-s. (2) of s. 158BFA makes it clear that it is well within the discretion of the AO, while framing the assessment for the block period, whether or not to impose any penalty or not. The words, may direct have to be given its normal meaning, leaving discretion to the officer. In absence of any special reason th .....

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block purpose is to be computed under section 158BB. In a series of decisions, it has been held that income for the block is to be computed on the basis of seized material. In other words, when the AO issues notice under section 158BC of the Act, inviting the assessee to file return of the undisclosed income, he would supply copies of seized material on the basis of which the assessee has to compute true undisclosed income. In other words, material on the basis of which income of an assessee has to be determined for the purpose of block period is common. It is the material collected during the course of search. In these circumstances, the allegations or the charge against an assessee could be why he failed to compute true undisclosed income. Thus, the question before us is, whether on the basis of material supplied by the ld.AO for preparing block return, could it be construed as assessee knowingly not included the income on these two issues which has been added subsequently in the assessment proceedings, and confirmed upto the ITAT ? As far as addition regarding stock position, an explanation was given by the assessee during the assessment proceedings and copy of such explanation .....

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ks cannot be uniform. Apart from valleys and hills, they are triangular, tripodical, rectangle and loose dumps also. • Given the mature of stocks and/or mounds, it is impossible to measure an accurate stock • Stock taking of volumetric stock is a peculiar exercise, requiring special expertise • It can be quite subjective exercise depending on the nature of material and team of persons measuring the volumetric stock. • Stock measurement is always affected by the approach or handling of the measuring process by the team of persons undertaking the measurement. Even holding the Measurement tape loose or tight, on the mound to be measured, can result into variation in stock, and this fact was brought to the notice even during the search proceedings. In fact some of the above factors were brought to the notice of the department s officer in the statement of Mr.V.N.Dewsai, our Vice President. The relevant reply was recorded in Gujarati, translated in English to reproduce hereunder. xxxx xxxx xxx xxxx xxxx xxx We enclose herewith a copy of a Statement of Stock physically verified on 27.9.2001. You may observe therein at the top of the paper, it has been mentioned that p .....

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