TMI Blog2004 (2) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome was accepted and block assessment was made on total undisclosed income of Rs. 78,530 vide order dated 22-10-1999 when penalty proceedings under section 158BFA(2) were also initiated. After giving show-cause notice to the assessee and considering various objections raised the Assessing Officer imposed penalty of Rs. 48,000 against minimum and maximum imposable amount of Rs. 47,318 and Rs. 1,41,354 respectively against which the assessee preferred appeal but did not find favour with the first appellate authority who confirmed the order of the Assessing Officer. 3. Still aggrieved, the assessee is in further appeal and while reiterating the submissions as made before the lower authorities, it was pleaded for deletion of penalty imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing Officer in this regard. Since opportunity is a must before any penalty is imposed under the Chapter XIV-B and notice is otherwise void ab initio, therefore, the penalty is not imposable. It was next contended that assessee's case is covered by the first proviso to section 158BFA(2) and the Assessing Officer is unjustified in not invoking the said proviso to drop the penalty and simply on the plea that return of undisclosed income was not filed within the time as stipulated in the notice issued in this regard whereas the return, though filed late, for the reasons explained, has otherwise been accepted as valid return because undisclosed income on the basis of such return has been accepted. Therefore, for the purpose of imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etters for inspection of the records and issuance of photocopies of the seized material are stated to have been filed. The return of undisclosed income was accepted and the block assessment was made on total undisclosed income of Rs. 78,530 vide order dated 22-1-1999 when penalty proceedings under section 158BFA(2) were initiated and after giving notice to the assessee and considering various arguments raised, the Assessing Officer imposed penalty of Rs. 48,000 against minimum imposable amount of Rs. 47,318 and which action of the Assessing Officer came to be confirmed in appeal by the CIT(A). 6. Before adverting to other details and facts, it is seen imperative first to discuss the relevant provisions of law. Levy of interest and penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, may direct that a person shall pay by way of penalty .... It further says that provided no order imposing penalty shall be made in respect of a person if he furnishes return under clause (a) of section 158BC, pays tax on the basis of such return or offers the money so seized to be adjusted against the tax payable on the basis of such return, adduce evidence alongwith the return of tax payment and an appeal is not filed against assessment of that part of the income which is shown in the return and Second Proviso enacts an exception to the First Proviso. It provides that concession given in the First Proviso shall not be available if the undisclosed income determined by the Assessing Officer under section 158BC exceeds the income shown in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpretation as placed by the revenue is to be accepted and it is to be held that in case of belated return First Proviso to section 158BFA(2) is not applicable, then the position would be as if one person, in whose case search has been conducted, files his return disclosing Rs. One Crore as undisclosed income but files his return beyond the period specified in notice issued for filing of the return under Chapter XIV-B and even fails to pay tax before filing of the return and said undisclosed income is enhanced by Rs. 1,00,000 by the Assessing Officer, and in that case, penalty would be Rs. 60,000 to Rs. 1,80,000 as per Second Proviso to section 158BFA(2), but if his returned undisclosed income is accepted at Rs. One Crore he would be liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose correct undisclosed in the return and as per the assessee, since full inspection of the record was not available, so it took some more time to collect the material for preparation of the return in order to arrive at the correct figures to disclose, but the Assessing Officer has simply rejected this plea of the assessee on the ground that no evidence has been placed without making any reference to the record available with other tax authorities to refute the plea. Since penalty has to be restricted to the difference in declared undisclosed income in the return and determined undisclosed income and Second Proviso to section 158BFA(2) does not talk about either filing of the return in time or referring to return under section 158BFA(2), an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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