TMI Blog2003 (11) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... l premises of the assessee on 29-7-1999. An order under section 158BC was passed on 27-7-2001. The undisclosed income determined consisted of Rs. 6,58,366 being the difference between the value of residential house declared by the assessee and as estimated by the Departmental Valuation Officer (DVO). The other item of addition as undisclosed income consisted of Rs. 1,72,653 being the unexplained credit mentioned in the statement of affairs filed during the course of assessment proceedings. The Assessing Officer found that since the additions were made as undisclosed income as ultimately decided after the order of Learned CIT(A) which has been accepted by the assessee, the same amounts to concealed income and penalty under section 158BFA(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the penalty is leviable only if there is a guilty mind of the assessee. If penalty is automatic, even appeal against such order would not have been provided for. Since the assessee has all the reason to believe that there is no concealed income, the assessee was justified in not offering the amount treated as undisclosed income while filing return of income for the block period. The assessee may not choose to file an appeal against the assessment. This cannot be viewed otherwise so as to levy penalty under section 158BFA of the Act. However, this does not conclusively prove any guilty mind or furnishing inaccurate particulars in the return of income. 4. Learned Departmental Representative Smt. Archana Chowdhary submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt) Act, 1997 with effect from 1-1-1997 only. Section 158BFA(1) (2) read as under: 158BFA (1) - Where the return of total income including undisclosed income for the block period, in respect of search initiated under section 132 or section 132A on or after the 1st day of January 1997, as required by a notice under clause (a) of section 158BC, is furnished after the expiry of the period specified in such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one and one-fourth per cent of the tax on undisclosed income, determined under clause (c) of section 158BC, for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an empty formality. The intention of affording a hearing is in compliance to principles of natural justice. No one should be condemned unheard'. Similarly, if penalty is automatic or mandatory, then no appeal will lie against such order. However, appeal mechanism is provided in section 246A(1). The assessee is to be heard as to why the amount was not offered in the return filed for block period. If the assessee offers a convincing reason or if any reasonable cause is demonstrated for non-inclusion of such income, the penalty in such a case is not attracted. One more aspect is that originally when the provisions were introduced with effect from 1-7-1995, the total tax determined in respect of undisclosed income was 60 per cent. This was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding that any material was found during search which suggested additional investment by the assessee in acquisition of the property leading to computation of undisclosed income. It is merely an estimate but not conclusively proved that such investment has been made by the assessee. It is not even conclusively proved that the same was spent out of the undisclosed income of the assessee found as a result of search. In the circumstances, the assessee was justified in not disclosing such amount in the return of income. Originally, the Assessing Officer determined the undisclosed income at Rs. 12.36 lakhs. The Learned CIT(A) reduced the same to Rs. 6.58 lakhs. Both are based on estimates. In such a situation the assessee is well deserved of mak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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