2012 (8) TMI 395 - AT - Income Tax

Penalty u/s 158 BFA (2) - application u/s 154 submitting mistake in the computation in the total income - Held that - It is not in dispute that after giving effect to the order of the CIT(A) passed against the appeal filed by the assessee u/s 154 the final undisclosed income of the assessee has been determined at Rs. 55 lacs as disclosed by the assessee in the return. Even otherwise, the difference between the income returned and assessed by the A.O. is due to difference of opinion, and, hence not a case of concealment - in absence of any contrary material placed on record by the Revenue there is no concealment on the part of the assessee and deleting the penalty is thus warranted - in favour of assessee.

Summary

Issues:
Appeal against cancellation of penalty under section 158 BFA(2) of the Income Tax Act, 1961 for the Block Period 01-04-95 to 27-09-2001.

Analysis:
1. Background and Assessment: The case involved a search and seizure action under section 132 of the Income Tax Act, leading to the declaration of undisclosed income by the assessee. The assessment process resulted in additions to the undisclosed income, which was challenged by the assessee in appeals. The Tribunal set aside certain issues for reassessment, leading to a revised undisclosed income determination.

2. Penalty Proceedings: The Assessing Officer initiated penalty proceedings under section 158 BFA(2) of the Act based on the revised undisclosed income. The assessee argued that the difference between the returned and assessed income was due to a mere difference of opinion and not concealment. Various decisions were cited to support this argument, but the AO imposed a penalty of Rs. 3,02,261.

3. Rectification Application: The assessee filed a rectification application under section 154, pointing out a mistake in the computation of total income. The AO rejected the application, stating that no apparent mistake existed. However, on appeal, the CIT(A) found a mistake in the assessment leading to over-assessment, directing a recomputation of undisclosed income based on the returned income declared by the assessee.

4. Cancellation of Penalty: In light of the revised undisclosed income determination, the CIT(A) held that the penalty was not justified, citing the discretionary nature of penalty imposition. Referring to relevant case law, the CIT(A) canceled the penalty imposed by the AO, leading to an appeal by the Revenue challenging the deletion of the penalty.

5. Appellate Tribunal Decision: The Appellate Tribunal considered the facts and the revised undisclosed income determination following the CIT(A)'s order. It noted that the difference between returned and assessed income was due to a difference of opinion, not concealment. In the absence of any contrary evidence from the Revenue, the Tribunal upheld the CIT(A)'s decision to cancel the penalty, dismissing the Revenue's appeal.

In conclusion, the Appellate Tribunal upheld the decision to cancel the penalty imposed under section 158 BFA(2) of the Income Tax Act, 1961, based on the revised undisclosed income determination and the absence of evidence supporting concealment by the assessee.