2013 (6) TMI 151 - AT - Income Tax

Penalty u/s 158BFA(2) - willful attempt on the part of the assessee to conceal the undisclosed income - CIT(A) deleted the levy - addition on account of jewellery - appeal in the case of Smt. Shanti Bai Yadav - Held that - There is no positive finding that jewellery was unexplained in spite of the explanation given by the assessee, case of CIT v. Ratanlal Vyaparilal Jain 2010 (7) TMI 769 - Gujarat High Court held that instruction No. 1916 dated May 11, 1994 can be considered to presume that the sources to the extent of jewellery stated in circular stands explained. If there is anything contrary noticed then the instruction may not be sufficient to explain the source of jewellery. Therefore, the assessee has given the explanation in respect of source of jewellery and the CIT (A) has rightly referred to the fact that mother of the assessee was residing with the assessee. Therefore, there is no case of imposition of penalty in respect of addition on account of jewellery. Difference between the income and expenditure - Held that - Penalty u/s 158BFA(2) is imposable in respect of undisclosed income which is determined as a result of evidence found during the course of search. The addition here is not based on any evidence found during the course of search and therefore, penalty was not imposable. CIT(A) was justified in cancelling the penalty. Appeal in the case of Shri Dal Chand Yadav - unaccounted marriage expenses - Held that - It is not clear as to how the authorised officer mentioned that paper relates to the marriage expenses. The assessee has shown withdrawal of Rs. 2,06,240 in the regular books of account. The other figures may be the amounts received from the relatives or the figures may not be for the marriage expenses. The availability of the word Papa on this paper show that this paper is not in the handwriting of the assessee as he would not have used the word Papa. Hence, such document is not sufficient to impose penalty. Similarly, in respect of other additions, there was no material found during the course of search for making the addition. Hence, CIT(A) was justified in deleting the penalty. Appeal of revenue dismissed.

Summary

Issues:
- Appeal against cancellation of penalty under section 158BFA(2).
- Discretionary nature of penalty under section 158BFA(2).

Analysis:
- The Revenue appealed against the cancellation of penalties under section 158BFA(2) for two different assesses for the block period April 1, 1996, to March 31, 2002.
- In the case of Smt. Shanti Bai Yadav, the undisclosed income was initially declared at Rs. 2,09,435 but later determined at Rs. 8,45,950 by the Tribunal. The penalty imposition was contested based on various components of the undisclosed income.
- The Commissioner of Income-tax (Appeals) held that penalty under section 158BFA(2) is discretionary, citing relevant case law.
- The Tribunal confirmed the addition on jewellery and income expenditure method, but the Commissioner of Income-tax (Appeals) canceled the penalty considering lack of opportunity for explanation and absence of incriminating evidence.
- The issue of discretionary nature of penalty under section 158BFA(2) was extensively discussed, citing various High Court judgments supporting discretionary imposition.
- In the case of Shri Dal Chand Yadav, the Tribunal confirmed various additions based on seized documents and explanations provided by the assessee, leading to the cancellation of penalties by the Commissioner of Income-tax (Appeals).
- The Tribunal highlighted the discretionary nature of penalties under section 158BFA(2) and concluded that the penalties were rightly canceled based on the lack of concrete evidence and proper explanations.
- The judgments emphasized the importance of evidence and proper procedures in determining the imposition of penalties under section 158BFA(2) and upheld the cancellation of penalties in both cases.
- Ultimately, both appeals of the Revenue were dismissed, affirming the cancellation of penalties under section 158BFA(2.

The detailed analysis of the judgment showcases the legal intricacies involved in the appeal against the cancellation of penalties under section 158BFA(2) and the discretionary nature of such penalties as interpreted by various courts and tribunals.