2014 (6) TMI 841 - AT - Income Tax

Confirmation of penalty u/s 158BFA(2) of the Act Furnishing of inaccurate particulars - Unexplained investment in jewellery, undisclosed source of cash and unexplained investment in valuable articles Held that - The addition on account of cash and investment in articles were sustained on estimated basis - With respect to the addition on account of investment in jewellery it is seen that Assessee had stated to have received the jewellery from her sister in Nairobi but in the absence of any supporting declaration filed before customs/ immigration, addition to the extent of 190 gms of jewellery was sustained - there is nothing to suggest that the explanation of the Assessee was found to be untrue Relying upon CIT vs. Becharbhai Parmar 2012 (4) TMI 418 - GUJARAT HIGH COURT - the penalty u/s 158BFA(2) is not mandatory in nature - Section 273B which provides that penalty shall not be imposed in certain cases on the assessee proving that there was reasonable cause for failure to pay tax refers to several provisions such as sections 271, 271A etc. makes no mention of Section 158BFA(2) - This still does not mean that penalty under section 158BFA(2) is mandatory the additons have been upheld on estimation basis , thus, no penalty is leviable Decided in favour of assessee.

Summary

Issues:
Appeal against CIT(A) order for block period, Addition of undisclosed income, Penalty under section 158BFA(2) of the Act, Confirmation of penalty by CIT(A), Grounds of appeal raised by Assessee, Estimation basis for additions, Explanation by Assessee, Supporting declaration for jewellery, Discretionary nature of penalty under section 158BFA, Decision based on previous case laws.

Issue 1: Appeal against CIT(A) order for block period
The appeal was filed by the Assessee against the order of CIT(A)-XVI, Ahmedabad for the block period 1.04.1988 to 31.03.1998 & 1.04.1998 to 17.01.1998.

Issue 2: Addition of undisclosed income
During a search and seizure action, various articles like cash, jewellery, shares, and bank accounts were found at the Assessee's premises. The total undisclosed income was determined, leading to certain additions by the Assessing Officer, some of which were later deleted by CIT(A) and upheld by ITAT.

Issue 3: Penalty under section 158BFA(2) of the Act
The Assessing Officer levied a penalty under section 158BFA(2) of the Act based on the additions confirmed by ITAT. The penalty was challenged by the Assessee before CIT(A) and subsequently appealed.

Issue 4: Confirmation of penalty by CIT(A)
CIT(A) confirmed the penalty, stating that the Assessee failed to provide satisfactory explanations for the unexplained jewellery, cash, and valuable items found during the search operation. The explanation given by the Assessee was deemed false, leading to the confirmation of the penalty.

Issue 5: Grounds of appeal raised by Assessee
The Assessee raised grounds challenging the confirmation of the penalty by CIT(A) on the basis that the additions were made on estimates and the Assessee did not conceal income or furnish inaccurate particulars.

Issue 6: Estimation basis for additions and Explanation by Assessee
ITAT sustained certain additions on an estimated basis, particularly in relation to cash and investment in articles. The Assessee's explanation regarding jewellery received from a sister in Nairobi was not supported by a supporting declaration filed with customs/immigration authorities.

Issue 7: Supporting declaration for jewellery
The Assessee's claim of receiving jewellery from a sister in Nairobi was not substantiated by any supporting declaration filed with customs/immigration authorities, leading to the sustained addition of jewellery.

Issue 8: Discretionary nature of penalty under section 158BFA
The Tribunal referred to previous case laws to establish that the penalty under section 158BFA(2) is discretionary and not mandatory, emphasizing that penalties should not be imposed in cases where additions are upheld on estimation basis.

Issue 9: Decision based on previous case laws
Citing previous judgments, the Tribunal concluded that penalties under section 158BFA(2) should not be levied when additions are made on an estimated basis. The Tribunal directed the Assessing Officer to delete the penalty, considering the facts of the case and the discretionary nature of the penalty.

This detailed analysis of the judgment covers the issues involved comprehensively, highlighting the key legal aspects and decisions made by the authorities involved in the case.