2008 (3) TMI 40 - HC - Income Tax

Block assessment - Whether on the facts and in the circumstances of the case the ITAT was right in law in deleting the penalty imposed under Section 158BFA (2) of the Act by ignoring its own finding that the income of Rs.3, 76, 640/- constituted undisclosed income within the meaning of section 158BB(1) (ca) read with Section 158BC(c ) of the Act and that such undisclosed income attracted penal provisions under Section 158BFA(2). (ii)Whether on the facts and in the circumstances of the case the ITAT was justified in deleting the penalty on the ground that the assessee still had time to file the return income under Section 139(4) and that it had paid entire advance tax ignoring the mandate of 2 nd proviso to sub section (2) to Section158 BFA of the Act.

Summary

Issues:
1. Appeal against deletion of penalty under Section 158BFA(2) of the Income Tax Act.
2. Justification for deleting penalty based on time available for filing return and payment of advance tax.

Analysis:
1. The Revenue filed an appeal against the deletion of penalty under Section 158BFA(2) of the Income Tax Act by the ITAT. The case involved undisclosed income of Rs.3,76,640/- declared after a search and seizure operation. The Assessing Officer treated this income as undisclosed under Section 158BB(1)(ca) and initiated penalty proceedings. The appeal filed by the assessee was partly allowed, but the Commissioner of Income Tax(Appeals) upheld the addition of Rs.3,76,640/- as undisclosed income. The Tribunal dismissed the assessee's appeal, leading to penalty proceedings. The Assessing Officer imposed a penalty of Rs.2,26,020/-, which the assessee contested. The Commissioner of Income Tax (Appeals) upheld the penalty, stating that the undisclosed income exceeded the amount shown in the return, justifying the penalty under Section 158BFA(2).

2. The assessee argued that there was no deliberate concealment of income, as the return was filed within the time allowed under Section 139(4) and advance tax was paid. The Tribunal reversed the Commissioner's order, noting that the assessee still had time to file the return and had paid advance tax. The Revenue contended that the undisclosed income related to the period before the search and penalty was justified. However, the Court found no merit in the Revenue's arguments. It held that there was no conscious breach of law by the assessee, as there was time available to file the return under Section 139(4). The Tribunal's finding that there was no deliberate concealment or furnishing of inaccurate particulars was upheld. The Court dismissed the appeal, stating that the questions of law proposed by the Revenue did not arise from the Tribunal's order.

In conclusion, the Court upheld the Tribunal's decision to delete the penalty under Section 158BFA(2) based on the availability of time for filing the return and payment of advance tax, finding no deliberate concealment of income by the assessee.