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2016 (3) TMI 420 - AT - Income TaxAddition to the undisclosed return income - addition made on the basis of GP rate and peak credit - Held that - We find that the AO was not justified to make the addition of 65, 78, 933/- in addition to the undisclosed return income of 21, 36, 111/- which was filed by the assessee during the course of block proceedings and as such the AO has ignored the block return income of 21, 36, 111/- which is the part of the total undisclosed income of the assessee of 65, 78, 933/-. It is apparent that the total undisclosed income as per the order of the Ld.CIT(A) and the Tribunal is 65, 78, 933/- which included the undisclosed block return income of 21, 36, 111/- and as such the AO should only assess the total income of 65, 78, 933/- only. We find considerable cogency in the Ld. CIT(A) order wherein the observed that the Assessee has stated that that the AO has made double addition of 21, 36, 111/- which has already been offered by the assessee in the block return income and accordingly the Ld. CIT(A) has rightly directed the AO to assess the total undisclosed income of 65, 78, 933/- only (Rs. 6, 76, 393/- 59, 02, 540/-) after the order of the Tribunal and as such the appeal of the assesse was rightly allowed. Keeping in view of the facts and circumstances of the case we do find any infirmity in the order of the Ld. CIT(A) which in our opinion does not need any interference - Decided against revenue Penalty order u/s. 158BFA(2) - Held that - AO has levied the penalty on the estimated income and as such there is no proper justification for the levy of penalty on the estimated hence the Ld. CIT(A) has rightly cancelled the penalty which in our considered opinion does not need any interference on our part hence we uphold the order of the Ld. CIT(A) on this issue on which he cancelled the penalty in dispute and dismiss the ground raised by the Revenue - Decided against revenue
Issues Involved:
1. Deletion of addition of Rs. 21,36,111/- made by the AO. 2. Deletion of penalty of Rs. 43,42,100/- under Section 158BFA(2) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Deletion of Addition of Rs. 21,36,111/-: The Department filed an appeal against the deletion of an addition of Rs. 21,36,111/- made by the Assessing Officer (AO). The AO had conducted a search and seizure operation at the business premises of the assessee, leading to the discovery of various incriminating documents. The assessee filed a return for the block period declaring total undisclosed income of Rs. 21,36,111/-. However, the AO assessed the total undisclosed income at Rs. 2,92,43,457/-. Upon appeal, the CIT(A) confirmed an addition of only Rs. 6,76,393/- and deleted the balance of Rs. 2,35,65,207/-, which was upheld by the Tribunal. The AO subsequently assessed the total income at Rs. 87,15,040/-, including the assessee's undisclosed block return income of Rs. 21,36,111/-. The assessee filed a petition under Section 154, which was rejected by the AO. The Tribunal found that the AO was not justified in making the addition of Rs. 65,78,933/- in addition to the undisclosed return income of Rs. 21,36,111/-. It was observed that the total undisclosed income as per the order of the CIT(A) and the Tribunal was Rs. 65,78,933/-, which included the undisclosed block return income of Rs. 21,36,111/-. The Tribunal upheld the CIT(A)'s order, directing the AO to assess the total undisclosed income of Rs. 65,78,933/- only, thereby dismissing the Revenue's appeal. 2. Deletion of Penalty of Rs. 43,42,100/-: The Department also appealed against the deletion of a penalty of Rs. 43,42,100/- imposed under Section 158BFA(2). The AO had levied the penalty on the basis of estimated income. The CIT(A) deleted the penalty, and the Revenue appealed this decision. The Tribunal noted that the AO had imposed the penalty on an estimated income of Rs. 65,78,933/-, which included the undisclosed block return income of Rs. 21,36,111/-. The Tribunal found that the AO was not justified in levying the penalty on the basis of estimated income. It was highlighted that there were differences of opinion among the assessee, AO, CIT(A), and the Tribunal regarding the undisclosed income/additions, indicating that the income was estimated at every stage. The Tribunal cited various case laws supporting the view that no penalty was leviable under Section 158BFA where the alleged undisclosed income was computed on the basis of estimation. The Tribunal concluded that the CIT(A) had rightly cancelled the penalty, and the appeal by the Revenue was dismissed. Conclusion: Both the appeals filed by the Revenue were dismissed. The Tribunal upheld the CIT(A)'s orders, confirming the deletion of the addition of Rs. 21,36,111/- and the penalty of Rs. 43,42,100/-. The Tribunal emphasized that the AO's assessments and penalties based on estimated income were not justified, and there was no need for interference with the CIT(A)'s well-reasoned orders.
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