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TMI Blog2010 (5) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod was submitted in due time as mentioned in notice under section 158BC(a) ; - the learned Commissioner of Income-tax (Appeals) has upheld the Assessing Officer's decision wherein the Assessing Officer has increased the gross profit of the appellant on an estimated basis and rejected books of account, while no undisclosed income was found in search operation ; - that mere acceptance of the amount of undisclosed income calculated by the Department has been wrongly taken for granted as a clear case confirmation of concealment of income by the learned Assessing Officer and further upheld by the learned Commissioner of Income-tax (Appeals) as per the order passed under section 158BFA(2). However, such cooperation had been made to avoid the unheeded tension relating to the case and to get the proceedings completed at the earliest as such proceedings involve a lot of time, effort, money and diversification of resources. The orders of the learned officers are contrary to the facts, law and the principles of natural justice since full and proper opportunity was not allowed during the relevant proceedings." 3. Briefly stated, the facts of the case are that a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the assessee has not carried the matter in appeal in quantum proceedings. It is submitted that it was intimated by the assessee to the Assessing Officer by a letter that the assessee is accepting the inflated gross profit as determined by the Department for buying peace of mind with a request for not imposing penalty. 5. As against this, the learned Departmental representative for the Revenue supported the orders of authorities below. Reliance was placed by him on the following judgments : (a) 129 TTJ 566 (Delhi). (b) 129 Taxman 652 (Ker). 6. We have considered the rival submissions, perused the material on record and have gone through the orders of the authorities below. We find that this was one of the contentions raised by the assessee before the Assessing Officer that there is no evidence gathered during search to enable the Department to estimate gross profit at a higher rate. At page 12 of the assessment order, the Assessing Officer has noted about this contention of the assessee raised before him and in spite of this also, it is not the case of the Assessing Officer that some evidence was gathered in the course of search suggesting some undisclosed incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 158BFA(2) can be imposed in such a case. The relevant paragraphs, i.e., paragraphs 24 to 30 of this judgment of the hon'ble High Court of Delhi are reproduced below (page 22 of 336 ITR) : "The expression 'undisclosed income determined' has to be understood in the context used in section 158BFA(2). It refers to the undisclosed income determined by the Assessing Officer under clause (c) of section 158BC. Section 158BC prescribes the procedure for block assessment. Clause (b) thereof stipulates as under : '(b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143, section 144 and section 145 shall, so far as may be, apply;' This is followed by clause (c) which reads as under : '(c) the Assessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment ;' Thus, determination of the undisclosed income has to be done in the manner laid down in section 158BB and the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8BC. Going back to section 158BFA(2), the Assessing Officer has been empowered to impose penalty on a person when the undisclosed income determined under clause (c) of section 158BC, is in excess of the undisclosed income returned by such person in pursuance of a notice under section 158BD/158BC. In other words, a pre-condition for the imposition of penalty under section 158BFA(2) is that there must be a determination of the undisclosed income by the Assessing Officer under clause (c) of section 158BC of the said Act. If this is not satisfied, then there would be no question of imposing any penalty. In the present case, we find that the computation of undisclosed income by the Assessing Officer cannot be construed as 'undisclosed income determined by the Assessing Officer under clause (c) of section 158BC'. The Tribunal has already returned a finding that there is no evidence found as a result of search, which suggests that the transactions for the whole year of 1999-2000 required any investment in the first instance. The Tribunal has also found as a fact that no amount was found to have been invested by the assessee in the first instance for the transactions of the whole year. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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