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TMI Blog2012 (4) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... ion still lies in the Assessing Officer whether or not to impose penalty; and [B] If it is held that it is discretionary whether or not to impose penalty under Section 158BFA (2) of the Act, whether the Tribunal correctly exercised its discretion to delete the penalty imposed by the Assessing Officer and confirmed by the CIT [A]. 2. Briefly stated, facts are as follow : 2.1 In case of the respondent-assessee, search and seizure operation under Section 132 of the Act was carried out on 31 st May 2001 at his residence, giving rise to the block assessment proceedings. The assessee filed return of income. The Assessing Officer, while carrying out the assessment proceedings vide its order dated 30 th May 2003, made various additions over and above the income disclosed by the assessee in his return. The Assessing Officer determined the undisclosed income at Rs. 4.08 Crores [ rounded off ] against the disclosed income of the assessee of Rs. 45,00,000/= in the return for the block period. 2.2 Assessee carried the issue in appeal. CIT[A] vide its order dated 27 th February 2004, restricted the additions and assessed the net income of the assessee at Rs. 97.30 lacs [ rounded off ]. In fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rs. 2,00,000/= towards unexplained investment in residential house, compound wall and farm house, the Tribunal deleted the penalty holding that the findings of the Assessing Officer that the income was required to be treated as unaccounted, is a mere presumption. The Tribunal observed that nothing incriminating had been found which would reveal that the appellant had incurred the said expenses. Though additions were confirmed to the above extent, the same being on estimation basis, revenue failed to prove that the appellant is guilty of concealment. In that view of the matter, the penalty to the extent of Rs. 25,000/= and Rs. 2,00,000/= [of income] was required to be deleted. 5. With respect to sum of Rs. 4.60 lacs, the Tribunal noted that the Assessing Officer added a sum of Rs. 70.92 lacs on the ground that the assessee had inflated his agricultural income. The addition was restricted to Rs. 11.28 lacs by CIT [A] and after giving set-off of the income added, the same was restricted to Rs. 4.60 lacs. With respect to penalty corresponding to this addition, the Tribunal observed that there is nothing on the record to prove that the assessee had disguised his tax bearing income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court in Bachahan Devi & Anr. v. Nagar Nigam, Gorakhpur & Anr., reported in [(2008) 12 SCC 372], wherein the Apex Court observed as under :- " 17. The question, whether a particular provision of a statute, which, on the fact of it, appears mandatory inasmuch as it used the word "shall", or is merely directory, cannot be resolved by laying down any general rule, but depends upon the facts of each case particularly on a consideration of the purpose and object of the enactment in making the provisions. To ascertain the intention, the court has to examine carefully the object of the statute, consequence that may follow from insisting on a strict observance of the particular provision and, above all, the general scheme of the other provisions of which it forms a part. The purpose for which the provision has been made, the object to be attained, the intention of the legislature in making the provisions, the serious inconvenience or injustice which may result in treating the provision one way or the other, the relation of the provision to other consideration which may arise on the facts of any particular case, have all to be taken into consideration in arriving at the conclusion wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person has furnished a return under clause (a) of Section 158BC; (ii) the tax payable on the basis of such return has been paid or, if the assets seized consist money, the assessee offers the money so seized to be adjusted against the tax payable; (iii) evidence of tax paid is furnished along with the return; and (iv) an appeal is not filed against the assessment of that part of income which is shown in the return : Provided further that the provisions of the preceding proviso shall not apply where the undisclosed income determined by the Assessing Officer is in excess of the income shown in the return and in such cases the penalty shall be imposed on that portion of undisclosed income determined which is in excess of the amount of undisclosed income shown in the return. 8. Upon perusal of sub-section (2) of Section 158BFA of the Act, it would emerge that the Assessing Officer or Commissioner (Appeals) has the power to impose penalty in course of any proceedings under the said Chapter, which penalty would range between 100% to 300% of the tax leviable on the undisclosed income determined by the Assessing Officer under clause (c) of Section 158BC of the Act. 8.1 Proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to imposed penalty, when there is a technical or venial breach of the provisions of the Actor where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute". 9. The contention of the counsel for the Revenue that only upon satisfaction of the conditions contained in proviso to sub-section (2) that the assessee, in case of the block assessment can be spared of the penalty cannot be accepted. It is, of course, true that upon satisfying such conditions, the assessee would get immunity from penalty. Nevertheless, this is not a thing as to suggest that in no other case, or on no other ground, the Assessing Officer may at his discretion, not impose penalty the moment additions under clause (c) of Section 158BC are sustained. In other words, we are unable to hold that the penalty under Section 158BFA(2) is mandatory in nature. 9.1 It is true that Section 273B of the Act which provides that penalty shall not be imposed in certain cases on the assessee proving t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified under section 158BFA shall follow as a natural consequence thereof. In our considered opinion, in terms of Section 158BFA, a discretion is vested with the Assessing Officer to levy the penalty in respect of the undisclosed income but it cannot be inferred from the said provision that the liability for penalty is automatic. Of course, the proviso to section 158BFA (2) enumerates the circumstances wherein no penalty is leviable but from that also it cannot be inferred that the absence of the circumstances enumerated will attract the provision of penalty automatically." 10.2 This view is also expressed by Kerala High Court in case of Dr. Attukal Radhkrishnan v. Assistant Commissioner of Income Tax & Ors., reported in 235 CTR p-384. 10.3 Delhi High Court in case of Commissioner of Income Tax v. Harkaran Das Ved Pal [Supra] also took a similar view, observing that - " It is apparent that in the course of any proceedings under Chapter XIV-B, the Assessing Officer "may direct" that a person shall pay by way of penalty a sum which shall not be less than the amount of tax leviable but which shall not exceed three times the amount of tax so leviable in respect of the undisclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umber of claims and deductions may be putforth by the assessee which may or may not be accepted in facts or on law by the Assessing Officer. Mere disallowance of a claim, therefore, would not give rise to the penal proceedings unless as provided in Section 271 [1](c) of the Act, the assessee had concealed the income or provided inaccurate particulars of such income. Under sub-section (2) of Section 158BFA, no such requirement is provided. None can be read therein. Significantly, as already noted, the said proviso is part of Chapter XIVB of the Act which makes special procedure for assessment of search cases. Additionally, we also notice that Section 158BF provides, inter alia, that no penalty under Section 271[1](c) of the Act shall be leviable with respect to undisclosed income determined in the block assessment. Thus, statutorily also, penalty provided under sub-section (2) of Section 158BFA is set apart from one imposable under Section 271 [1](c) of the Act. The concept of the onus on the Revenue to prove concealment of the income, therefore, cannot be imported while considering the question of penalty under sub-section (2) of Section 158BFA of the Act. Recently, we had occasio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings would arise while the Assessing Officer had assessed income for the block period in excess of the income declared by the assessee." 12.1 This was also the view of the Delhi High Court in case of Commissioner of Income-Tax v. Harkaran Das Ved Pal [Supra], wherein, it was observed that, " ....However, with regard to question (b) we note that the Tribunal was concerned with concealment and/or furnishing of inaccurate particulars of income, which is an expression occurring in section 271[1](c) of the said Act but not in section 158BFA (2). The consideration of the question of concealment of income or furnishing inaccurate particulars of income was not a relevant consideration in the facts of the present case. To that extent, the Tribunal had misconstrued the scope of the penalty provisions applicable to the present case." 13. We are further of the opinion that the Tribunal deleted penalty on the grounds which were simply not permissible. As already noted, penalty on the grounds of addition of Rs. 7.23 lacs and Rs. 2 lacs was deleted observing that the findings of the Assessing Officer is mere presumption and that nothing incriminating was found which would reveal that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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