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TMI Blog2012 (10) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cases other than covered by section 273B for any failure or violation imposition of the penalty is automatic. Each provision of penalty has to be construed independently keeping in view the language employed therein - thus as the assessee’s explanation was not found to be false or untrue and keeping in view that the A.O. while imposing the penalty at minimum i.e. 100% has accepted the reasonable cause though for limited purpose, that on the facts and circumstances of the case, the penalty u/s 158BFA(2) is not leviable - in favour of assessee. - I.T.(SS)A. No. 48/Mum/2011 - - - Dated:- 18-7-2012 - SHRI DINESH KUMAR AGARWAL AND SHRI B. RAMAKOTAIAH, JJ. Appellant by : Shri M. Murali Respondent by : Shri Yogesh A. Thar ORDER PER DINESH KUMAR AGARWAL, J.M.: This appeal preferred by the Revenue is directed against the order dated 23-5-2011 passed by the ld. CIT(A)- 39, Mumbai for the block period 1-4-96 to 26-2-2003. 2. Briefly stated facts of the case are that the assessee an individual is engaged in the business as a builder and landlord. There was a search and seizure u/s 132 of the Income Tax Act, 1961 (the Act). In response to notice is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that out of cash in hand available with the assessee and the same are without any basis/corroborative evidence. It was further submitted that merely because the explanation of the assessee has been rejected, it did not attract penalty. It was further submitted that the penalty is discretionary and not mandatory. It was, therefore, submitted that the penalty proceeding initiated be adopted. However, the A.O. did not accept the assessee s explanation. The A.O. observed that it is very clear that the additions to the extent of Rs. 18,25,849/- have been confirmed by the Tribunal. The assessee has not preferred an appeal before the High Court. Thus, the additions have attained finality. The provisions of section 158 BFA(2) are mandatory in nature. Further, the A.O. while observing that since the assessee has shown a reasonable cause for non-inclusion of items assessed in his returned undisclosed income, held that the assessee is liable to a minimum penalty equivalent to amount of tax leviable on the amount of undisclosed income assessed in excess of returned income and accordingly he imposed a penalty of Rs. 12,05,060/- vide order dtd. 30-3-2010 passed u/s 158 BFA(2) of the Act. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 10. DCIT vs. Suresh Kumar, (2005) 97 ITD 527 (Kol) 11. Nemichand vs. ACIT (Investigation), 93 TTJ (Bang) 564 He, therefore, submits that the order passed by the ld. CIT(A) in deleting the penalty be upheld. 7. We have carefully considered the submissions of both parties and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that there is a difference of Rs. 18,25,849/- between the undisclosed income returned by the assessee and finally assessed. We further find that the A.O. while observing that the assessee has not preferred an appeal before the High Court has imposed penalty on the amount of additions sustained at Rs. 18,25,849/-. Merely because the part of the addition has been confirmed by the Tribunal and the assessee has not filed appeal before the Hon ble High Court does not mean that the assessee is liable to penalty u/s 158 BFA(2) of the Act. According to the A.O. the penalty on the addition of Rs. 18,25,849/- is mandatory but discretionary to the extent as to whether it is to be levied at 100% or maximum at 300% of the amount of undisclosed income. The A.O. keeping in mind the above held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- (Page 177 178, Placitum 10,11,12 13):- A bare perusal of section 158BFA(2) goes to show that by virtue of the said provision, the Assessing Officer or the Commissioner (Appeals) is vested with the power to direct the assessee to pay the penalty as specified in respect of the undisclosed income determined by the Assessing Officer under clause (c) of section 158BC, however, the Assessing Officer or the Commissioner of Income-tax (Appeals) is not empowered to impose the penalty in respect of the person who fulfils the conditions enumerated in the first proviso to section 158BFA. It is to be noticed that in the main provision providing for imposition of penalty, the word " may" has been used. It is settled law that the penal provision in the taxing statutes shall be construed strictly. From the plain reading of section 158BFA(2), it does not appear that in all the cases where the undisclosed income is determined by the Assessing Officer under clause (c) of section 158BC, the imposition of penalty as specified 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 Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod, capital possessed by the assessees prior to the block period as revealed from the ledger and the material seized during the search could not be treated as undisclosed income of the first assessment year in the block period. Thus, in view of the concurrent finding of facts arrived at by the two appellate authorities, as aforesaid, in our considered opinion, no substantial question of law arises for consideration of this court in these appeals. 10. In CIT vs. Dodsal Ltd. (2009) 312 ITR 112 (Bom) it has been held as under (Head note) : Held, dismissing the appeal, that the authorities below had recorded reasons for exercise of their discretion. The Revenue had not challenged the finding of fact as to the exercise of discretionary power. The decision of the Tribunal that section 158BFA(2) was directory and not mandatory was to be upheld. 11. Respectfully following the ratio of the above decisions and keeping in view that the assessee s explanation was not found to be false or untrue and keeping in view that the A.O. while imposing the penalty at minimum i.e. 100% has accepted the reasonable cause though for limited purpose, we are of the view that on the facts and ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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