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TMI Blog2015 (9) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER CHANDRAMOHAN GARG, J.M. These appeals by the revenue have been directed against the order of CIT(A)-III, New Delhi dated 29.01.2013 passed in Appeal No. 22 and 25/11- 12/CIT(A)-III for the block period from 1.4.89 to 31.1.10. The revenue has raised following ground in this appeals:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in cancelling the penalty of ₹ 10,15,733/- imposed by the AO u/s 158BFA(2) of the Income Tax Act, 1961 in respect of the addition confirmed by the Hon ble Delhi High Court vide order dated 29.11.2010. 2. Ld. DR supporting the action of the AO submitted that the AO imposed penalty u/s 158BFA(2) of the Income Tax Act, 1961 (for short the Act) rightly found that the assessee company is liable for imposition of penalty under the said provision in respect of its undisclosed income of ₹ 15,38,990 for the period under consideration. Ld. DR further submitted that in view of the facts of the case and decision of Hon ble High Court wherein the addition pertaining to said undisclosed income of the assessee has been sustained, the provisions of section 158BFA(2) of the Act are squarely applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel further pointed out that as per decision of the Tribunal dated 3.8.2007 in quantum proceedings, the fact of assessee s case, the capital gain of shares is not to be treated as undisclosed income whereas the Hon ble High Court in its judgment dated 29.11.2010 was of the view that since the return of income is not filed by the due date, the capital gain in question has to be treated as undisclosed income of the assessee, then where there is a difference of opinion either between different benches of the Tribunal or High Court which is finally settled by the pending judgment of Hon ble Supreme Court and specially when all necessary facts have been disclosed by the assessee in its return, the penalty is not warranted. However, before parting with the argument, ld. Counsel of the assessee fairly submitted that the SLP (Civil) Nos. 9018-9022/2011 including SLPs of the assessee against the order of Hon ble High Court dated 29.10.2012 have been dismissed at the admission stage without any detailed deliberations. 5. Ld. DR also placed a rejoinder to the above submissions of the assessee and submitted that when the issue has attained finality in the hands of Hon ble Apex Court where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared bank account for the year under consideration. Therefore there was no intention to hide said income and it was only a technical fault that the return of income was filed under section 139(4). In support of this the appellant also relied on ITAT s Pune Bench decision in the case of Vidya Madan Lal Malani vs ACIT (115 ITD 316). 8. Finally, the CIT(A) did not accept the assessee s above submissions and he also held that the long term capital gain was undisclosed income as the return of income was not filed by the due date i.e. 31.12.1999 and the same was filed later on 31.3.2000. The assessee carried the matter to the ITAT where in order dated 3.8.2007, it was held that the said long term capital gain was not an undisclosed income of the assessee. We further respectfully note that the Hon ble Delhi High Court held that since the return of income was not filed by the due date which falls before the date of search, therefore, provisions of section 158BB(1)(c) of the Act were rightly applied by the AO and therefore, impugned long term capital gain has to be treated as undisclosed income of the assessee and the action of the AO was confirmed by the Hon ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the appellant and have perused the AO's order and considered the facts and evidences on record and judicial pronouncements on this issue. 4.1 It is an established preposition that the assessment proceedings and penalty proceedings are two all together different proceedings. An issue may call or an additions in the assessment proceedings, but that addition in itself cannot be the sole ground for imposition or levy of penalty. For the purpose of imposing penalty, the AO has to walk a little extra mile to prove that the appellant has concealed or likely to conceal the income or furnished the inaccurate particular of its income. 4.2 Further before discussing the facts of the present case and to see whether the penalty under section 158BFA(2) is imposable, it is worth re-iterating here the general rules to be followed for the purpose of levying the penalty as laid down by the Hon'ble Supreme Court in the case of Dilip N. Shroff vs. CIT (2007) (291 ITR 519 (SC) and T. Ashoke Pai vs. CIT (2007) (292 ITR 11) (SC). i.e. (i) Both the expressions concealment of income and furnishing of inaccurate particulars indicate some deliberation on the part of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dited balance sheet, profit and loss account and sale proceeds have been deposited in the declared bank account and also the investment in shares (which were said in the year under consideration} were found to' be duly recorded in the regular books of accounts, in my humble view all the these facts doesn't calls for imposition of penalty under section 158BFA(2). The AO while considering the levy of penalty should not begin with the presumption that the appellant is guilty of concealing the particulars of income, the AO before levying the penalty must bring on record the primary evidence to establish that the appellant had undisclosed income which he was concealing or likely to conceal. The levy of penalty under section 158BFA(2) is not an automatic action, the wards may direct mentioned in section 158BFA(2) has to be given its normal meaning. The ward may cannot be read as shall . 4.5 Looking into the facts of the appellant's case, it is quite likely that the appellant might be waiting for the requisite details of shares sold and this may be the genuine reason for not been able to file the return of income by due date i.e. 31.12.1999, but the fact remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 per cent. The tax paid by the assessee at 20 per cent along with its return could not have been accepted. All these factors were very relevant for completing the quantum assessment and demanding the tax at 60 per cent from the assessee. But the above factors were not sufficient to impose penalty under section 158BFA. The reason that the assessee had not furnished any undisclosed income in the block return filed by it in pursuance of notice under section 158BO was not a grievous mistake when the earlier belated return filed by the assessee and available in the files of the assessing authority was also looked into. The fact that the assessee had not filed any return of income through its block return was a legal error but not a ground to impose penalty. The block assessment itself had been completed by the Assessing Officer by adopting the amount of capital gains offered by the assessee in its belated return filed immediately after the search operation. Therefore, even though legally and technically not valid, the assessee had already returned the capital gains liable for taxation in its hands. If that amount of capital gains was impregnated in the block return filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o it is a trite law that where two views are possible on the issue, the penalty is not imposable in such cases. Applying, this principle to the facts of the present case, it is seen that as per ITAT's decision dated 03.08.2007 in the facts of the appellant's case the capital gain on shares is not to be treated as undisclosed income , whereas the Hon'ble Delhi High Court vide their decision dated 29.11.2010, was of the view that since the return of income is not filed by due date, the capital gain in question has to be treated as undisclosed income , further even against the said order of High Court the appellant has filed an SLP before the Apex Court on 01.03.2011. Therefore in such an event as per the spirit of decision of Delhi High Court in the recent case of CIT vs. Sarla Fabrics P. Ltd . (ITA 788/2011) dated 20.07.2012) the Hon'ble court by relying on their own decision in the case of CIT-IV Delhi vs. IP India P. Ltd. (204 Taxman 368) (2012) have held that: where there is a difference of opinion either between different Benches of Tribunal or the High Courts, which is finally settled by the pending judgment of the Supreme Court and all necessary facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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