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TMI Blog2016 (1) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... tly, a notice u/s 158BC was issued on 6-6-2003, which was served on the managing partner of the firm and asked to file the return for the block period within 30 days from the date of receipt of notice. In response to notice, the firm has filed return for the block period on 11- 08-2003, declaring undisclosed income of Rs. 35,00,000/-. As per the return of income, tax payable on undisclosed income was Rs. 22,09,000/- as against this, the assessee has paid a sum of Rs. 9,00,000/- and balance amount of Rs. 13,09,000/- shown as payable in the return of income. The assessee has filed a letter along with return of income and requested to grant time for payment of taxes as it is unable to arrange money immediately. The assessment was completed u/s 153BC, r.w.s. 143(3) on 31-03-2005 and determined the undisclosed income of Rs. 85,30,933/-. The assessment travelled to ITAT and consequent to the order of ITAT, the AO determined the undisclosed income of Rs. 42,59,159/-. 3. The Assessing Officer, initiated penalty proceedings u/s 158BFA(2). In response to show cause notice, the assessee filed a detailed replay and requested to drop the penalty proceedings. The Assessing officer, after consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, he argued that the order of Assessing Officer should be confirmed. 5. Per contra, the authorised representative of the assessee submitted that as per the scheme of provisions of section 158BFA(2) second proviso, penalty can be levied only on the undisclosed income over and above the returned and assessed income. He further, argued that though there is marginal delay of 10 days in filing the return of income, the Assessing Officer proceeded to assess the income on the basis such return, therefore, it cannot be held as not furnishing the return within the time allowed in the notice. He further argued that the assessee has paid the total tax due on the undisclosed income finally assessed consequent to ITAT order. To this effect he has furnished copy of order giving effect to ITAT order, which is available at paper book page No. 48 & 49. The authorised representative further submitted that the additional undisclosed income determined is based on the valuation report, which is an estimate and penalty cannot be levied on additions made on estimation basis. He further, submitted that the CIT(A) has rightly levied the penalty on undisclosed income over and above the undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermined by the AO under cl. (c) of Section 158BC : Provided that no order imposing penalty shall be made in respect of a person if- (i) such person has furnished a return under cl. (a) of Section 158BC : (ii) the tax payable on the basis of such return has been paid or, if the assets seized consist of 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 AO 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. A careful study of section 158BFA(2) the first proviso made it clear that the Assessing Officer may direct the assessee to pay a penalty in respect of undisclosed income determined by the AO under clause (c) of section 158BC, in case the assessee fails to file the block retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returned income. In the present case, the undisclosed income finally assessed at Rs. 42,59,151/- as per the consequential order passed by AO, giving effect to ITAT order. The assessee admitted a undisclosed income of Rs. 35,00,000/- in the block return. Thus, there was difference of Rs. 7,59,151/- in the assessed income in excess of returned income. The CIT(A), after considering the factual position and also considering the third member decision of ITAT Cochin bench in the case of DCIT vs. Heera Constructions Co P. Ltd 125TTJ 589, confirmed the penalty on this portion of undisclosed income. The decision of ITAT Cochin bench case was examined. The Third member in the case held as under. In the case in hand and evident from the question referred to me, the controversy is restricted to the deduction of the sum of Rs. 79,10,182 shown in the return as undisclosed income in Form No. 2B. The said sum should not be taken into account for purposes of levy of penalty under s. 158BFA(2). It is not anybody's case that no order of penalty can be made in this case. Therefore, question of considering whether that four conditions/circumstances mentioned in the first proviso are satisfied does n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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