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TMI Blog2014 (2) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... s also paid subsequently to him. The issue that whether the liability of professional fees accrued as on 31.03.1999 was a debatable issue and therefore penalty cannot be sustained on debatable issue. With respect to gross profit, he has noted that G.P. addition was made on the basis of estimate and therefore no penalty was leviable. Before us, the Revenue could not controvert the findings of CIT(A) by bringing any contrary material on record. We also do not agree with the submission of Revenue that penalty u/s. 158BFA is mandatory in view of the decision of Rajasthan High Court in the case of CIT vs. Satyendara Kumar Dosi (2009 (1) TMI 240 - RAJASTHAN HIGH COURT) where the Hon’ble High Court has held that levy of penalty u/s. 158BFA(2) is discretionary and not mandatary. - Decided in favour of assessee - I.T.(SS) A. No. 59 /AHD/2010 - - - Dated:- 21-2-2014 - Shri G.C.Gupta Vice President Shri Anil Chaturvedi, A.M. For the appellant : Shri J.P. Jhangid, Sr. D.R. For the Respondent : Shri Aseem Thakkar ORDER PER SHRI ANIL CHATURVEDI,A.M. 1. This appeal is filed by the Revenue against the order of CIT(A)-I, Baroda dated 14.10.2009 for Block Period 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, A.O. vide order dated 26.02.2009 levied penalty of ₹ 14,62,487/- under section 158BFA(2) of the Act. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) vide order dated 14.10.2009 allowed the appeal of the Assessee by holding as under:- 5.1 Undisclosed Agricultural Income: It is well settled that penalty proceedings and quantum proceedings are distinct and separate. Different standards have been prescribed both for the A.O. as well as the assessee. Here the issue is with regard to the amount of agriculture income earned by the assessee. The assessee claimed to have earned during the block period agricultural income of ₹ 35,72,353/-. However, the appellate authorities accepted, on the basis of evidences filed, agricultural income of ₹ 23,11,092/- only. Subsequently in the penalty proceedings, the assessee has furnished other evidences in the form of confirmations. This was not considered by the A.O. As per the decision of jurisdictional Bench of the ITAT in Gandhi Station vs. ACIT, 100 TTJ 1143, the same ought to have been considered. The A.O. has disallowed the agricultural income by treating it as business income. No instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned above. Accordingly, penalty in respect of disallowance of ₹ 11 lacs is cancelled. 5.3 Gross Profit: In a very large number of cases, the courts have consistently held that penalty may not be levied in respect of GP addition made purely on the basis of estimate, as in the instant case. In this regard, the decisions cited by the Id. AR (supra) are relevant. Following the decision of the jurisdictional Bench of the IT AT in the case of Allarakha I. Vohra v ACIT, in IT(SS)A No. 63/Ahd/2008, vide order dt. 31.12.2008, the penalty levied in respect of GP addition amounting to ₹ 76,217/- is cancelled. 5. Aggrieved by the order of CIT(A), the Revenue is now in appeal before us. Before us, the ld. D.R. submitted that the penalty was levied under section 158BFA on the addition which were confirmed by CIT(A) and ITAT. He took us through the findings of A.O. and supported his order. He further submitted that penalty under 158BFA is mandatory and therefore CIT(A) has erred in deleting the penalty. He also placed reliance on the decision in the case of Kandoi Bhogilal Mulchand vs. DCIT (2012) 341 ITR 271 (Guj.) CIT vs. Becharbhai Parmar (2012) 341 ITR 499 (Guj.) and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness income but for which no evidence during the search or otherwise was found to show that Assessee had earned business income outside it books and has not been disclosed in the return of income but was disguised as agriculture income. With respect to disallowance of professional fees, CIT(A) has given a finding that Assessee was engaged on 31.03.1999 and ₹ 4.50 lacs was also paid subsequently to him. The issue that whether the liability of professional fees accrued as on 31.03.1999 was a debatable issue and therefore penalty cannot be sustained on debatable issue. With respect to gross profit, he has noted that G.P. addition was made on the basis of estimate and therefore no penalty was leviable. Before us, the Revenue could not controvert the findings of CIT(A) by bringing any contrary material on record. 8. We also do not agree with the submission of Revenue that penalty u/s. 158BFA is mandatory in view of the decision of Rajasthan High Court in the case of CIT vs. Satyendara Kumar Dosi (2009) 315 ITR 172 where the Hon ble High Court has held that levy of penalty u/s. 158BFA(2) is discretionary and not mandatory. 9. In the case of CIT vs. Becharbhai Parmar (Supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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