9911796707
TMI Blog2008 (3) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... tiala (Punjab) Vs. ACIT Circle, Patiala for the Block period 1.4.1986 to 2.1.1997, raising the following proposed substantial questions of law:- (i) Whether on the facts and in the circumstances of the case, the ITAT was right in law in deleting the penalty imposed under Section 158BFA (2) of the Act by ignoring its own finding that the income of Rs.3,76,640/- constituted undisclosed income within the meaning of section 158BB(1) (ca) read with Section 158BC(c ) of the Act and that such undisclosed income attracted penal provisions under Section 158BFA(2)." (ii)Whether on the facts and in the circumstances of the case, the ITAT was justified in deleting the penalty on the ground that the assessee still had ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal filed by the assessee against the order of the assessment was partly allowed vide order dated 12.11.1999. However, the findings of the Assessing Officer pertaining to the addition of Re.3,76,640/- shown as income by the appellant in his return filed on 17.1.1997 for the Assessment Year 1996-97 were upheld by the Commissioner of Income Tax(Appeals). 3. Aggrieved against the order of the Commissioner of Income Tax(Appeals), the assessee filed further appeal before the Tribunal challenging the order of the Assessing Officer, which was confirmed by the Commissioner of Income Tax(Appeals) adding the income of Rs.3,76,640/- as an undisclosed income within the meaning of Section 158 BB(1)(ca) on the ground that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve reply put forth by the assessee which is not correct because return of income for the assessment year 1996-97 was due on 30.10.1996 and the same was filed on 17.1.1997 declaring income of Rs.3,76,640/- after the search and seizure operation conducted by the department on 2.1.1997 i.e., precisely a fortnight after the search u/s 132(1) of the Income Tax Act, 1961. It was an after thought on the part of the assessee which clearly shows that the assessee had concealed particulars of his income and declared his income only after the search operation conducted on 2.1.1997. Accordingly, the declaration under Part III of the Block Assessment by the assessee of income of Rs.3,76,640/- is the undisputed income and not what it has claimed. Moreove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has to be exercised by the Assessing Officer considering the facts and circumstances of the case. 7. The Commissioner of Income Tax (Appeals) dismissed the appeal vide order dated 19.9.2005.The relevant part of the order is reproduced as under: - " The assertion made by the learned counsel of the appellant that imposition of penalty u/s 158 BFA(2) of the Act is discretionary and not mandatory is not disputed. Nevertheless, it is noted that 2nd proviso to sub section 2 of section 158 BFA stipulates that penalty "shall" be imposed on such portion of undisclosed income determined which is in excess of amount of undisclosed income shown in the return. In the case under consideration, there is no dispute that the sum of Rs.&nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome should be in excess of the returned income and such excess income is in the nature of undisclosed income." 8. Not satisfied with the order of the Commissioner of Income Tax (Appeals), the assessee filed further appeal before the Tribunal challenging the said order. The Tribunal allowed the appeal vide order dated 25.4.2007 filed by the assessee and reversed the order of the Commissioner of Income Tax (Appeals) by holding that it is not the case of the revenue that the assessee either concealed the income or furnished inaccurate particulars of such income. It can be said rather the assessee is on more sound wicket due to the fact that the assessee filed the advance tax before the search and secondly there was still time av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97 as the search took place on 2.1.1997 and before the expiry of the said period as provided under Section 139(4) of the Act. Undisputedly, the assessee had paid the entire Advance Tax and was claiming refund. Therefore, in such a situation, the assessee was saved by the proviso (i) to sub clause (2) to Section 158 BFA of the Act. For imposing penalty under Section 158 BFA (4), there is discretion with the Assessing Officer but at the same time, the said discretion has to be used in a judicious way. As in the present case, there is no concealment of income since the assessee has already paid the advance tax. If the assessee was having any intention not to pay the tax, he would not have paid the advance tax. 11. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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