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TMI Blog2016 (7) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... was unable to make up its mind as to whether the undisclosed income belonged to the company/assessee or to the director Sri S.N. Shroff. There was in those circumstances an understanding arrived at between the parties on the basis whereof the director made a disclosure of ₹ 2.16 crores whereas the company filed a nil return. Ultimately the undisclosed income of the director was assessed at ₹ 2.02 crores approximately and undisclosed income of the company was assessed at ₹ 37 lakhs. Both the CIT(A) and the Tribunal were of the opinion that in the facts of the case no penalty should be levied upon the company. The understanding arrived at between the revenue, the company and the director has not been disproved nor is that fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an undisclosed income of ₹ 2,02,66,971/- whereas the company filed a NIL return. The assessing officer was of the opinion that the undisclosed income of the company was ₹ 491.50 lakhs. In an appeal preferred by the assessee company the sum of ₹ 491.50 lakhs was reduced by the CIT(A) to a sum of ₹ 37 lakhs. The CIT did not direct commencement of any penalty proceedings. The assessing officer as already indicated had on the basis of seized documents assessed the undisclosed income of the company at a sum of ₹ 491.50 lakhs and had also started penalty proceedings. When the amount of undisclosed income was reduced by the CIT(A), in the quantum appeal, no fresh penalty proceeding was initiated. The reduction of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that: When the Assessing Officer was unable to decide that the undisclosed income reflected in the seized document belongs to appellant company or its Managing Director, the question of concealment becomes irrelevant. For the purpose of concealment, there has to be a clear finding that the income treated as concealed income, belong to the appellant company. 17. It is true that the penalty is with reference to the undisclosed income finally determined. But for this purpose, if the Ld.CIT(A) did not initiate penalty proceedings, he exercised the judicial discretion not to do so. The Assessing Officer while giving effect to this order cannot conceal this decision. Besides, it may not be correct to say that the proceedings before C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified. Accordingly, the order of penalty is cancelled and the appeal allowed. The learned Tribunal was of the following opinion: We are of the considered view that the Ld. CIT(A) has rightly held that considering the totality of circumstances, the judicial discretion restricting that the Assessing Officer permits him not to levy penalty and omission of exercise it appears unjustified . In view of the above, we do not find any reason to interfere with the order of the Ld. CIT(A). hence, we uphold the order of the Ld. CIT(A) and reject the ground of appeal taken by the Department. From the recital of the facts appearing from the order of the CIT(Appeals), it appears that there was some sort of understanding between the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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