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TMI Blog2018 (10) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 - - - Dated:- 10-10-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For The Assessee : Shri S.N. Soparkar, and Shri Himanshu C. Shah For The Revenue : Shri S.K. Dev, Sr.DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER Assessee is in appeal before the Tribunal against order o f ld.CIT(A)-9, Ahmedabad dated 20.3.2015 passed for the block period 1.4.1995 to 27.9.2001. 2. Sole grievance of the assessee is that the ld.CIT(A) has erred in confirming penalty of ₹ 6,18,386/- imposed under section 158BFA(2) of the Income Tax Act, 1961. 3. Brief facts of the case are that a search under section 132 of the Act was carried out at the premises of the assessee on 27.9.2001. Simultaneous surveys were also conducted at different business premises. A notice under section 158BC was issued to the assessee, and in response to the notice, the assessee has filed return of income for the block period at NIL. The assessment order was passed on 31.10.2003whereby income of the assessee for the block period was determined at ₹ 27,77,98,314/-. The ld.AO has made addition on ten counts. On further appeal, almost all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has taken note of section 158BFA, and thereafter expounded the meaning and interpretation of this section. The discussion made by the Hon ble Court from para 8 to 9 in this regard reads as under: 8. Having thus heard learned counsel for the parties, we may take note of the relevant statutory provisions. Sec. 158BFA of the Act is part of Chapter XIV-B, which lays down special procedure for assessment of search cases. Sec. 158BFA pertains to levy of interest and penalty in certain cases. Sub-s. (2) of s. 158BFA, which is relevant for our purpose, reads as under: 158BFA. Levy of interest and penalty in certain cases-(1) ................... ( 2) The AO or the CIT(A), in the course of any proceedings under this chapter, may direct that a person shall pay by way of penalty a sum which shall not be less than the amount of tax leviable but which shall not exceed three times the amount of tax so leviable in respect of the undisclosed income determined by the AO under cl. (c) of s. 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 s. 158BC; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scretion of the AO, while framing the assessment for the block period, whether or not to impose any penalty or not. The words, may direct have to be given its normal meaning, leaving discretion to the officer. In absence of any special reason the word, may cannot be read as shall . 8.4 In case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR (SC) 26 the apex Court in connection with penalty prescribed in Orissa Sales-tax Act observed : .. .. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included the income on these two issues which has been added subsequently in the assessment proceedings, and confirmed upto the ITAT ? As far as addition regarding stock position, an explanation was given by the assessee during the assessment proceedings and copy of such explanation is available on page no.108 of the paper book. It is a letter dated 17.12.2002 written by the assessee in response to the notice received under section 142(1) of the Act. It is imperative upon us to take note of relevant part of the reply, which reads as under: [ 2] Stock at Bhavnagar Chemical Complex Your above referred letter also states the difference between the book, stock and physical stock in case of Limestone, salt and soda Ash. The question posed pertains to our Bhavnagar Site survey u/s.133A of Income Tax Act, 1961 was carried out. Any issue of such Survey proceedings cannot and ought not be covered while looking into Block assessment. Without prejudice to above, we draw your attention to the following facts: It is pertinent to bear in mind the following vital facts, which has substantial bearing in the process of physical stock taking. a. During the course of survey pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of Mr.V.N.Dewsai, our Vice President. The relevant reply was recorded in Gujarati, translated in English to reproduce hereunder. xxxx xxxx xxx xxxx xxxx xxx We enclose herewith a copy of a Statement of Stock physically verified on 27.9.2001. You may observe therein at the top of the paper, it has been mentioned that physical stock taken on urgent basis and below that normal stock and undersize stock have been separately taken and calculated. Inadvertently, this stock has been compared with Book stock. In fact the correct calculation of stock should be: Qty. In MT a. Stock of usable lime stone as specifically Stated NORMAL 30,937.600 b. Stock of unusable UNDER SIZE material (Not to be taken for Book Stock comparison) 7,847,100 c. Stock as per books Book stock found in Excess 32,080,082 1,142,482 6. A perusal of the above reply would indicate that measurement of stock was taken hypothetically i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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