The ACIT, Gandhidham Circle,, GANDHIDHAM v. M/s. M.R. Shah Transport,, GANDHIDHAM

ITSSA 7/RJT/2011 | misc
Pronouncement Date: 25-10-2016 | Result: Dismissed

Appeal Details

RSA Number 724916 RSA 2011
Assessee PAN ITANO1351A
Bench Rajkot
Appeal Number ITSSA 7/RJT/2011
Duration Of Justice 5 year(s) 5 month(s) 26 day(s)
Appellant The ACIT, Gandhidham Circle,, GANDHIDHAM
Respondent M/s. M.R. Shah Transport,, GANDHIDHAM
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 25-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 25-10-2016
Date Of Final Hearing 23-08-2016
Next Hearing Date 23-08-2016
Assessment Year misc
Appeal Filed On 29-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI AMARJIT SINGH ACCOUNTANT MEMBER ./ IT(SS)A.NO.7/RJT/2011 / BLOCK PERIOD : [01.04.2001 TO 06.02.2002 AND 6 PRECEDING YEARS] ACIT GANDHIDHAM CIRCLE GANDHIDHAM-KUTCH. VS M/S.M.R. SHAH TRANSPORT PLOT NO.63 SECTOR NO.8 GANDHIDHAM-KUTCH. / (APPELLANT) !' / (RESPONDENT) REVENUE BY : SHRI YOGESH PANDEY CIT-DR ASSESSEE BY : SHRI M.J. RANPURA AR / DATE OF HEARING : 23/08/2016 / DATE OF PRONOUNCEMENT: 25/10/2016 #$%/ O R D E R PER RAJPAL YADAV JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST TH E ORDER OF THE LD.CIT(A) DATED 20.1.2011 PASSED FOR THE BLOCK PERI OD ENDING ON 6.2.2002. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD .CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.16 27 553/- IMPOSED BY T HE AO UNDER SECTION 158BFA(2) OF THE INCOME TAX ACT 1961. 3. BRIEF FACTS OF THE CASE ARE THAT SEARCH OPERATIO N UNDER SECTION 132 OF THE INCOME TAX ACT 1961 WAS CARRIED OUT AT THE PREMISE S OF THE ASSESSEE ON 6.2.2002. DURING THE COURSE OF SEARCH LOOSE PAPERS WERE FOUND AND DULY IT(SS)A NO.07/RJT/2014 2 INVENTORISED UNDER ANNEXURE A/13 FROM PAGE NOS.1 TO 221. ACCORIDNG TO THE LD.AO PAGE NO.66 TO 77 OF ANNEXURE A/13 PERTAINED TO THE NOTICE OF ADDITIONAL STAMP DUTY REQUIRED TO BE PAID BY THE ASSESSEE ON V ARIOUS PROPERTIES PURCHASED BY THE ASSESSEE. THE AO HAS TABULATED TH E DETAILS OF PURCHASES AND OBSERVED THAT A SUM OF RS.2 65 940/- WAS PAID AS AD DITIONAL STAMP DUTY. ON THE BASIS OF THIS NOTICE IT WAS INFERRED BY THE AO THAT THE ASSESSEE MUST HAVE PAID SOMETHING MORE THAN THE ONE STATED IN THE SALE DEED. IN ORDER TO BUTTRESS HIS CONCLUSION HE FURTHER RELIED UPON THE STATEMEN T OF SHRI ATMARAM J. NAVANI WHO HAPPENED TO A BROKER IN SUCH TRANSACTIO NS. ACCORDINGLY ADDITION OF RS.26 59 400/- WAS MADE TO THE TOTAL IN COME OF THE ASSESSEE. IT EMERGES FROM THE RECORD THAT IN RESPONSE TO THE NOT ICE RECEIVED UNDER SECTION 158BC OF THE INCOME TAX ACT THE ASSESSEE HAS FILED RETURN FOR THE BLOCK PERIOD AT RS.3 00 000/- AND THE ASSESSMENT ORDER W AS PASSED UNDER SECTION 158BC OF THE ACT ON 27.2.2004 AND TOTAL UNDISCLOSE D INCOME OF THE ASSESSEE WAS DETERMINED AT RS.32 77 674/-. IN OTHER WORDS IN THE FIRST ROUND OF ASSESSMENT ORDER AN ADDITION ON ACCOUNT OF UNEXPLA INED INVESTMENT IN THE IMMOVABLE PROPERTY WAS MADE AT RS.30 80 525/-. THI S ORDER WAS CHALLENGED BEFORE THE LD.CIT(A) AND THE LD.CIT(A) HAS DELETED THE ADDITION VIDE ORDER DATED 7.6.2004. 4. DISSATISFIED WITH THE ORDER OF THE LD.CIT(A) RE VENUE WENT IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL HAS SET ASIDE THE ORDER OF THE LD.CIT(A) VIDE IT(SS)A.NO.60/RJT/2004. THE TRIBUNAL VIDE ITS ORDER DATED 28.2.2006 HAS SET ASIDE THE ISSUE TO THE FILE OF THE AO. IN THE FRESH ASSESSMENT PROCEEDINGS THE LD.AO SCALED DOWN THE ADDITION TO RS.26 59 400/- AS AGAINST RS.30 80 525/- IN THE FIRST ROUND. THIS ASSESSMENT ORDER DATED 18.12.2006 WAS CHALLENGED BEFORE THE LD.CIT(A) AND THE LD.CIT (A) AGAIN DELETED THE ADDITION. REVENUE WENT IN APPEAL BEFORE THE TRIBUN AL VIDE IT(SS)A NO.07/RJT/2014 3 IT(SS)A.NO.21/RJT/2007. THE TRIBUNAL HAS SET ASIDE THE ORDER OF THE LD.CIT(A) AND RESTORED THAT OF THE AO. IN THIS WAY ADDITION OF RS.26 59 400/- HAS BEEN CONFIRMED. THE LD.AO HAS I NITIATED PENALTY PROCEEDINGS UNDER SECTION 158BFA(2) AND IMPOSED PEN ALTY AT RS.16 27 553/-. ON APPEAL THE LD.CIT(A) HAS DELETED THIS PENALTY B Y OBSERVING AS UNDER: 4.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER PENA LTY ORDER AND THE SUBMISSION FILED BY THE AR OF THE APPELLANT. I FIND THAT THE ADDITION IS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PU RCHASE OF PROPERTY HAS BEEN WORKED OUT ON THE BASIS OF ADDITIONAL STAM P DUTY PAYMENT. HOWEVER IT IS SEEN THAT NO EVIDENCE OTHER THAN NOT ICES FOR PAYMENT OF ADDITIONAL STAMP DUTY AND THE STATEMENT OF SHRI ATM ARAM J NAVANI WHO CONFIRMED THAT THE ACTUAL CONSIDERATION PAID BY THE APPELLANT WAS DIFFERENT FROM THE DOCUMENTED PRICE WAS FOUND DURI NG THE SEARCH OPERATION OR THE POST SEARCH ENQUIRIES. THE BOOKS O F ACCOUNTS ALSO DID NOT REVEAL ANY EVIDENCE OF PAYMENT OF CONSIDERATION OVER AND ABOVE THAT WHAT IS RECORDED IN THE DOCUMENTS. IT IS ALSO SEEN THAT ON TWO OCCASIONS THE ADDITION MADE BY THE AO HAS BEEN DELE TED BY THE CIT(A). EVEN THE HON. ITAT RAJKOT IN THE FIRST ROUND HAD S ET ASIDE THE MATTER BACK TO THE FILE OF THE AO. THE APPEAL OF THE APPEL LANT HAS BEEN ADMITTED BY THE HON. GUJARAT HIGH COURT. THEREFORE IT IS CLEAR THAT THE ISSUE UNDER CONSIDERATION IS THE ONE WHICH INVOLVES SUBSTANTIAL QUESTION OF LAW. 4.3(I) PENALTY U/S. 271(L)(C) AND U/S. 158BFA(2) CA N BE LEVIED ONLY IS ESTABLISHED THAT THERE IS AN ATTEMPT ON THE PART OF THE APPELLANT TO CONCEAL PARTICULARS OF INCOME RESULTING IN EVASION OF TAX. HOWEVER IN THE INSTANT CASE AO HAD MADE THE ADDITIONS ON THE BASIS OF PAYMENT OF ADDITIONAL STAMP DUTY ONLY. THEREFORE IN THE ABSENCE OF ANY EVIDENCE IT CANNOT BE ASSUMED THAT THE APPELLAN T HAD MADE PAYMENT OVER AND ABOVE THE DOCUMENTED PRICE. FURTHE R PENALTY CANNOT BE LEVIED WHEN TWO OPINIONS ARE POSSIBLE. FURTHER IN THIS CASE THE ADDITION HAS BEEN UPHELD IN THE SECOND RO UND OF ASSESSMENT PROCEEDINGS. IT IS ALSO SEEN THAT THE APPELLATE AUT HORITIES HAD DIVERGENT VIEWS ON THE ISSUE OF ADDITION. THE MATTE R IS PENDING BEFORE THE HON. GUJARAT HIGH COURT WHERE THE APPEAL HAS BEEN ADMITTED. THIS INDICATES THAT THE HON'BLE GUJARAT H IGH COURT FOUND IT(SS)A NO.07/RJT/2014 4 THAT THE ISSUE INVOLVED SUBSTANTIAL QUESTION OF LAW . IN SUCH A SITUATION PENALTY U/S.!58BFA(2) IS NOT LEVIABLE. TH E IT AT AHMEDABAD 'A' THIRD MEMBER BENCH IN THE CASE OF RUP AM MERCANTILES LTD. (IN LIQUIDATION) & ORS.-V. DCIT RE PORTED IN 91 ITD 237 (AHD) (TM) HAS HELD AS UNDER: : 'HIGH COURT HAVING ADMITTED APPEAL OF ASSESSEE AGAI NST DISALLOWANCE FINDING A SUBSTANTIAL QUESTION OF LAW INVOLVED IN T HE MATTER THE CLAIM OF ASSESSEE FOR DEDUCTION OF ENTIRE AMOUNT IN THE YEAR OF PAYMENT WAS NOT MALA FIDE AND PENALTY UNDER S. 271(L)(C) WAS NOT AT TRACTED THE PENALTY LEVIED U/S. 158BFA(2) IS DIRECTED TO BE DELETED. ' FURTHER THE ITAT AHMEDABAD IN THE CASE OF MISTRY B UILDERS P LTD. VS ACIT CIRCLE-1 BHAVNAGAR IN ITA NO 1351 AND 1352/AHD /2010 HELD AS UNDER: 'THE MATTER IS SUBJUDICE BEFORE THE HON'BLE GUJARAT HIGH. .... THUS THE MATTER HAS NOT REACHED FINALITY AND.THE ASSESSEE HA S BEEN ABLE TO EXPLAIN THAT IT HAS AN ARGUABLE CASE. THE HON'BLE R AJASTHAN HIGH COURT IN THE CASE OF CIT VS HARSHVARDHAN CHEMICALS & MINERALS LTD (259 1TR 212) HELD THAT IF ARGUABLE-CLAIM OF DEDUC TION IS MADE OUT NO PENALTY U/S. 27L(L)(C) SHOULD BE LEVIED. ' IN VIEW OF THE ABOVE IT IS CLEAR THAT THERE ARE TW O VIEWS POSSIBLE ON THE ISSUE AND IN SUCH SITUATIONS PENALTY FOR CONCEALMEN T CANNOT BE LEVIED. IN VIEW OF THE ABOVE THE PENALTY LEVIED BY THE AO IS NOT JUSTIFIED. THE SAME IS DELETED. 5. BEFORE US THE LD.DR HAS SUBMITTED WRITTEN SUBMI SSIONS VIDE LETTER DATED 13.6.2016. IN THE WRITTEN SUBMISSION ON THE STRENGTH OF HONBLE GUJARAT HIGH COURT DECISIONS RENDERED IN THE CASE O F CIT VS.BEECHARBHAI P. PARMAR 341 ITR 499 (GUJ) HAS CONTENDED THAT PENALT Y IMPOSED UNDER SECTION 158BFA(2) IS MANDATORY ONE. THE ADDITION MADE ON T HE BASIS OF ESTIMATION MAY BE ONE OF THE GROUNDS ON WHICH DISCRETION NOT T O IMPOSE PENALTY MAY BE EXERCISED BY THE AO. BUT SUCH DISCRETION IS TO BE EXERCISED BY THE AO AND IT(SS)A NO.07/RJT/2014 5 NOT BY THE TRIBUNAL. HE POINTED OUT THAT THE HON BLE HIGH COURT DID NOT APPROVE EXERCISE OF DISCRETION AT END OF THE TRIBUN AL AND THEREFORE THE LD.CIT(A) OUGHT TO HAVE NOT DELETED PENALTY. HE PL ACED ON RECORD COPY OF THE HONBLE GUJARAT HIGH COURTS DECISION IN THE CASE O F CIT VS.BEECHARBHAI P. PARMAR (SUPRA). 6. ON THE OTHER HAND THE LD.COUNSEL FOR THE ASSESS EE RELIED UPON THE ORDERS OF THE LD.CIT(A). HE FURTHER PLACED RELIANCE ON TH E DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. LIQUID INVE STMENT AND TRADING CO. IN ITA NO.240/2009. HE PLACED ON RECORD COPY OF THE H ONBLE HIGH COURT DECISION DATED 5.10.2010. ON THE STRENGTH OF THIS DECISION HE CONTENDED THAT APPEAL AGAINST THE QUANTUM ADDITION HAS BEEN ADMITT ED BY THE HONBLE GUJARAT HIGH COURT. THUS THERE IS A SUBSTANTIAL Q UESTION OF LAW ON SUCH ADDITION. SIMILARLY HE MADE REFERENCE TO FOUR ORD ERS OF THE ITAT AND ALSO PLACED ON RECORD COPIES OF THESE ORDERS. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. AS FAR AS ORDERS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE ARE CONCERNED THEY ARE QUITE DISTINGUISHABLE ON FACTS. IN ALL THESE CASES PENALTY WAS IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME T AX ACT. A PENALTY UNDER SECTION 271(1)(C) IS TO BE IMPOSED ALTOGETHER UNDER DIFFERENT CIRCUMSTANCES THAN THE ONE IMPOSED UNDER SECTION 158BFA(2) OF THE INCOME TAX ACT. THIS DISTINCTION HAS BEEN ELABORATELY PROPOUNDED IN THE DECISION OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS.B EECHARBHAI P. PARMAR (SUPRA) REFERRED TO BY THE LD.DR. BEFORE EMBARKING UPON AN INQUIRY ON THE FACTS OF THE PRESENT CASE WE DEEM IT APPROPRIATE T O TAKE NOTE OF THE FINDING RECORDED BY THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS.BEECHARBHAI P. PARMAR. THE HONBLE COURT HAS TA KEN NOTE OF SECTION IT(SS)A NO.07/RJT/2014 6 158BFA AND THEREAFTER EXPOUNDED THE MEANING AND IN TERPRETATION OF THIS SECTION. THE DISCUSSION MADE BY THE HONBLE COURT FROM PARA 8 TO 9 IN THIS REGARD READS AS UNDER: 8. HAVING THUS HEARD LEARNED COUNSEL FOR THE PARTI ES WE MAY TAKE NOTE OF THE RELEVANT STATUTORY PROVISIONS. SEC. 158 BFA 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 INTER EST AND PENALTY IN CERTAIN CASES. SUB-S. (2) OF S. 158BFA WHICH IS RE LEVANT FOR OUR PURPOSE READS AS UNDER: '158BFA. LEVY OF INTEREST AND PENALTY IN CERTAIN CA SES(1) ................... (2) THE AO OR THE CIT(A) IN THE COURSE OF ANY PROC EEDINGS 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 LEVI ABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO LEVIABL E IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED BY THE AO UNDER CL. ( C) OF S. 158BC : PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MA DE IN RESPECT OF A PERSON IF (I) SUCH PERSON HAS FURNISHED A RETURN UNDER CL. (A ) OF S. 158BC; (II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HA S BEEN PAID OR IF THE ASSETS SEIZED CONSIST MONEY THE ASSESSEE OFFERS TH E 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 PRECEDI NG PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED BY TH E 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 DETER MINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN.' IT(SS)A NO.07/RJT/2014 7 8. UPON PERUSAL OF SUB-S. (2) OF S. 158BFA OF THE A CT IT WOULD EMERGE THAT THE AO OR CIT(A) HAS THE POWER TO IMPOSE PENAL TY IN COURSE OF ANY PROCEEDINGS UNDER THE SAID CHAPTER WHICH PENALTY W OULD RANGE BETWEEN 100 PER CENT TO 300 PER CENT OF THE TAX LEV IABLE ON THE UNDISCLOSED INCOME DETERMINED BY THE AO UNDER CL. ( C) OF S. 158BC OF THE ACT. 8.1 PROVISO TO SUB-S. (2) OF S. 158BFA OF THE ACT HOWEVER PROVIDES FOR FOUR CONDITIONS UPON SATISFACTION OF WHICH THE AS SESSEE WOULD GET IMMUNITY FROM SUCH PENALTY. SUCH CONDITIONS ARE TO BE SATISFIED CUMULATIVELY. IN ESSENCE IT PROVIDES THAT THE PENA LTY SHALL NOT BE IMPOSED IF THE ASSESSEE FURNISHES A RETURN UNDER CL . (A) OF S. 158BC; ALSO PAYS TAX ON THE BASIS OF SUCH RETURN OR OFFER S FOR ADJUSTMENT ANY MONEY SEIZED OR PRODUCES EVIDENCE OF HAVING PAID S UCH TAX AND ALSO DOES NOT FILE APPEAL AGAINST ASSESSMENT ON THAT PAR T OF THE INCOME WHICH IS SHOWN IN THE RETURN. IN OTHER WORDS IN CA SES OF PROCEEDINGS FOR BLOCK ASSESSMENT THE ASSESSEE WOULD HAVE AN AD DITIONAL CHANCE TO AVOID PENALTY BY FURNISHING A RETURN PAYING TAX ON SUCH UNDISCLOSED RETURN AND ACCEPTING FINALITY WITH RESPECT TO THE S AME. 8.2 FURTHER PROVISO TO SUB-S. (2) OF S. 158BFA IS M ERELY IN NATURE OF CLARIFICATION AND PROVIDES THAT THE FIRST PROVISO W OULD NOT APPLY WHERE UNDISCLOSED INCOME DETERMINED BY THE AO IS IN EXCES S OF THE INCOME SHOWN IN THE RETURN AND IN SUCH CASES PENALTY SHAL L BE IMPOSED ON THAT PORTION OF THE UNDISCLOSED INCOME DETERMINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN. 8.3 CLOSELY SEEN SUB-S. (2) OF S. 158BFA MAKES IT CLEAR THAT IT IS WELL WITHIN THE DISCRETION 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 L EAVING DISCRETION TO THE OFFICER. IN ABSENCE OF ANY SPECIAL REASON THE W ORD 'MAY' CANNOT BE READ AS 'SHALL'. 8.4 IN CASE OFHINDUSTAN STEEL LTD. VS. STATE OF ORI SSA (1972) 83 ITR (SC) 26 THE APEX COURT IN CONNECTION WITH PENALTY P RESCRIBED IN ORISSA SALES-TAX ACT OBSERVED : '.. ..AN ORDER IMPOSING PENALTY FOR FAILURE TO CARR Y OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEE DING AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED IT(SS)A NO.07/RJT/2014 8 DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CO NDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD OF IT S OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFU L 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 EX ERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCE S. EVEN IF A MINIMUM PENALTY IS PRESCRIBED THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSED PE NALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM ABONA FIDE BELIEF THAT THE OFFEND ER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE.' 9. THE CONTENTION OF THE COUNSEL FOR THE REVENUE TH AT ONLY UPON SATISFACTION OF THE CONDITIONS CONTAINED IN PROVISO TO SUB-S. (2) THAT THE ASSESSEE IN CASE OF THE BLOCK ASSESSMENT CAN BE SP ARED OF THE PENALTY CANNOT BE ACCEPTED. IT IS OF COURSE TRUE THAT UPO N SATISFYING SUCH CONDITIONS THE ASSESSEE WOULD GET IMMUNITY FROM PE NALTY. NEVERTHELESS THIS IS NOT A THING AS TO SUGGEST THA T IN NO OTHER CASE OR ON NO OTHER GROUND THE AO MAY AT HIS DISCRETION N OT IMPOSE PENALTY THE MOMENT ADDITIONS UNDER CL. (C) OF S. 158BC ARE SUSTAINED. IN OTHER WORDS WE ARE UNABLE TO HOLD THAT THE PENALTY UNDER S. 158BFA(2) IS MANDATORY IN NATURE. 9.1 IT IS TRUE THAT S. 273B OF THE ACT WHICH PROVID ES THAT PENALTY SHALL NOT BE IMPOSED IN CERTAIN CASES ON THE ASSESSEE PRO VING THAT THERE WAS REASONABLE CAUSE FOR FAILURE TO PAY TAX REFERS TO S EVERAL PROVISIONS SUCH AS SS. 271 271A ETC. MAKES NO MENTION OF S. 158B FA(2). THIS STILL DOES NOT MEAN THAT PENALTY UNDER S. 158BFA(2) IS MA NDATORY. 8. THE HONBLE COURT THEREAFTER OBSERVED THAT THE TRIBUNAL IN THAT CASE HAS DELETED PENALTY FOR THREE REASONS VIZ. (A) ADDI TION WAS MADE ONLY ON ESTIMATION (B) THERE IS NO CONCEALMENT OF PARTICUL ARS BY THE ASSESSEE AND (C) CERTAIN ADDITIONS WOULD NOT GIVE RISE TO PENALTY PR OCEEDINGS. THESE REASONS DID NOT GET APPROVAL OF THE HONBLE COURT AND THER EFORE PENALTY IN THE CASE OF CIT VS.BEECHARBHAI P. PARMAR (SUPRA) WAS RESTORE D. ON THE STRENGTH OF THIS DECISION IT WAS CONTENDED BY THE LD.DR THAT T HOUGH IMPOSITION OF PENALTY UNDER SECTION 158BFA(2) MAY NOT BE MANDATORY BUT O NCE A DISCRETION WAS IT(SS)A NO.07/RJT/2014 9 EXERCISED BY THE AO TO VISIT THE ASSESSEE WITH PENA LTY THEN THE TRIBUNAL HAS NO POWER TO REPLACE DISCRETION EXERCISED BY THE AO WITH THAT OF THE TRIBUNAL. 9. IT IS PERTINENT TO MENTION HERE THAT CHAPTER XIV B STARTING FROM SECTION 158B PROVIDE SPECIAL PROCEDURE FOR ASSESSMENT OF SE ARCH CASES UPTO THE SEARCH CONDUCTED PRIOR TO 31.5.2003. UNDER THE SCH EME OF BLOCK ASSESSMENT INCOME OF AN ASSESSEE FOR THE BLOCK PURPOSE IS TO B E COMPUTED UNDER SECTION 158BB. IN A SERIES DECISIONS IT HAS BEEN HELD THA T INCOME FROM THE BLOCK IS TO BE COMPUTED ON THE BASIS OF SEIZED MATERIAL. IN OT HER WORDS WHEN THE AO ISSUES NOTICE UNDER SECTION 158BC OF THE ACT INVIT ING THE ASSESSEE TO FILE RETURN FOR THE UNDISCLOSED INCOME HE WOULD SUPPLY COPIES OF SEIZED MATERIAL ON THE BASIS OF WHICH THE ASSESSEE HAS TO COMPUTE T RUE UNDISCLOSED INCOME. IN OTHER WORDS MATERIAL ON THE BASIS OF WHICH INCO ME OF AN ASSESSEE HAS TO BE DETERMINED FOR THE PURPOSE OF BLOCK PERIOD IS COMMO N. IT IS THE MATERIAL COLLECTED DURING THE COURSE OF SEARCH. IN THESE CI RCUMSTANCES THE ALLEGATIONS OR THE CHARGE AGAINST AN ASSESSEE SHOULD BE WHY HE FAILED TO COMPUTE TRUE UNDISCLOSED INCOME. LIKE IN THE PRESENT CASE THE ASSESSEE HAS DISCLOSED AN INCOME OF RS.3 LAKHS FOR THE BLOCK PERIOD. THE AO HAS DETERMINED THE TAXABLE INCOME OF THE ASSESSEE AT RS.26 59 400/-. ALLEGATION FOR VISITING THE ASSESSEE WITH PENALTY UNDER SECTION 158BFA(2) CAN B E WHY THE ASSESSEE FAILED TO COMPUTE HIS TRUE UNDISCLOSED INCOME. ING REDIENTS OF SECTION 271(1)(C) I.E. REVENUE HAS TO ESTABLISH THAT THE AS SESSEE HAD EITHER CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF SUCH INCOME HAS NO SUCH PLACE FOR VISITING THE ASSESSEE WITH PENALT Y UNDER SECTION 158BFA(2) AND FOR THIS REASON WE HAVE DISTINGUISHED DECISION REFERRED TO BY THE LD.COUNSEL FOR THE ASSESSEE. IN THE PRESENT CASE EVIDENCE ALLEGED TO HAVE BEEN FOUND AGAINST THE ASSESSEE WAS COPY OF NOTICE INVIT ING FOR PAYMENT OF ADDITIONAL STAMP DUTY. THIS STAMP DUTY IS OF RS.2 65 940/-. SINCE IT MIGHT BE IT(SS)A NO.07/RJT/2014 10 CHARGED AT THE RATE OF 10% OF THE VALUE THEREFORE THE AO HAS MULTIPLIED IT WITH 10 AND WORKED OUT UNEXPLAINED INVESTMENT OF RS .26 59 400/-. WE HAVE TO EVALUATE WHAT HAD OPERATED IN THE MINDS OF THE A SSESSEE WHEN HE HAS FILED HIS RETURN. THERE MAY BE VARIOUS FACTORS. ONE OF THE FACTORS MAY BE THAT AN AMOUNT OF RS.2 63 950/- WAS NOT SUBSTANTIAL AMOUNT AND THE ASSESSEE MIGHT HAVE NOT AGITATED THIS AMOUNT WITH THE STAMP DUTY V ALUATION AUTHORITY FOR GETTING THE SALE DEED REGISTERED. THERE IS NO OTHE R DIRECT EVIDENCE EXHIBITING THE PAYMENT OF RS.26 59 400/- FOR THE PURCHASE OF T HE PROPERTY. THE AO HAS NOT RECORDED THE STATEMENT OF VENDORS. HE WAS NOT ABLE TO LAY HIS HAND ON ANY OTHER MATERIAL. LITIGATION COST FOR CHALLENGING VA LUATION OF PROPERTY FOR THE PURPOSE OF STAMP DUTY VALUATION MIGHT BE MORE THAN THE PAYMENT OF ADDITIONAL STAMP DUTY. WHEN THIS FACT WAS BEFORE T HE ASSESSEE WHILE IT WAS PREPARING HIS RETURN THEN THERE MUST BE A WAVERIN G MIND. ON ONE HAND THERE ARE NOTICES ISSUED BY THE STAMP DUTY VALUATION AUTH ORITY FOR PAYMENT OF STAMP DUTY ON THE OTHER HAND THE FACTS IN THE KNOWLEDGE OF THE ASSESSEE THAT IT HAS NOT MADE EXTRA PAYMENT. IN SUCH SITUATION WHILE C OMPUTING TRUE UNDISCLOSED INCOME ASSESSEE COULD NOT INCLUDE THE ALLEGED UNEX PLAINED INVESTMENT COMPUTED BY THE AO. HAD THE ASSESSEE INCLUDED IT THEN WHEN IT WILL GET CHANCE TO REBUT THIS ASSUMPTION. THE HONBLE GUJAR AT HIGH COURT IN THE CASE OF CIT VS.BEECHARBHAI P. PARMAR (SURPA) HAS OBSERVE D IN PARA 8.1 IN OTHER WORDS IN CASES OF PROCEEDINGS FOR BLOCK ASSESSMENT THE ASSESSEE WOULD HAVE AN ADDITIONAL CHANCE TO AVOID PENALTY BY FURNISHING A RETURN PAYING TAX ON SUCH UNDISCLOSED RETURN AND ACCEPTING FINALITY WITH RESPECT TO THE SAME. THIS WAS OBSERVED WHILE CONSTRUING THE MEANING OF SECTIO N 158BFA AND EXPOUNDING UNDER WHICH CONDITION THE ASSESSEE COULD GET IMMUNITY FROM SUCH PENALTY. NOW THIS IS THE AREA WHICH WOULD GIVE RI SE TO THE LITIGATION HOW THE ASSESSEE WOULD COMPUTE HIS TRUE UNDISCLOSED INCOME AND WHERE THERE IS A IT(SS)A NO.07/RJT/2014 11 DEBATE ABOUT THE COMPUTATION OF PARTICULAR AMOUNT O N THE BASIS OF ALLEGED SEIZED MATERIAL THEN THERE WOULD BE DIFFERENCE OF OPINION BETWEEN THE ASSESSEE VIS--VIS THE AO. IF IT IS DEMONSTRATED T HAT WITH THE HELP OF CIRCUMSTANTIAL EVIDENCE THAT INCLUSION OF A PARTICU LAR ITEM IN THE ULTIMATE UNDISCLOSED INCOME DETERMINED BY THE AO WAS NOT CER TAIN RATHER THERE CAN BE TWO OPINIONS ABOUT ITS INCLUSION OR EXCLUSION THEN TO OUR MIND THE ASSESSEE SHOULD NOT BE VISITED WITH PENALTY. JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS.BEECHARBHAI P. PAR MAR (SUPRA) HAS CATEGORICALLY LAID DOWN THAT IT IS NOT MANDATORY TO IMPOSE PENALTY UNDER SECTION 158BFA(2). SIMILARLY CONDITIONS REQUIRED T O BE FULFILLED FOR THE PURPOSE OF VISITING AN ASSESSEE WITH PENALTY UNDER SECTION 271(1)(C) ARE ALSO NOT TO BE EVALUATED FOR DECIDING THE FACTOR WHETHER THE ASSESSEE SHOULD BE VISITED WITH PENALTY OR NOT. IN OUR OPINION CIRCU MSTANCES FOR DECIDING THE FACTOR FOR VISITING AN ASSESSEE WITH PENALTY UNDER SECTION 158BFA(2) ARE ALTOGETHER DIFFERENT THAN THE ONE UNDER SECTION 271 (1)(C) OF THE ACT. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY ERROR I N THE ORDER OF HE LD.CIT(A) AND ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMI SSED. 10. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 25 TH OCTOBER 2016 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 25/10/2016