1. This appeal filed by the assessee is directed against the order dt.
13th Feb., 2006 of the CIT(A), Central-I, Kolkata pertaining to block period 1990-91 to 14th Dec, 1999. In this appeal, the assessee has raised several grounds, but all of them are against confirming the penalty imposed under Section 158BFA(2) and further enhancing it with a direction to determine the quantum of penalty on the amount of difference between the loss declared in the return under Section 158BC of Rs. 1,29,57,430 and the income determined in the block assessment order of Rs. 35,73,902, i.e. Rs. 1,65,31,332.
2. The assessee-company is closely held by Sonthalia Group, The facts as emerge from the record and submissions made before the Tribunal are that a search and seizure operation was conducted in the residential and business premises of the assessee-company and its directors on 14th Dec, 1999 under Section 132 of the Act. It was brought to the notice of the Bench by the assessee's learned Counsel that, as a matter of fact, the appellant-group faced several search and seizure proceedings conducted by various authorities from time to time. Owing to the frequent raids the entire accounting system of the company went haywire. The records seized by the DGAE Department were released only in November, 1999. A month thereafter the same records were again seized by the IT Department making it extremely difficult for the appellant to reconcile the pending accounts in a reasonable time.
Copies of the voluminous seized documents could not also be obtained from the Department within the prescribed time-limit for filing the block return. In the circumstances the appellant could file its return for the block period upto 14th Aug., 2001 declaring a net loss of Rs. 1,29,57,430. As the said return was based only on available records which gave incomplete information, the appellant subsequently filed an application before the Settlement Commission under Section 245C(1) of the IT Act, 1961 on 21st Nov., 2001 disclosing its modified income for the block period. The same income i.e. Rs. 14,25,052 was also disclosed to the IT authorities by a disclosure petition dt. 20th Dec, 2001 substituting the loss return initially filed in response to the notice under Section 158BC. This disclosure was made on condition of granting immunity from penalty and prosecution as well as waiver of interest.
The block assessment was completed on the basis of the aforesaid conditional disclosure on 31st Dec, 2001. The Settlement Commission vide its order dt. 17th April, 2002 declined to entertain the application since the block assessment was already completed on 31st Dec, 2001 on the basis of the declaration made before the Department of the entire income disclosed in the settlement petition. During the course of verification and examination of the case, the AO found an additional amount of Rs. 21,50,850 which he added in the block assessment as undisclosed income over and above the amount of income disclosed by the assessee at Rs. 14,25,052. Thus, the block assessment was completed on a total undisclosed income of Rs. 35,73,902. No appeal was filed against the assessment order. The AO thus initiated penalty proceeding under Section 158BFA(2). According to him, Rs. 14,25,052 was arising from the voluntary disclosure made by the assessee in course of block assessment proceeding before detection by the AO, whereas Rs. 21,50,850 was detected by the AO on examination of the seized documents. The AO thus treated the sum of Rs. 21,50,850 as undisclosed income for the purpose of levy of penalty under Section 158BFA(2) and levied a penalty of Rs. 14,19,561 being a sum equivalent to the amount of tax leviable in respect of the undisclosed income of Rs. 21,50,850.
3. On appeal, the learned CIT(A) vide his appellate order dt. 13th Feb., 2006 enhanced the quantum of penalty by directing the AO to impose penalty to the extent of the amount of tax leviable on the difference of the returned loss (Rs. 1,29,57,430) and the income ultimately assessed (Rs. 35,73,902), the difference being Rs. 1,65,31,322. According to the CIT(A), in the case of the assessee there was no revised return and there is also no provision in the law for filing the revised return in case of block assessment. He further observed as under in para 15 of his order: 15. ...The original return disclosed loss of Rs. 1,29,57,430. The disclosure petitionif there is any such thing in the lawoffered to agree for the assessment of income of the block period at Rs. 14,25,052. The revision of income in this manner is to the extent of Rs. 1,43,82,482. The appellant found out that the disclosure made in the return under Section 158BC had been short by an amount of Rs. 1,43,82,482. Now instead of loss there is some income. The nondisclosure of such huge amount in the return under Section 158BC has not been explained. There is no way in which it can be treated as a voluntary disclosure. It is made after the search action and after the appellant had already made application for settlement of his case. There is no provision under which such disclosure can be treated as revision of the return under Section 158BC and there is no scope under the law for any promise that penalty shall not be levied. Even the disclosure thus made was further revised to Rs. 35,73,902 on detection of additional income by the AO of Rs. 21,50,850. The total difference between the declaration of undisclosed income in the return under Section 158BC and the undisclosed income finally assessed under Section 158BG is a staggering amount of Rs. 1,65,33,332. This is not explained in terms of specific error or omission inadvertently made at the time of filing the return. Therefore, the Gauhati High Court judgment as affirmed by the Supreme Court judgment is fully applicable to the case in terms of facts and law to this case.
The learned CIT(A) further opined that the decisions of several Courts relied upon by the assessee at various stages i.e. during the course of the penalty proceedings as well as the appellate proceedings are all distinguishable on facts. He further observed that there is a clear distinction between the provisions of Sections 271(1)(c) and 158BFA(2).
The return under Section 158BC(1) is filed by the assessee only after detection of concealed income during the course of a search. It is a return of the income concealed by the assessee and detected through the efforts of the Department. This return can never be equated with the return filed under Section 139. Furthermore, the penalty under Section 158BFA(2) is a penalty on concealment of income to the extent not admitted in the return filed under Section 158BC, but determined in the block assessment. Where the additions to the declared undisclosed income are not disputed, levy of penalty is justified. The CIT(A) thereafter analysing clauses of Section 158BC and Section 158BFA(2) came to the conclusion that penalty is imposable on the portion of undisclosed income which is in excess of the amount of undisclosed income shown in the return. He served notice on the assessee for the proposed enhancement of quantum of penalty. In response, the assessee unsuccessfully filed written explanation/ submission before the CIT(A) and ultimately the AO, vide his order under Section 251 r/w Section 158BFA(2) dt. 6th April, 2006, enhanced the penalty from Rs. 14,19,561 to Rs. 99,18,793. Being aggrieved, the assessee is in appeal before us.
4. Before us, the assessee's learned Counsel made elaborate arguments with reference to several documents placed in the paper book as also several judicial pronouncements. His arguments are summarised as below: (i) That it is an admitted fact that due to frequent search by various authorities, the accounting system of the assessee got totally dislocated. In p. 2 of the block assessment order, the AO acknowledged this fact and observed that due to this reason the books of account maintained in the computer were found incomplete and there were other information gaps in the various accounts maintained by the assessee which needed reconciliation. The non-availability of the copies of the seized books of account created further obstacles for the appellant and furnishing of the correct return of income for the block period proved an extremely difficult task. The loss return filed by the assessee in response to notice under Section 158BC has to be viewed in this background. As soon as the assessee could lay its hands on the relevant materials needed to determine its correct income during the block period, it filed an application before the Settlement Commission disclosing the said income. Subsequent to the filing of the settlement application the Authorised Representative of the appellant had occasions to meet the learned CIT, Central-I, Kolkata, as well as the Addl. CIT and the AO. It was explained to the learned CIT that the case of the group was full of complexity as complete particulars and/or information were not available and there was no other alternative than to approach the Settlement Commission for a practical and judicious adjudication on the complex issues and for avoiding protracted litigation. The CIT, Central-I, Kolkata, then suggested that the appellant-group could make a full and true disclosure of their income before the Department itself, consequent on which full immunity from penalty and prosecution would be granted to the assessees. Only in view of the aforesaid assurance, the appellant-company made in good faith a conditional disclosure of its additional income of Rs. 1,53,39,769 vide its letter dt. 20th Dec, 2001 before the AO, thus showing a positive income of Rs. 14,25,052 against the returned loss of Rs. 1,29,57,430. The copy of the said letter is placed on pp. 71 to 77 of the paper book.
(ii) That but for the disclosure made by the appellant, it would have been hardly possible for the Department to determine the correct assessable income from the voluminous seized documents containing about 6000 loose sheets seized under five different Panchnamas (none of which related to any warrant executed in the name of the appellant). The seizure was so haphazardly made that even the assessee had to devote considerable time just to arrange these in proper order for facilitating error-free extraction of information therefrom. The delay in supplying copies of the seized documents by the Department did not also help matters. That for these reasons the books of account were incomplete. So in order to determine the correct income of the block period, it was imperative that these loose sheets were thoroughly scrutinized. The task would have been extremely difficult for the Department, especially in view of the time constraint, had not the appellant co-operated in all sincerity, by furnishing the disclosure petition at the suggestion of the CIT, Central-I, Kolkata. Assuming but not admitting that any amount was left to be included in the declaration of income made in the disclosure petition, that would have been purely accidental. No motive should be imputed to the assessee that it deliberately refrained from declaring any part of its income in the disclosure petition filed by it.
(iii) That the above facts would show that the appellant-company acted in good faith and made a bona fide disclosure of its income during the block period as soon as it was in possession of the material necessary for computing its correct income. It was in fact a sincere effort on its part to remove the shortcomings and defects from which the return filed for the block period suffered. It has been held by the Madras High Court in the case of CIT v. Best Supply Agency that where the assessee endeavoured to correct the mistake in accounting occurring due to extraneous factor (death of the accountant) by agreeing to additions to income and filing revised return, no penalty for concealment is leviable. The ratio of the above decision squarely applies to the facts of the appellant's case.
(iv) That the learned CIT(A) has stated that there is no provision of filing a revised return under Chapter XIV-B and the disclosure petition filed by the assessee has no legal sanctity. It has never been the contention of the appellant that the disclosure petition filed by it should be construed as a revised return. In fact that was not necessary. All that the appellant-company sought to do by filing the disclosure petition was to make good the defects in the return filed under Section 158BC. In this connection, reliance was placed on the decision of Allahabad High Court in the case of Dhampur Sugar Mills Ltd. v. CIT .
(v) That the learned CIT(A) failed to appreciate the principles of law enunciated so succinctly in the above decision of the Court. In the instant case also the disclosure petition only sought to remove the defects and make good the shortcomings of the return filed in response to the notice under Section 158BC. The finding of the AO that no penalty was imposable on the amount of Rs. 14,25,052, voluntarily disclosed by the appellant, is to that extent justified; although he was wrong in holding that penalty was imposable on the alleged undisclosed income of Rs. 21,48,850 (Rs. 35,73,902 - Rs. 14,25,052).
(vi) That no penalty under Section 158BFA(2) is leviable on the amount of Rs. 21,50,850 also, which, the AO added to the income disclosed by the appellant. Perusal of the computation of the income during the block period would clearly show that apart from disallowing certain intangible items without mentioning any cogent reason therefor, the AO accepted in toto whatever income was included in the disclosure petition. The imposition of penalty for not disclosing the purported income of Rs. 21,50,850 only, which the AO claimed to have detected in course of verification and examination of seized documents, was totally uncalled for. An analysis of the income disclosed by the assessee and that assessed by the AO would reveal that the said amount constituted the aggregate of the various intangible/ad hoc additions made to the income disclosed by the appellant, as the following table would show-Excess purchase written 1,42,53,464 Unverifiable sundry 1,48,00,464back (sundry creditors creditors on account ofwritten off) purchasesErrors and omissions in 75,00,000 Unrecorded purchases and 34,07,285sales and purchases cash sales as per SS-7 and SS-13Difference in accounts of 2,87,000 Unrecorded purchases and 54,93,464Individuals cash sales as per SS-24, SS-33 and 34Unaccounted sales (a/c 9,54,682 Unaccounted sales (a/c 9,84,682Shree Ganesh Enterprise) Shree Ganesh Enterprise) Disallowance on donation 58,601 ___________ ___________ 2,29,95,146 2,51,45,996 ___________ ___________ (vii) That as far as the disallowance of donations and estimated expenses are concerned, by no stretch of imagination these can be construed as undisclosed or concealed income of the appellant on which penalty under Section 158BFA(2) could be levied. Similarly the ad hoc increase by Rs. 30,000 to the amount surrendered as "unaccounted sales" of Shree Ganesh Enterprises, without mentioning any reason therefor, can hardly be regarded as addition of concealed income. The AO made another addition of Rs. 5,47,000 to the income surrendered as "excess purchase written back (sundry creditors written off)". No reason whatsoever has been given by the AO for adding this additional amount to the amount of Rs. 1,42,53,164 disclosed under this head. Indeed it is a mystery as to how the AO arrived at this precise amount. The appellant had offered Rs. 77,87,000 as "errors and omissions in sales and purchases" and "difference in accounts of individuals". The AO has taken Rs. 89,00,749 as "unrecorded purchase and cash sales" in lieu of the said amount offered. Although he did refer to certain seized documents while making an upward revision of the income surrendered under this head, he neither gave the particulars of entries that he identified as unrecorded purchase/cash sales allegedly not disclosed by the appellant, nor did he clarify the reasons therefor. Mere mention of identification marks of the seized documents would not give authenticity or sanctity to any ad hoc and/or intangible addition. Apart from these, all other amounts included in the computation of the income for the block period exactly tallied with those offered by the appellant in the disclosure petition.
Therefore, whatever might be the claim of the AO, no part of Rs. 21,50,850 could be regarded as undisclosed income of the appellant, which would qualify for levy of penalty under Sub-section (2) of Section 158BFA of the Act.
(viii) That the AO stated that this addition was not challenged by the assessee inasmuch as no appeal was filed against the assessment, meaning thereby, that the amount of Rs. 21,50,850 was accepted by the appellant as its undisclosed income. It may be pointed out that the appellant-company accepted the addition and did not file an appeal only to avoid protracted litigations and to buy peace. In response to the notice of the AO proposing to complete the block assessment at Rs. 35,75,439 against the income of Rs. 14,25,052 offered, the appellant, by its letter dt. 27th Dec, 2001 accepted the proposed enhancement of income stating as under: The abovenamed assessee is in receipt of your office memo No. Dy.
CIT/CC-VTI/2001-02 dt. 24th Dec, 2001 indicating completion of block assessment at an income of Rs. 35,75,439 against the revised offer of Rs. 14,25,052 made by the assessee vide disclosure petition dt.
20th Dec, 2001. The assessee, in order to buy peace and put a quietus to the proceedings, is willing to accept the proposed assessment figures of Rs. 35,75,439 (rupees thirty five lakh seventy five thousand four hundred thirty nine only) provided no penalty and/or prosecution proceedings are initiated. It may be recalled that the assessees of the group were assured of full immunity from penalty and prosecution proceedings in case they came out with voluntary disclosure of undisclosed income and, accordingly, disclosure petition dt. 20th Dec, 2001 was filed with your Department. The assessee is offering enhanced tax appropriation against seized KVP vide separate petition enclosed herewith.
(ix) That, moreover, the mere fact that the appellant did not challenge the addition would not necessarily mean that it accepted that the impugned amount represented its concealed income detected during the course of block assessment. Therefore by a letter dt. 4th Jan., 2002, the appellant objected to the initiation of penalty proceedings under Section 158BFA(2) and urged the AO to drop the same on the ground that a conditional surrender of cash credits or agreement to certain assessment does not attract penalty proceedings. It was further contended that where the assessee agreed to higher assessment to escape penal consequences and the assessment was made on estimate, there being no evidence of concealment, cancellation of penalty was justified. In support of the above submissions, the following case laws were relied upon: According to the learned Counsel, the ratio of all the above decisions suggests that in the facts and circumstances of the appellant's case, no penalty is leviable.
(x) Finally it was argued that the learned CIT(A) in enhancing the penalty gave fairness and justice a go by. The order of the learned CIT(A) enhancing the penalty is thus erroneous, arbitrary, against the tenets of fairplay and justice and therefore, bad in law. To substantiate his arguments, the assessee's learned Counsel referred to series of decisions of several High Courts as well as different Benches of Tribunal which are placed on pp. 149 to 254 of the compilation submitted before us. On the basis of above facts and arguments, he submitted for cancellation of the penalty imposed under Section 158BFA(2) on the basis of CIT(A)'s order.
5. The learned Departmental Representative, on the other hand, heavily relied on the order of the CIT(A). According to him, the assessee originally filed its block return disclosing loss. It is the duty of the assessee to furnish true and correct declaration in the block return so as to complete the block assessment in proper manner.
Therefore, if there would be any deficiency, it would tantamount to concealment of income not duly reflected in the block return filed under Section 158BC. That on scrutiny of the seized documents the AO was able to detect further concealment of undisclosed income which the assessee had no alternative but to accept the same. The declaration subsequently made by the assessee, may be by its own volition, showing further secret/undisclosed income was on the basis of the seized documents which was not reflected in its original return. Therefore, there was a clear case of concealment of undisclosed income, inviting thereby penal consequences under Section 158BFA(2) of the Act. The CIT(A), therefore, was perfectly justified in treating the difference between the disclosure made originally and the subsequently revising the same by way of further declaration after filing of the block return under Section 158BC as assessee's hidden income during the block period. The CIT(A) after examining the case thoroughly in terms of all the seized documents came to the conclusion that the case laws relied upon by the assessee are distinguishable on facts. That it is an admitted position that return under Section 158BC(1) was filed by the assessee only after detection of concealed income during the course of a search, therefore it is a return of the income concealed by it and detected through the efforts of the Department and this block return cannot be equated with a return under Section 139(1). According to the learned Departmental Representative, although penalty is not mandatory, but when the addition to the declared undisclosed income is not disputed, levy of penalty is justified even if the addition proceeds on the basis of admission in the course of block assessment proceedings.
Referring to judgment of Hon'ble Supreme Court in the case of G.C.Agarwal v. CIT , he contended that on analogous facts and circumstances the Court has held that no particular item of income has been pointed out to explain that the revised returns were merely the result of inadvertent mistakes or omission and in that context the conclusion that the assessee had submitted inaccurate particulars of his income and had also concealed the particulars of his income while filing his original return is established. Referring to Hon'ble Madras High Court judgment in the case of CIT v. J.K.A. Subramania Chettiar 1978 CTR (Mad) 35 : (1977) HOUR 602 (Mad), the learned Departmental Representative submitted that the fact that the assessee furnished the particulars of undisclosed income before any detection by the Department is not relevant for the purpose of levying penalty for concealment. He thus contended for confirmation of the enhancement of penalty made by the CIT(A).
6. We have heard the parties and carefully considered their rival submissions, We have also perused the material produced before us including the paper book containing 256 pages. The premises on which the AO imposed the penalty is that, no doubt the assessee unilaterally made a disclosure of Rs. 1,43,82,482, thus declaring a net taxable income of Rs. 14,25,052 after completely wiping out the returned loss of Rs. 1,29,57,430 made in the block return, but the Department has been able to detect a further undisclosed income of Rs. 21,50,850 from verification of the seized documents. According to the AO, even though the assessee readily accepted the AO's proposal to assess the said amount and did not file any appeal against the block assessment order, but the fact that only the income of Rs. 14,25,052 was voluntarily disclosed by the assessee before the above detection by the AO could not be lost sight of. Since the balance amount of Rs. 21,50,850 was detected by the AO and not disputed by the assessee, the AO held that penalty under Section 158BFA(2) is leviable on this amount. In the opinion of CIT(A), provisions to Explanation to Section 271(1)(c) had similarities with those of the provisions,of Section 158BFA(2), inasmuch as in both these provisions, one would notice a presumption for concealment. The learned CIT(A) also observed that there was no provision for filing of revised return under Chapter XIV-B. So the disclosure petition of the assessee had no legal sanctity. Therefore, penalty should have been levied on the difference between the income disclosed in the block return and the income ultimately assessed.
Accordingly, he enhanced the quantum of penalty.
6.1 Now the question is whether the direction of the CIT(A) for enhancing penalty and AO's passing of consequential order giving effect of the said order was, on the facts and in the circumstances of the case, justified or not. Elaborate arguments have been made by the assessee's learned Counsel on this issue. It is a fact that the appellant-group faced several search and seizure proceedings conducted by several authorities consecutively. The seized material included apart from valuables and books of account, about 6000 loose sheets under different Panchnamas. Therefore, it is evident that the accounting system of the assessee due to these frequent searches by different authorities got dislocated. Even the AO has acknowledged this fact by stating that due to this reason the books of account maintained in the computer were found incomplete and there were other information gaps in the various accounts maintained by the assessee which needed reconciliation. The assessee also could not obtain the copies of the voluminous seized documents from the Department within the prescribed time-limit for filing the block return which also resulted in further obstacles for furnishing block return with true disclosure. Therefore, there is substance in the argument of the assessee that with a view to file the block return as per stipulated time, the assessee had to rely on incomplete accounts and information and returned on lump sum basis a net loss of Rs. 1,29,57,430. It is indeed a difficult task to reconcile 6000 loose sheets and other seized documents and books of account without devoting proper care and consuming considerable time.
Therefore, the block return initially filed by the assessee should be viewed from this background. The assessee on receipt of all the seized documents and after reconciliation of the same found the block return defective and not giving true picture of the income during the block period. It thus filed application before the Settlement Commission under Section 245C(1) disclosing income of Rs. 14,25,052 which it computed on the basis of elaborate reconciliation of the seized documents. On the basis of this disclosure before the Settlement Commission, the assessee filed a disclosure petition during block assessment proceeding before the AO substituting the loss return initially filed in response to notice under Section 158BC. It was not the case of the assessee that it filed revised block return. According to the assessee, it was a disclosure to enable the Department to frame error-free and correct block assessment. It is pertinent to mention here that the Settlement Commission did not entertain the application filed under Section 245C(1) as the assessee made declaration before the Department of the entire income which was disclosed in the settlement petition.
6.2 In support of the contention that disclosure was made on condition of granting immunity from penalty and prosecution as well as waiver of interest, the assessee's learned Counsel invited our attention on pp.
71 to 84 and 93 and 94 of the paper book which are three letters addressed to Dy. CIT, Central Circle-VII, Kolkata, dt. 20th Dec, 2001 and 9th Jan., 2002 and CIT, Central Circle-I, Kolkata dt. 21st Dec, 2001. The facts and submissions written in those letters are more or less similar. For convenience of understanding the factual position, we quote relevant portion of the assessee's Authorised Representative's letter dt. 21st Dec, 2001 written to CIT, Central Circle-I (p. 78 of the paper book) as under: In course of block assessment proceedings of the abovenamed assessee-company and the concerned group (Santhalia) concerns and individuals, the undersigned had occasion to be present before your honour as well as before the Addl. CIT and the Dy. CIT. It was explained to your honour that the case(s) of the group was peculiar and full of complexities since complete particulars and/or information were not available and there was no other way than to approach the Hon'ble Settlement Commission for a practical and judicious adjudication of the complex case(s) and avoiding protracted litigations. Accordingly, an application for settlement under Section 245C(1) of the IT Act, 1961 was already filed by Enfield Industries Ltd. for the block period as well as for the asst. yr. 2000-01 and the individuals, namely, Sri Satyadeo Sonthalia, Sri Sudesh Kumar Sonthalia and Sri Rajesh Kumar Sonthalia were on the verge of filing their respective settlement applications. Your Honour were kind enough to suggest that the assessees make a true and full disclosure of their income before the Department itself and full immunity from penalty and prosecution will be granted to them and their disclosures will be accepted with due consideration. Your kind suggestion and assurance was seconded and supported by the Addl. CIT and the Dy. CIT. In view of the assurance of Your Honour, the assessee company and the individuals are hereby making disclosure of their additional income as under:Sl. No. Name of assessee Annex.
Additional Additional Tax No. Income It is pertinent to mention here that the block assessment under Section 158BC was completed on the basis of the aforesaid conditional disclosure on 31st Dec, 2001 and the Settlement Commission declined to entertain the application since the block assessment was already completed on 31st Dec, 2001 on the basis of declaration made before the Department of the entire income disclosed in the settlement petition.
There is no evidence on record to indicate that it was due to Department's sole effort that after consulting voluminous seized documents the aforesaid additional income reflected in the disclosure petition was detected by it. Rather it is established in view of the above factual and circumstantial evidence that the assessee volunteered and co-operated with the Department to frame error-free and correct block assessment. Therefore, in our considered opinion, it cannot be said that the assessee knowingly and deliberately filed inaccurate information and particulars concealing its undisclosed income. If that would be the case, then the assessee must not have come forward with further disclosure before the Settlement Commission as well as before the AO during block assessment proceedings. The finding of the CIT(A) that there is no provision for filing of revised return under Chapter XIV-B and hence the disclosure petition of the assessee had no legal sanctity is misconceived. What we find is that the assessee did not file any revised block return. It filed block return on the basis of incomplete information and seized documents showing loss. After thorough scrutiny, reconciliation and efforts when the assessee found its earlier disclosure untrue and defective, it volunteered the additional income arrived at on the basis of subsequent checking and reconciliation of documents during block assessment proceedings at the suggestion of the CIT, Central-I, Kolkata. The Department could not bring on record any letter or document to discard the written confirmation by the assessee's learned Counsel that acting on the advice/suggestion of the CIT, Central-I to make a true and full disclosure of their income before the Department itself and assurance of granting full immunity from penalty and prosecution, the assessee came forward with the disclosure petition surrendering further undisclosed income, which ultimately resulted in income instead of loss originally shown in block return under Section 158BC. The above facts would thus show that the assessee acted in good faith and made a bona fide disclosure of its income during the block period as soon as it was in possession of the material necessary for computing its correct income.
6.3 It has been held by Hon'ble Madras High Court in the case of CIT v.Best Supply Agency (supra) that where the assessee endeavoured to correct the mistake in accounting occurring due to extraneous factor (death of the accountant) by agreeing to additions to income and filing revised return, no penalty for concealment is leviable. The ratio of the above decision applies to the facts of the assessee's case. In this context, it is pertinent to refer to the decision of Hon'ble Allahabad High Court in the case of Dhampur Sugar Mill Ltd. v. CIT (supra). Their Lordships at pp. 239 and 241 of the report has observed as under: The return when filed was a return in all essential respects, and the removal of the defects merely made good the shortcomings from which it suffered. It must be held that the return in question must be considered as filed by the assessee in June, 1961, and not subsequently when the defects were removed....
There is a distinction between a revised return and a correction of the return. If the assessee files some application for correcting a return already filed or making amends therein, it would not mean that he has filed a revised return. It will still retain the character of an original return, but once a revised return is filed, the original return must be taken to have been withdrawn and to have been substituted by a fresh return for the purpose of assessment.
The learned CIT(A) failed to appreciate the principles of law enunciated so succinctly in the above observations of the Court. In the instant case also the disclosure petition only sought to remove the defects and make good the shortcomings of the return filed in response to the notice under Section 158BC. The finding of the AO that no penalty was imposable on the amount of Rs. 14,25,052, voluntarily disclosed by the appellant, is to that extent justified; although he was wrong in holding that penalty was imposable on the undisclosed income of Rs. 21,48,850 (Rs. 35,73,902 - Rs. 14,25,052).
6.4 Therefore, the assessee-company made a conditional disclosure of certain amounts of income which for reasons stated hereinabove, it was unable to include in the return filed in response to notice under Section 158BC. The Hon'ble Calcutta High Court in the case of CIT v.Amalendu Paul , held that such conditional admission on the part of the assessee cannot be treated as an unconditional admission and therefore, cannot be relied upon for imposing penalty. In the said case, the assessee filed a revised return including therein certain cash credit amounts as his income. The ITO completed the assessment by including the income offered by the assessee and the IAC levied penalty under Section 271(1)(c) treating the said income as concealed income since the revised return was filed only after the ITO started investigation. On appeal, the Tribunal found that the income was offered voluntarily as the assessee failed to prove genuineness of the credits by adducing satisfactory evidence. He admitted the amount to be his undisclosed income only with a prayer that no penalty was to be levied. On these facts, the Tribunal cancelled the levy of penalty.
The Calcutta High Court held, affirming the decision of the Tribunal, that the admission made by the assessee was a conditional admission and could not be relied upon for imposing penalty as an unconditional admission. Further, in the case of Sir Shadilal Sugar & General Mills Ltd. v. CIT , the Hon'ble Supreme Court also held that mere acceptance by an assessee of certain amount as his taxable income cannot mean that he deliberately concealed any part of his income. From the fact that the assessee agreed to the proposed additions to his income, it does not follow that the amount agreed to be added was his concealed income. Ratio of both these decisions would apply squarely to the facts of the assessee's case.
6.5 The CIT(A) further observed that the penalty under Section 158BFA(2) is a penalty on concealment of income to the extent not admitted in the return filed under Section 158BC, but determined in the block assessment. He further observed that where the additions to the declared undisclosed income are not disputed, levy of penalty is justified. In view of our discussions above, we are not in agreement with the above observations of the CIT(A). It is true that penalty under Section 158BFA(2) is imposable on the income which has not been shown by the assessee in the block return but subsequently during assessment proceeding detected and added by the AO to the undisclosed income computed in assessment framed under Section 158BC of the Act.
Here in the assessee's case, as stated above, the block return filed under Section 158BC was no doubt on the basis of incomplete information and documents and without thorough consulting/reconciling the large volume of loose sheets. Subsequently the assessee of its own volition reconciled thoroughly all the seized documents and ultimately with a view to remove the defects occurred for the said reasons in its return under Section 158BC and to make the block return as also block assessment error-free, filed additional information by way of a declaration showing resultant positive income replacing loss originally declared in the block return. Indeed it helped the Department to frame the assessment. In this context, the finding of the AO in his order under Section 158BFA(2) is worth quoting: 11. On the facts and circumstances of the case and relying on the ratio of the cases discussed above. I am of view that the assessee did not proceed deliberately with the intention to conceal his correct income to the extent of Rs. 14,25,052 represented in the voluntary disclosure petition. It should not, therefore, form part of the undisclosed income determined by the AO in the assessment for the purpose of levy of penalty under Section 158BFA(2). In the facts and circumstances of the case, I am of the view that the first part of the concealed income cannot be treated as part of undisclosed income for levy of penalty. Therefore, no penalty is imposed in respect of the undisclosed income of Rs. 14,25,052 out of the assessed income of Rs. 35,75,902.
Therefore, on the above facts and circumstances of the case, it cannot be said that there was concealment on the part of the assessee in not declaring true income in the block return but determined in the block assessment. The AO completed the assessment on the basis of declaration filed by the assessee, excepting an addition of Rs. 21,50,850 said to have been detected from the seized documents.
6.6 It is pertinent to mention here that while penalty proceeding initiated under Section 158BFA(2), the assessee's learned Authorised Representative vide his letter dt. 4th Jan., 2002 (pp. 93 and 94 of the paper book) explained to the Dy. CIT CC-VH the reasons for not contesting the addition made to the undisclosed income in the block assessment in the following manner: (2) While passing the assessment order, your goodself has initiated penalty proceedings under Section 158BFA(2) of the IT Act, 1961. It may be recalled that the assessee-group made a conditional disclosure of revised undisclosed income of Rs. 14.25 lakhs before your goodself on the assurance given by the Hon'ble CIT, Central-I as well as by the Addl. CIT, Range-II and your goodself, that no penalty and prosecution proceedings will be initiated in the cases.
(3) The Hon'ble Calcutta High Court in the case of CIT v. Amalendu Paul held that penalty cannot be levied on the (4) Your goodself, while finalizing the block assessment, indicated that you proposed to complete the block assessment at an undisclosed income of Rs. 35.75 lakhs. The assessee, in view of the assurances given and also to avoid protracted litigations and put a quietus to the proceedings, accepted your enhanced assessment figures (of undisclosed income) of Rs. 35.75 lakhs against the disclosed figure of Rs. 14.25 lakh reiterating that no penalty and prosecution proceedings should be initiated.
From the above correspondence, more so when there was no evidence in rebuttal or denying the said assertion of the assessee's learned Authorised Representative, it is clearly evident that the acceptance of the addition to the undisclosed income and assessment of the block assessment on such income was conditional and as per assurance of the Revenue Department.
6.7 The Bombay High Court in the case of CIT v. Dharamchand L. Shah (supra) had held that no penalty can be sustained merely on the ground that certain additions were made and the same were accepted by the assessee. It has also been held by the Allahabad High Court in the case of CIT v. Mansa Ram & Sons (supra), that a conditional surrender of cash credits or agreement to certain assessment does not attract penalty proceedings. In the case of CIT v. Saran Khandsari Sugar Works (supra), the Allahabad High Court had held that where the assessee agreed to higher assessment to escape penal consequences and the assessment was made on estimate, there being no evidence of concealment, cancellation of penalty was justified. The ratio of all these three decisions suggests that in the facts and circumstances of the appellant's case, no penalty is leviable.
Hon'ble Supreme Court has held that where the assessee claimed that he offered additional income only to buy peace and avoid litigation and the Department did not prove concealment but simply rested its conclusion on the voluntary surrender of income by the assessee in good faith, no penalty for concealment of income can be levied. In our opinion, on the given facts, the case of the appellant-company is fully covered by this decision of the apex Court. In this particular case, the assessee originally filed its return showing a meagre income but after action under Section 132 of the IT Act, 1961, a notice under Section 148 was served on him. In response to the said notice he filed revised return showing higher income. Eventually assessment orders were passed on the basis of return submitted under Section 148. In the penalty proceeding under Section 271(1)(c) the assessee claimed that he had offered additional income to buy peace of mind and avoid litigation. On the above facts, the High Court held that no penalty could be levied for concealment. The Hon'ble Supreme Court affirmed the order of the High Court.
6.9 The CIT(A) observed in p. 14 of his order that the return under Section 158BC is filed only after detection of concealed income during the course of a search. It is a return of concealed income only, detected by the efforts of the Department. In our considered opinion, the CIT(A) was wrong in entertaining such a view. A plain reading of Section 158BC(a) would show that the assessee, in response to a notice received by him under Section 158BC, is required to furnish within the stipulated time a return in the prescribed form "setting forth his total income including the undisclosed income of the block period". If the object of requiring the assessee to file block return was merely to make him state the amount that the Department claimed to have already detected as his concealed income, then the legislature would not have indulged in an exercise in redundancy by incorporating the words "setting forth his total income including the undisclosed income for the block period" in Section 158BC(a). The section could have simply required the assessee to file a return of his undisclosed income during the block period as claimed to have been detected by the Department during the course of search. A return filed in response to a notice under Section 158BC is not only supposed to include the income of the block period already disclosed by an assessee but, in addition, the undisclosed income, if any, earned during the block period. It naturally follows that such a return may or may not include concealed/undisclosed income depending on the relevant facts and circumstances. If an assessee had no undisclosed income, he would not be obliged to invent the same, even if there was a search in his case and irrespective of any claim of detection of undisclosed income by the Department. In such a case he could very well file a return for the block period including therein "nil" undisclosed income and the onus would lie entirely with the Department to prove any concealment of income. So a return filed in response to a notice under Section 158BC would not necessarily be a return of the concealed income only.
6.10 The CIT(A) also observed that the Supreme Court in the case of G.C. Agarwal v. CIT (supra), is fully applicable to the facts of this case. The Hon'ble Supreme Court's decision in the above case merely affirmed the decision of the Gauhati High Court in the case of F.C.Agarwal v. CIT . The decision of the Gauhati High Court is based on the applicability of the Explanation to Section 271(1)(c) which was inserted by Section 40 of the Finance Act, 1964 w.e.f. 1st April, 1964. The Explanation reads as under: ExplanationWhere the total income returned by any person is less than eighty per cent of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under Section 143 or Section 144 or Section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purpose of Clause (c) of this sub-section.
From a plain reading of the above it would be clear that the observation of the CIT(A) that the said Explanation clause is applicable to the facts of the instant case is erroneous. As a matter of fact, these two provisions i.e. Sub-section (2) of Section 158BFA and the Explanation to Section 271(1)(c) as inserted by the Finance Act, 1964, have nothing in common. Most importantly, unlike the latter, there is no presumption for concealment in the former. So onus would lie heavily with the Department to prove concealment for the purpose of imposing penalty under Section 158BFA(2), which is lacking in this case.
6.11 The CIT(A) also relied on the decisions of CIT v. Mussadilal Ram Bharose , CIT v. Subramania Chettiai (supra), CIT v.Hazi P. Mohammed (1981) 23 CTR (Ker) 39 : (1981) 132 ITR 623 (Ker) and Nav Niiman Co. v. CIT (1984) 43 CTR (MP) 302 : (1984) 148 ITR 603 (MP) to contend that mere filing of a revised return cannot exonerate the assessee from penalty incurred by filing a false first return and that the facts of each case have to be examined to find out whether the subsequent return was filed in consequence of bona fide discovery of omission in the first return or whether it was filed in view of imminent detection of concealment by the AO or whether there Was neither any basis for the original return nor for the revised return.
In the Mussadilal's case (supra), for the asst. yr. 1965-66, the income returned by the respondent, a licensed vendor of country liquor, was rejected by the ITO on the ground that the sales and expenses were not verifiable and the margin of profit shown was low. The ITO accordingly estimated the sales and applied a net profit rate of 8 per cent and arrived at a total income of Rs. 60,936 against the returned income of Rs. 30,138. The Tribunal, on appeal, reduced the total income to Rs. 40,600 in the light of the licence fee paid by the respondent and the lower rate of profit in the cases of other liquor contractors. Penalty proceedings were initiated against the respondent under Section 271(1)(c) of the Act, and the IAC levied a penalty of Rs. 8,300. The Tribunal, however, cancelled the penalty holding that the respondent had maintained certain types of books of account and honestly believed them to be sufficient for the true ascertainment of its profit and that it could not be said that in filing the return of income as reflected in the books of account, the respondent was grossly or wilfully negligent, much less fraudulent. The Tribunal and the High Court rejected the Department's applications for a reference. Thereafter the Department took the matter to the apex Court. The Hon'ble Supreme Court dismissing the appeal, held that the Tribunal and the High Court had rightly rejected the Department's applications for a reference. The Tribunal's conclusion on relevant and sufficient material that the respondent had discharged its onus to prove that the difference was not owing to gross or wilful neglect or fraud, was a conclusion of fact and no question of law arose. The Tribunal had borne in mind the relevant principles of law and had also judged the facts on record. This was not a case where there was no evidence nor a case where no reasonable person could have accepted the explanation of the respondent. Clearly, the facts in the appellant's case are poles apart from those in Mussadilal's case (supra). In the case of Subramania Chettiar (supra) the Hon'ble Madras High Court held that it is implicit in the word "concealed" used in Section 271(1)(c) that there has been a deliberate act on the part of the assessee. The word "omission" occurring in Section 139(5) connotes an unintentional act. Equally, the words "wrong statement" will not take in "a statement known to be false to the person who made the statement". However, the word "discovers" occurring in Section 139(5) will make it clear that only at the time of discovery a person who had furnished a return finds out that an inadvertent omission or unintended wrong statement had crept in the return filed by him. If a person who furnished the return was aware of the falsity of the statement and the incorrectness of the particulars of income even at the time when he filed the original return, there was no question of that person subsequently discovering the existence of the omission or creeping in of the wrong statement in the return already filed by him.
Therefore, Section 139(5) will apply only to cases of "omission or wrong statements" and not to cases of "concealment or false statements". In the assessee's case, no material was brought on record by the Department to prove any deliberate act on its part to conceal particulars of income. Rather, on discovery of the omissions in the original return, (no doubt caused by the voluminous seizure haphazardly made as well as the failure of the Department to furnish copies of all seized books and papers in time), the assessee on its own volition approached the Settlement Commission, disclosing its true income, and subsequently, at the behest of the CIT, Central-I, Kolkata, filed a disclosure petition before the Department declaring the same income. As discussed earlier, clearly the assessee was prevented by circumstances beyond its control from returning its correct income within the prescribed time-limit. Thus the facts in the appellant's case are totally distinguishable from those obtaining in Subramania Chettiar's case (supra). In the case of Hazi Mohammed (supra), there was no discovery on the part of the assessee of any omission or wrong statement made by him in the original return. Therefore it was held that the subsequent return could not be regarded as a return filed under Section 132(5) and, consequently would not be sufficient to protect the assessee from imposition of penalty for concealment. The facts in the case of Nav Nirman Co. (supra) are also similar. As in the case of Subramania Chettiar (supra), facts in the above two cases also had nothing in common with those in appellant's case. Therefore the decisions in these cases are not relevant in the context of the facts and circumstances in the assessee's case.
6.12 The CIT(A) also endeavoured to draw support from the decision in the case of CIT v. R. Sadayappan (Deed.)(By LRs). In the said case, for the asst. yr. 1966-67, the assessee had disclosed the purchase of a site for a consideration of Rs. 25,000 and, subsequently, admitted the fact that the real consideration was much more but, however, the Tribunal held that there was no concealment. On a reference the Madras High Court held that the approach of the Tribunal could not be approved. The assessee could not make a false declaration knowing the real facts and after a raid and seizure, admit the real facts and claim that such subsequent admission takes away the effect of the wrongful conduct earlier displayed. The assessee was liable for penalty and the Tribunal was in error in setting aside the penalty. In the assessee's case before us, there was no question of prior knowledge of real facts since even the AO admitted that due to frequent searches by various Government Agencies the accounts of the appellant were in total disarray. So the facts in these two cases are hardly comparable.
6.13 Even otherwise also, penalty for concealment is not warranted merely because the assessee has disclosed certain additional amount as his income. It is well settled principle of law that in order to justify levy of penalty, the following factors must co-exist: (1) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the income of the assessee, and, (ii) the mere fact that the amount has been assessed as income is not sufficient for the purpose of levying penalty but the circumstances must show that there was conscious and deliberate concealment of income or conscious furnishing of inaccurate particulars thereof on the part of the assessee with a view to evade tax.
In the case of the appellant neither of the above two factors existed.
There was no material or circumstances which could have led the AO to any reasonable conclusion that the amount of Rs. 21,50,850 represented income of the appellant. Besides, the AO failed to prove with an iota of evidence that there was conscious or deliberate concealment of income, or conscious furnishing of inaccurate particulars thereof by the appellant with a view to evade tax.
6.14 The CIT(A), in our opinion, appears to have given inadequate consideration to the contention of the assessee-company that imposition of penalty under Section 158BFA(2) is not mandatory. Clearly the penalty under Sub-section (2) of Section 158BFA is optional unlike the interest chargeable under Sub-section (1) since the word used in Sub-section (2) is "may" unlike the word "shall" used in Sub-section (1). The same view has been held by the Tribunal, Madras, in the case of Smt. Mala Dayanithi v. Dy. CIT . The Calcutta Bench of Tribunal in the case of Dy. CIT v. Suresh Kumai (2005) 95 TTJ (Kol) 926 : (2005) 97 TTD 527 (Kol) has also held identical view. There is no doubt that this is the correct view of law because had the penalty been automatic, the appeal against an order under s,158BFA(2) would not have been provided for. Section 158BFA(2) states: 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 etc. etc.
If the AO or the CIT(A) in the course of any proceedings under this Act, is satisfied that any person....
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income he may direct that such person shall pay by way of penalty etc. etc.
It may be noticed that the identical expression "may direct that such person shall pay by way of penalty" occurs in both the sections. So levying of penalty under both these sections is not mandatory. Since the imposition of penalty under Section 158BFA(2) is, like that under Section 271(1)(c), discretionary, such discretion has to be exercised judicially, as has been held in the case of Hindustan Steel Ltd. v.State of Orissa . In the case of CIT v. Khoday Eswarsa & Sons 1972 CTR (SC) 295 : (1972) 83 ITR 369 (SC), the Hon'ble Supreme Court had held that before levying penalty the Department must have before it cogent material or evidence to show that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars of the same. Similar is the position dealt in by the jurisdictional High Court in the case of CIT v. Bengal Iron Galvanising Works where the Court observed that it was not mandatory under Section 271 of the Act, that a penalty must be imposed in every case. If the conditions laid down in the said section are established, then the authority concerned "may direct" that the person committing the default within the meaning of the said section shall pay the penalty imposed. In p. 252 of the said judgment their Lordships observed: It is settled law that before a penalty can be imposed, it has to be established that the assessee proceeded deliberately with an intention to conceal his correct income or to furnish incorrect particulars thereof. In the facts, the assessee by its subsequent conduct may be said to have established that there was no deliberate intention on its part to conceal its income and the incorrect return, which was initially filed, was sought to be rectified by its subsequent disclosure, which was noted and acted upon by the ITO. It is not mandatory under Section 271 of the IT Act, 1961, that a penalty must be imposed in every case.
6.15 It is thus established without any ambiguity that in the instant case the Department was not able to establish either conscious and deliberate concealment of income or deliberate furnishing of inaccurate particulars of income by the assessee. The block assessment was made primarily on the basis of income disclosed in the disclosure petition.
The AO only made some intangible/ad hoc additions. Undoubtedly the income was disclosed by the assessee after considering all the relevant books and documents including the voluminous seized material found at the time of search. But for the co-operation extended by the appellant by voluntarily disclosing its correct income, it would have been extremely difficult for the Department, if not impossible; to determine the correct income from the loads of seized papers. Thus, it could not be said that the appellant-company deliberately concealed particulars of its income or deliberately furnished inaccurate particulars thereof.
6.16 In this case, as stated above, the CIT(A) not only confirmed the penalty levied by the AO but also suggested enhancement of penalty under Section 158BFA(2) summarily for the following reasons: (i) The report of the AO dt. 8th Aug., 2003 to the CIT(A) was not forthright in stating that any promise was made to the appellant for non-levy of penalty in the event of full and true disclosure of income prior to assessment.
(ii) There is nothing on record to confirm that the CIT, Central-I, Kolkata had granted full immunity from penalty and prosecution if full and true disclosure is made before the Department.
(iii) In the order-sheet there is no reference to any meeting in which the CIT, Central-I, Kolkata indicated that the conditional disclosure by the appellant was acceptable to him.
(iv) There is no provision of filing a revised return under Chapter XIV-B of the Act. So the disclosure petition of the appellant had no legal validity.
We find that in the first three grounds the CIT(A) sought to give a lie to the assertion of the assessee/leamed Authorised Representative that in a meeting with the CIT, Central-I, Kolkata it offered to make a full and true disclosure of its income before the Department (as already done in the petition filed before the Settlement Commission) provided it was promised immunity from penalty and prosecution, because he did not find any documentary evidence thereof. Incidentally, for reasons best known to him, he did not consider the letters of the appellant/learned Authorised Representative dt. 20th Dec, 2001 and 21st Dec, 2001 in which the disclosure was made as good enough evidence. On similar facts the Hon'ble Allahabad High Court in the case of Mansa Ram & Sons 1975 CTR (All) 163 : (1977) 106 ITR 307 (All) observed: It was clear that after the assessee had written the first letter disowning the cash credit, there was a discussion between its representative and the ITO, as a result whereof the cash deposits were surrendered for assessment "as desired provided no penalty was imposed". The ITO must have induced the assessee to surrender the cash deposits so as to avoid penalty which could be as high as one-and-a-half times the tax sought to be evaded. It was possible that the surrender was made to escape the penal liability. It was also clear from the letter quoted above that some sort of assurance was given by the ITO to the assessee that if the amount was offered for assessment, no penalty would be levied. It was upon those considerations that the Tribunal appeared to have held that the charge of concealment was not proved and the Tribunal was justified in doing so.
Significantly, the Hon'ble High Court did not need to look for any other documentary evidence except the letter of the assessee to conclude "that some sort of assurance was given by the TFO to the assessee that if the amount was offered for assessment, no penalty would be levied", (emphasis, italicized in print, supplied). It is important to note that in the instant case also the AO did not call in question the abovestated assertion of the appellant and all his subsequent actions during and after the completion of the assessment proceedings bore eloquent testimony to the fact that he accepted that the appellant made a conditional disclosure of its true income prior to the assessment. In para 11 of the order under Section 158BFA(2), which we have quoted earlier, the AO categorically stated that the assussee did not deliberately conceal his correct income to the extent of Rs. 14,25,052 implying thereby the correctness of the aforesaid assertion of the appellant, which the CIT(A) doubted for the unfounded reasons discussed above. In the order, the CIT(A) did not give any cogent reason for not accepting such finding of the AO. The other officials of the Department also appeared to accept the fact of conditional disclosure made by the appellant through their various actions. The penalty order was passed by the AO with the approval of the Addl. CIT, Range-II, Kolkata. The CIT, Central-I, Kolkata, had also acknowledged the contents of the disclosure petition dt. 21st Dec, 2002 submitted to him, as his letter dt. 23rd Dec, 2002 apparently implies. Thus, apart from the CIT(A), all other concerned officials of the Department accepted the letters of the appellant dt. 20th Dec, 2002 and 21st Dec, 2002, addressed to the Dy. CIT and the CIT, respectively, as incorporating the conditional disclosure of income made by the assessee. Merely because the Department did not reply to the letters referred to above would not negate the fact that the assessee did make a conditional disclosure,. which was acted upon by the Department. As far as the fourth ground is concerned, at the cost of repetition, the appellant never said that the disclosure petition filed by it should be construed as a revised return. All it sought to do by filing the disclosure petition was to make good the deficiencies in the block return filed by it, which crept in because of non-completion of accounts due to frequent searches by various Government agencies, non-receipt of the copies of the voluminous seized material and resultant complexity in determining the true income. From the conduct of the assessee and evidentiary documents placed on record, it is established that the declaration of additional income was to co-operate the Department to complete error-free block assessment at the best possible manner. On the above facts, circumstances of the case and legal position involved in this case, we have no hesitation to hold that the CIT(A) was not justified in enhancing the quantum of penalty.
7. To sum-up, on an in-depth study of the entire case record and after due consideration of the rival submissions from both the sides along with the case laws, it is needless to say that the learned Counsel for the assessee has justified the case of the assessee-appellant both factually as well as legally and, on the other hand, despite the learned Departmental Representative's support to the order of the Revenue authorities, on a fair consideration of the cited case laws by the learned Departmental Representative, we find that the cited case laws stand on a different footing from that of the impugned case.
Accordingly, we do not have any hesitation to allow the assessee's appeal and reject the contention of the Revenue. The penalty finally levied by the Revenue authorities of Rs. 99,18,793 under Section 158BFA(2) is thus deleted.