IN HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH : NAGPUR INCOME TAX APPEAL NO.12 OF 2009 Commissioner of Income Tax-IV, M.E.C.L. Building, 5th Floor, Seminary Hills, Nagpur. .. APPELLANT //Versus// Vasantrao Vithobasao Khanorkar, Jogithana, Umred, District Nagpur. .. RESPONDENT Mr.Abhishek Bhoot, Advocate for Appellant/Revenue. Mr.M.V.Samarth, Advocate for Respondent. CORAM : M.S.SANKLECHA & MANISH PITALE, JJ. DATED : June 27, 2017. P.C. 1. This appeal under Section 260A of Income Tax Act, 1961 (the Act) challenges Order dated 5.1.2009 passed by Income Tax Appellate Tribunal, Nagpur (the Tribunal). By impugned Order, dated 5.1.2009, Tribunal upheld Order of Commissioner of Income Tax (Appeals) {CIT (A)} deleting penalty imposed upon respondent/assessee under Section 158BFA(2) of Act. ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: 2 itl12.09.odt 2. This appeal was admitted on 16.7.2009 on following substantial question of law : Whether in facts and circumstances of case and in law ITAT, Nagpur Bench, Nagpur was justified in upholding Order of CIT(A)-1, Nagpur cancelling penalty of Rs.38,70,633/- levied by A.O. u/s.158BFA(2) of IT Act, 1961, when provision relating to levy of penalty u/s.158BFA (2) is different from provisions relating to levy of penalty u/s.271(1)(c) ? 3. impugned order relates to block Assessment period from 1.4.1996 to 14.2.2003. 4. Briefly stated, facts leading to this appeal are as under : (a) On 14.2.2003, search and seizure operation under Section 132 of Act was carried out on respondent- assessee's premises. Consequent to above, notice dated 28.4.2004 was issued under Section 158BC of Act to respondent/assessee. (b) On 23.2.2005, respondent/assessee in response to notice dated 28.04.2004 filed his return of income declaring income of Rs.10.52 Lakhs. ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: 3 itl12.09.odt (c) Assessing Officer passed order dated 28.2.2005 under Section 158BC r/w. Section 143(3) of Act determining respondent/assessee's income at Rs.2.64 Crores (later rectified to Rs.2.14 Crores). Further penalty proceedings under Section 158BFA(2) of Act were also initiated. (d) Being aggrieved with Assessment Order dated 28.2.2005, respondent/Assessee filed appeal to CIT (A). By order dated 9.8.2006, appeal of respondent was partly allowed and CIT (A) re-determined income at Rs.31 Lakhs. (e) On further appeal, Tribunal, by order dated 25.1.2007, sustained order of CIT (A). income of respondent/assessee as determined at Rs.31 Lakhs by CIT (A) was upheld. (f) Consequent to order dated 25.1.2007 of Tribunal, Assessing Officer by Order dated 5.4.2007 passed under Section 158BFA(2) of Act imposed penalty of Rs.38.70 Lakhs. This on basis of second proviso to Section 158 BFA(2) of Act which provides that Assessing Officer may impose penalty where undisclosed income determined by Assessing Officer is in excess of income shown in return. This penalty ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: 4 itl12.09.odt would be imposable on that portion of undisclosed income determined/assessed in excess of amount of undisclosed income shown in return. Assessing Officer taking into account fact that assessee has disclosed undisclosed income of Rs.10.52 Lakhs in his return of income while his tax finally determined was Rs.31 Lakhs worked out quantum on which penalty could be imposed at Rs.20.47 Lakhs and applied maximum penalty of 300 % of tax payable on Rs.20.47 Lakhs i.e. Rs.38.70 Lakhs by order dated 5.4.2007. (g). Being aggrieved, respondent/assessee carried issue in appeal to CIT (A). By order dt.23.7.2007, penalty of Rs.38.70 Lakhs under Section 158BFA(2) of Act was deleted by CIT (A). This on ground that penalty under Section 158BFA(2) of Act is not mandatory but discretionary. Further reliance was placed upon Section 271(1)(c) of Act to hold that proceedings under Section 158BFA(2) are similar to proceedings of penalty under Section .271(1)(c) of Act. Therefore, before penalty is imposed under Section 158BFA(2) of Act, Assessing Officer must establish concealment of income or furnishing of inaccurate particulars of income on part of asssessee. (h). Being aggrieved, appellant-Revenue carried issue in appeal to Tribunal. By impugned order dated 5.1.2009, ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: 5 itl12.09.odt Tribunal upheld finding of CIT (A) and held that, in absence of there being any conscious concealment of income or filing of incorrect particulars of income, with intention to avoid tax, no penalty under Section 158BFA of Act is imposable. It essentially upheld reasoning of CIT (A) to hold that where there is difference in income returned and income finally assessed, on account of difference in estimation of income by assessee and authorities, it would not per se amount to concealment of income. Thus, no penalty under Section 158BFA(2) of Act is imposable upon respondent-assessee. Thus, impugned order dated 5.1.2009 upheld deletion of penalty under Section 158BFA(2) of Act. 5. Being aggrieved, Revenue is in appeal before us. 6. Mr.Abhishek Bhoot, learned Counsel appearing in support of appeal submits that penalty under Section 158BFA(2) of Act is not circumscribed by requirement found in Section 271(1) (c) of Act. This for reason that two provisions are worded entirely differently. Consequently, conditions required for imposition of penalty u/s.271(1)(c) of Act cannot be invoked while imposing penalty under Section 158BFA(2) of Act. This particularly in view of fact that there is no requirement of concealment of particulars of income or furnishing inaccurate particulars of income, before penalty can be imposed under Section ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: 6 itl12.09.odt 158BFA(2) of Act, unlike Section 271(1)(c) of Act. In support of above, reliance is placed upon decision of Gujarat High Court in case of CIT vs. Becharbhai Paramar, 341 ITR 499 wherein, by reasoned order, Gujarat High Court held that provisions of Section 271(1)(c) of Act cannot be imported while interpreting Section 158BFA(2) of Act. 7. As against above, Mr.Samarth, learned Counsel for respondent/assessee submits that CIT (A) as well as Tribunal have both arrived at concurrent findings of facts and deleted penalty imposed upon respondent by Assessing Officer under Section 158BFA(2) of Act. It is submitted that, in absence of concurrent findings being shown to be perverse, this Court should not interfere with findings of fact. Therefore, it is submitted that no fault can be found with impugned order. 8. So far as penalty u/s.158BFA of Act is concerned, it is settled position that imposition of penalty under Section 158BFA (2) of Act is not mandatory but is discretionary. This penalty is dependent upon facts and circumstances of case and need not be imposed in each and every case where Section 158BFA(2) of Act is invocable, as held by this Court in CIT .vs. Smt. Anju R. Innani, 323 ITR 626 and CIT .vs. Satyendra Kumar Dosi 315 ITR 172. In present facts, we find that all Authorities have proceeded on basis that penalty imposable u/s.158BFA of ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: 7 itl12.09.odt Act is discretionary, yet, on facts, Assessing Officer found that penalty is imposable while CIT (A) and Tribunal have found that it is not imposable. CIT (A) and Tribunal held penalty is not imposable by reading requirements of Section 271(1)(c) of Act into Section 158BFA(2) of Act. Therefore, it is not, as contended by Mr.Samarth learned Counsel for respondent-Assessee, that deletion of penalty is on basis of concurrent findings of fact. In present case, orders of CIT (A) as well as Tribunal held that no penalty is imposable upon respondent/assessee not on basis of conduct of respondent/assessee, but on basis of reading requirement of Section 271(1)(c) of Act into Section 158BFA(2) of Act, to hold that requirements of Section 271(1)(c) of Act are not satisfied. Consequently, no penalty under Section 158BFA(2) of Act can be imposed. This is clearly not permissible. Section 158BFA(2) of Act is part of Chapter XIV-B of Act and deals with assessments, consequent to search with regard to undisclosed income. Therefore, it cannot be governed and/or restricted by Section 271(1)(c) of Act. 9. In fact, Gujarat High Court in case of Becharbhai Parmar (supra) had occasion to deal with identical situation as arising before us viz. whether requirements of Section 271(1) (c) of Act can be read into Section 158BFA(2) of Act. same was negatived. We can fruitfully re-produce relevant ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: 8 itl12.09.odt extract from above decision dealing with this issue as under : 13.We are afraid, none of grounds were sufficient in facts of this case to permit Tribunal to delete penalties. Firstly, we are of clear opinion that concept of proving concealment of income can nowhere be traced in section 158BFA(2). penalty envisaged and imposable under section 271(1)(c) of Act is different from one that can be imposed under section 158BFA. Section 271(1)(c) of Act provides for penalty in case assessee has concealed particulars of his income or furnished inaccurate particulars of such income. It can be easily seen that during course of assessment proceedings for normal assessment, large number of claims and deductions may be putforth by assessee which may or may not be accepted in facts are on law by Assessing Officer. Mere disallowance of claim, therefore, would not give rise to penal proceedings unless, as provided in Section 271(1)(c) of Act, assessee had concealed income or provided inaccurate particulars of such income. Under sub-section 2 of section 158BFA, no such requirement is provided. None can be read there. Significantly as already noted, said proviso is part of Chapter XIV-B of Act which makes special procedure for assessment of search cases. Additionally we also notice that Section 158BFA provides, inter alia, that no penalty under section 271(1)(c) of Act shall be leviable with respect to undisclosed income determined in block assessment. Thus, statutorily also, penalty ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: 9 itl12.09.odt provided under sub-section (2) of Section 158BFA is set apart from one imposable under section . 271(1)(c) of Act. concept of onus on Revenue to prove concealment of income, therefore, cannot be imported while considering question of penalty under sub-section (2) of section 158BFA of Act. Recently, we had occasion to examine provisions of Section 158BFA (2) and compare same with penalty under section 271(1)(c) of Act. In decision dated November 8, 2011, in Tax Appeal No.2467 of 2010 (since reported in Kandoi Bhogilal Mulchand v. Deputy CIT {2012) 341 ITR 271 (Guj.), it was observed as under (page 275) : If we analyse provisions contained in sub-section (2) of section 158BFA, it would appear that penalty not less than amount of tax leviable but not exceeding three times amount of tax so leviable in respect of undisclosed income determined by Assessing Officer under clause (c) of Section 158BC of Act is envisaged. first proviso to sub-section (2) of section 158BFA, however, provides that no order imposing penalty shall be made if conditions (i) to (iv) therein are satisfied. In essence, no penalty would be imposed if assesee furnishes return of income; pays or offers tax by way of adjustment on such income : produces evidence of tax having been paid along with return and also does not dispute by filing appeal against that portion of assessment which he has shown in his return. By further proviso, however, it is clarified that such exclusion will not be available where undisclosed ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: 10 itl12.09.odt income determined by Assessing Officer is in excess of income shown in return and in such case, penalty shall be imposed on that portion of undisclosed income determined, which is in excess of amount undisclosed income shown in return. In essence, therefore, penalty under sub-section (2) of section 158BFA of Act is provided where Assessing Officer computes income in excess of what is declared by assessee for block period. proviso thus is vitally different from penalty provisions contained in section 271(1)(c) of Act, which provides for penalty where assessee has concealed particulars of his income, or furnished inaccurate particulars of such income. It is, therefore, often stated by different courts that mere disallowances of claim or additions made by Assessing Officer would not ipso facto give rise to penalty proceedings under section 271(1)(c) of Act. What is further required to be established is that assessee had either concealed particulars of his income or furnished inaccurate particulars of such income. In contrast, no such language is used in section 158BFA of Act. We may recall that under section 158BFA(2) of Act, penalty proceedings would arise while Assessing Officer had assessed income for block period in excess of income declared by assessee. This was also view of Delhi High Court in case of CIT v. Harkaran Das Ved Pal [2011] 336 ITR 8 ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: 11 itl12.09.odt (Delhi), wherein, it was observed that, (page 25) : However, with regard to question (b) we note that Tribunal was concerned with concealment and/or furnishing of inaccurate particulars of income, which is expression occurring in section 271(1)(c) of said Act but not in section 158BFA(2). consideration of question of concealment of income or furnishing inaccurate particulars of income was not relevant consideration in facts of present case. To that extent, Tribunal had misconstrued scope of penalty provisions applicable in present case. (emphasis supplied) 10. We are in complete agreement with above reasoning of Gujarat High Court in case of Becharbai P. Parmar (supra). Therefore, would adopt same reasons for disposal of substantial question raised for our consideration. 11. In above view, substantial question of law is answered in negative i.e. in favour of appellant/Revenue and against respondent/assessee. 12. Therefore, appeal is allowed. No order as to costs. JUDGE JUDGE jaiswal ::: Uploaded on - 01/07/2017 ::: Downloaded on - 04/07/2017 09:49:53 ::: Commissioner of Income-tax-IV, Nagpur v. Vasantrao Vithobasao Khanorkar