IN THE ITAT AHMEDABAD BENCH ‘A’

Dy. Commissioner of Income-tax

v.

Jayshree M. Pethani

R.P. GARG, VICE PRESIDENTN

AND RAJPAL YADAV, JUDICIAL MEMBER

[BLOCK PERIOD 1987-88 TO 1997-98]

September 22, 2004

Section 158 BFA of Income-tax Act, 1961 - Block assessment in search cases - Levy of interest and penalty in certain cases - Block assessment years 1987-88 to 1997-98 - During course of search and seizure proceedings under section 132, one S made a statement before authorised officer that out of gold jewellery / ornaments valued at Rs. X found from her bank locker, jewellery / ornaments having value of Rs. Y belonged to assessee - Assessee confirmed ownership of said jewellery and also filed regular return of income disclosing value of jewellery found from locker and paid tax - Subsequently, Assessing Officer issued a notice under section 158 BD upon assessee directing to file return for block period - Assessee, therefore, filed return for block period declaring undisclosed income at nil - Subsequently, assessee, however, paid tax on value of jewellery, i.e., Rs. Y at rate specified under section 113 - Assessing Officer held that since assessee instead of paying tax at a higher rate meant for block assessment had paid tax at normal rate instant case was covered by second proviso to sub-section (2) of section 158 BFA - Assessing Officer, therefore, imposed penalty upon assessee under section 158 BFA (2) - Whether since assessee on asking of Assessing Officer had further paid difference of tax and did not agitate matter, imposition of penalty upon assessee was not justified and Commissioner (Appeals) had rightly deleted same - Held, yes

FACTS

During the course of search and seizure proceedings under section 132, one S made a statement before the Authorised Officer that out of gold Jewellery / ornaments valued at Rs. X found from her bank locker, jewellery/ornaments having value of Rs. Y belonged to her mother, i.e., the assessee herein. The assessee confirmed the ownership of the said jewellery and also filed the regular return of income disclosing the value of jewellery found from the locker and paid the tax. Subsequently, the Assessing Officer issued a notice under section 158BD upon the assessee directing to file the return for the block period. Therefore, the assessee filed the return for the block period declaring undisclosed income at nil. However, subsequently the assessee paid the tax on the value of Jewellery, i.e., Rs Y at the rate specified under section 113.

The Assessing Officer held that since the assessee instead of paying the tax at a higher rate meant for the block assessment had paid the tax at the normal rate instant case was covered by the second proviso to sub- section (2) of section 158BFA. The Assessing Officer, therefore, imposed the penalty upon the assessee under section 158 BFA (2)

On appeal, the Commissioner (Appeals) deleted the penalty imposed upon the assessee.

On revenue’s appeal to the Tribunal:

HELD

The assessee had voluntarily filed the regular return and disclosed the value of gold jewellery. She had paid the tax on the value of gold ornaments being acquired from unexplained sources. On asking of the Assessing Officer, she had further paid the difference of tax, i.e., worked out on higher rate applicable on the income required to be assessed in the block period and did not agitate the matter. In her explanation to the Assessing Officer, in response to the penalty notice, she had shown her inability of understanding the procedure, otherwise she would have complied with them.

Therefore the, imposition of penalty upon the assessee was not justify and the Commissioner (Appeals) had rightly deleted the same. (Para 5)