ITAT upheld deletion of penalty
ITAT upheld deletion of penalty
Assessee submitted his 'block return' declaring income, including Rs 30 lakhs as 'undisclosed income' on account of inflated labour expenses. AO estimated inflation and salary payment @ 5% as ad-hoc addition to work out undisclosed income. AO levied penalty u/s 158BFA(2). CIT(A) partly sustained undisclosed income, worked out inflated expenses at 3.7%, an deleted penalty for sums over Rs 30 lakhs. ITAT upheld deletion of penalty.-500617
1. Assessee was engaged in steevedoring activity.
2. A search and seizure action was carried out in M/s ABC Group u/s 132(1).
3. A notice u/s 158BC for the impugned block period was issued and in response, the assessee submitted his 'block return' declaring income of Rs. 85,57,100.
4. It included sum of Rs. 30,00,000 disclosed by the assessee as 'undisclosed income' on account of inflated labour expenses in its proprietary concern.
5. In the quantum proceedings, AO gathered that assessee was inflating expenses on account of payment of salaries and labour charges.
6. He estimated inflation of labour charges and salary payment @ 5% as ad-hoc addition to work out the undisclosed income for the block period which was worked at Rs. 57,20,788/-.
7. AO levied penalty u/s 158BFA(2) and held that undisclosed income determined in quantum was not merely an estimate but was based on various documents found and assessee's own admission that he was resorting to inflation of the payments of the labours.
8. CIT(A) partly sustained the computation of undisclosed income at Rs. 43,19,050, and held that inflated expenses worked out to 3.7%.
9. CIT(A) deleted penalty for the sums declared over and above the sum of Rs. 30 lakhs.
On appeal, the ITAT held as under:
10. I hold that, the A.O. or the CIT(A) had not found anything to determine any amount beyond the disclosed amount of Rs. 30 lacs as unaccounted income.
11. I also find that in his penalty order the A.O. has not discussed as to how the appellant had been found culpable for the CIT(A)'s confirmed amount of Rs.45,10,000/-.
12. There is no consideration by the A.O. in his penalty order, that the said declared undisclosed income of Rs. 30 lac had been covered by the conditions laid down-in the first proviso to section 158 BFA(2).
13. The aforesaid finding of the CIT(A) for deleting the penalty appears to be based on the proper appreciation of facts and material on record, thus we find no reason to deviate from such finding of the facts therefore CIT(A)'s deleting the penalty is affirmed.
Case Reference - Deputy Commissioner of Income Tax Vs Shri C Raja.
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH "C", MUMBAI
BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER
AND SHRI AMIT SHUKLA, JUDICIAL MEMBER
IT(SS)A No. : 68/Mum/2008
Block period 1989-90 to 1998-99
