Case Law Details
RELEVANT PARAGRAPH
5. Provisions of section 158BFA(2), which is applicable in this case are as under:
“The Assessing Officer or the CIT(Appeals) 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 the amount of tax leviable but which shall not exceed three times the amount of tax so leviable in respect of the undisclosed income determined by the Assessing Officer under clause (c) of section 158BC.
Provided that no order-imposing penalty shall be made in respect of a person if –
(i) such person has furnished a return under clause (a) of section 158BC;
(ii) the tax payable on the basis of such return has been paid or, if the assets seized consist of money, the assessee offers the 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 preceding proviso shall not apply where the undisclosed income determined by the Assessing Officer is in excess of the income show in the return and in such cases the penalty shall be imposed on that portion of undisclosed income determined which is in excess of the amount of undisclosed income shown in the return.”
The provisions are not happily worded as has been expressed by various Benches of the Tribunal, noted in the proposed order of the learned Accountant Member. But having in mind the principle that Courts are to administer law as handed over to them by Courts, I find on a reasonable reading of the above provision that the sub section unfolds three situations, as under:
(1) That no order-imposing penalty shall be made if the following conditions/circumst ances are satisfied:
(i) such person has furnished a return under clause (a) of section 158BC;
a. the tax payable on the basis of such return has been paid or, if thee assets seized consist of money, the assessee offers the money so ( seized to be adjusted against the tax payable;
b. evidence of tax paid is furnished along with the return; and
c. an appeal is not filed against the assessment of that part of income which is shown in the return:
(2) The second proviso states that first proviso shall not apply where undisclosed income determined by the Assessing Officer is in excess of income shown in the return and in such cases penalty shall be imposed on that portion of undisclosed income determined, which is in excess of amount of undisclosed income shown in the return. In other words, no penalty under the second proviso is imposable on undisclosed income shown in the return. Payment of tax on above income is not provided.
(3) If, neither first proviso nor second proviso is applicable, then, case is governed by provision of main sub section (2). The said provision would be applicable if no return is filed or return is filed but no undisclosed income is shown in the said return.
6. The aforesaid conclusion and inferences are drawn from a plain reading of the section. In the case in hand and evident from the question referred to me, the controversy is restricted to the deduction of the sum of Rs.79,10,182/ – shown in the return as undisclosed income in Form No.2B. The said sum should not be taken into account for purposes of levy of penalty u/s.158 BFA(2). It is not anybody’s case that no order of penalty can be made in this case. Therefore, question of considering whether that four conditions/circumst ances mentioned in the first proviso are satisfied does not arise at all. In my view, the learned CIT(Appeals) and learned Accountant Member were not required to consider whether conditions/circumst ances of first proviso are satisfied in this case or not. The case does not fall under the above proviso and therefore, in my humble opinion, discussion of question whether conditions are satisfied or not will not serve any purpose. For this reason, I am not referring to the detailed reasoning adopted by the learned Commissioner of Income-tax (Appeals) and learned Accountant Member for holding that on facts conditions of first proviso should be taken to be satisfied. Second proviso to section 158BFA(2) is applicable to cases where the provision of the preceding first proviso shall not apply. Therefore, both provisos cannot apply to the case. However, the learned Commissioner of Income-tax (Appeals) and learned Accountant Member tried to apply both the proviso. As they had allowed the benefit of sum of Rs.79,10,182/ – shown by the assessee as undisclosed income in the return, the matter in my view is fully governed under second proviso to the statutory provision. There is no question of application of main provision of sub section (2) for imposing penalty even on the undisclosed income shown in the return in Form No.2B. The case before me is fully covered by the second proviso to the sub-section. It is settled law that penal provisions are required to be construed strictly and nothing, which is not provided, can be assumed. The conditions/circumst ances required to be satisfied for application of first proviso cannot be incorporated in the second proviso. There is nothing in the language to incorporate the requirement of payment of tax on the “undisclosed income” as a condition for application of the said second proviso. It was not necessary for the Revenue authorities or for the learned Members of the
Tribunal to consider the requirements of the first proviso. In fact, as per the clear language of the second proviso, provisions of first proviso referred to as preceding proviso, ” shall not apply” if the case is covered by the second proviso. There is no justification to act contrary to the mandate of the statutory provision. In the light of the above discussion, I am unable to subscribe to the view taken by the Assessing Officer and confirmed in the proposed of the learned Judicial Member.
