ITO, Ward-2, Kakinada V. Sri Radha Krishna Vihar, Kakinada

ITSSA 2/VIZ/2013

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1211 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-09-2015
• Assessment Year: misc
• Appeal Filed On: 28-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reasonable cause; Valuation report
• Section: 143(3); 132; 15

Judgement Text

IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , ,, , . . . . , , , , % % % % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER . .. ./ // / I.T.(SS)A.NO.2/VIZAG/2013 ( BLOCK PERIOD 1.4.96 TO 13.3.2003 ) ITO WARD-2 KAKINADA VS. SRI RADHA KRISHNA VIHAR KAKINADA [ PAN:AAEFS4555N ] ( * * * * / APPELLANT) (+,* +,* +,* +,* / RESPONDENT ) * - / APPELLANT BY : SHRI G.V.N. HARI, AR +,* - / RESPONDENT BY : SHRI M.N. MURTHY NAIK, DR - 2 / DATE OF HEARING : 28. 0 9.2015 - 2 / DATE OF PRONOUNCEMENT : 29.10.2015 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-11, M UMBAI, CAMP AT VISAKHAPATNAM, DATED 10-01-2013 FOR THE BLOCK PERIO D FROM 01-04-1996 TO 13.03.2003. THE REVENUE HAS RAISED FOUR GROUNDS AND FROM THESE IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 2 GROUNDS OF APPEAL, THE ONLY ISSUE ARISES FOR OUR CO NSIDERATION IS WHETHER THE CIT(A) IS RIGHT IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 158BFA(2) OF THE INCOME TAX ACT 1961. 2. THE BRIEF FACTS OF THE CASE, ARE THAT THE ASSESS EE FIRM IS ENGAGED IN THE BUSINESS OF FILM EXHIBITION. A SEARCH AND SE IZER OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN THE BU SINESS PREMISES OF THE FIRM AS WELL AS RESIDENTIAL PREMISES OF THE PAR TNERS ON 13-03-2003. SUBSEQUENTLY, A NOTICE U/S 158BC WAS ISSUED ON 6-6- 2003, WHICH WAS SERVED ON THE MANAGING PARTNER OF THE FIRM AND ASKE D TO FILE THE RETURN FOR THE BLOCK PERIOD WITHIN 30 DAYS FROM THE DATE O F RECEIPT OF NOTICE. IN RESPONSE TO NOTICE, THE FIRM HAS FILED RETURN FOR T HE BLOCK PERIOD ON 11- 08-2003, DECLARING UNDISCLOSED INCOME OF RS. 35,00, 000/-. AS PER THE RETURN OF INCOME, TAX PAYABLE ON UNDISCLOSED INCOME WAS RS. 22,09,000/- AS AGAINST THIS, THE ASSESSEE HAS PAID A SUM OF RS. 9,00,000/- AND BALANCE AMOUNT OF RS. 13,09,000/- SH OWN AS PAYABLE IN THE RETURN OF INCOME. THE ASSESSEE HAS FILED A LETT ER ALONG WITH RETURN OF INCOME AND REQUESTED TO GRANT TIME FOR PAYMENT OF T AXES AS IT IS UNABLE TO ARRANGE MONEY IMMEDIATELY. THE ASSESSMENT WAS CO MPLETED U/S 153BC, R.W.S. 143(3) ON 31-03-2005 AND DETERMINED T HE UNDISCLOSED INCOME OF RS. 85,30,933/-. THE ASSESSMENT TRAVELLED TO ITAT AND IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 3 CONSEQUENT TO THE ORDER OF ITAT, THE AO DETERMINED THE UNDISCLOSED INCOME OF RS. 42,59,159/-. 3. THE ASSESSING OFFICER, INITIATED PENALTY PROCEED INGS U/S 158BFA(2). IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE FILED A DETAILED REPLAY AND REQUESTED TO DROP THE PENALTY PROCEEDINGS. THE ASSE SSING OFFICER, AFTER CONSIDERING THE EXPLANATIONS, LEVIED THE PENALTY OF RS. 26,83,300/- VIDE HIS ORDER DATED 19-03-2010. WHILE, LEVYING THE PENAL TY, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO FILE T HE RETURN FOR THE BLOCK PERIOD WITHIN THE DATE SPECIFIED IN THE NOTICE ISSU ED U/S 158BC AND NOT PAID THE ENTIRE TAX DUE ON THE RETURNED INCOME BEFO RE FILING THE RETURN OF INCOME. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE FIRM COULD NOT ADDUCE ANY REASONABLE CAUSE FOR ITS FAILURE TO DISC LOSE THE ENTIRE UNDISCLOSED INCOME AND PAY TAXES, THEREFORE IT IS A FIT CASE FOR LEVY OF PENALTY. THE ASSESSEE PREFERRED APPEAL BEFORE THE C IT(A) AND CHALLENGED THE LEVY OF PENALTY. BEFORE CIT(A), THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER A ND ARGUED AGAINST LEVY OF PENALTY ON ASSESSED INCOME AND HAS NOT ARGU ED THAT PENALTY IS NOT LEVIABLE AT ALL ON THE MERITS OF THE CASE. DURI NG THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE ASSESSEE DRAW TH E ATTENTION OF THE CIT(A) ON THE SECOND PROVISO TO SECTION 158BFA(2) A ND ARGUED THAT PENALTY CAN BE LEVIED ONLY ON THE UNDISCLOSED INCOM E DETERMINED OVER IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 4 AND ABOVE THE UNDISCLOSED INCOME DECLARED IN THE BL OCK RETURN. IN SUPPORT OF ITS CLAIM, THE ASSESSEE RELIED UPON THE JUDGMENTS OF CIT VS. HARKARAN DAS VED PAL 222 CTR 38 AND DCIT VS. HEERA CONSTRUCTIONS CO P. LTD 125TTJ 589. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS, DIRECTED THE ASSESSING OFFICER TO LEVY PENALTY ONLY ON THE UNDISCLOSED INCOME ASSESSED IN EXCESS OF THE UNDISCLOSED INCOME DECLARED IN THE BLOCK RETURN. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4. THE DEPARTMENTAL REPRESENTATIVE, STRONGLY SUPPO RTED THE ORDER OF THE ASSESSING OFFICER. HE FURTHER, ARGUED THAT THE FIRST PROVISO TO SECTION 158BFA(2) IS VERY CLEAR THAT IF, THE RETURN IS NOT FILED UNDER CLAUSE (A) OF SECTION 158BC AND THE TAXES PAYABLE ON THE BASIS OF SUCH RETURN HAS NOT BEEN PAID BEFORE FURNISHING THE RETURN OF INCOME AN D FURNISHED THE PROOF OF PAYMENT OF TAX, PENALTY CAN BE LEVIED ON T HE ASSESSED INCOME. HE ALSO DREW OUR ATTENTION TO THE SECOND PROVISO TO SECTION 158BFA(2) AND ARGUED THAT THOUGH THE SECTION STIPULATES TO LE VY OF PENALTY ON UNDISCLOSED INCOME OVER AND ABOVE THE ASSESSED AND RETURNED INCOME, THE ASSESSING OFFICER CHOSEN TO INVOKE FIRST PROVIS O, AS THE ASSESSEE FAILED TO FURNISH THE RETURN AND PAY THE TAXES AS S TIPULATED IN THE SECTION 158BFA(2). THEREFORE, HE ARGUED THAT THE ORDER OF A SSESSING OFFICER SHOULD BE CONFIRMED. IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 5 5. PER CONTRA, THE AUTHORISED REPRESENTATIVE OF TH E ASSESSEE SUBMITTED THAT AS PER THE SCHEME OF PROVISIONS OF S ECTION 158BFA(2) SECOND PROVISO, PENALTY CAN BE LEVIED ONLY ON THE U NDISCLOSED INCOME OVER AND ABOVE THE RETURNED AND ASSESSED INCOME. HE FURTHER, ARGUED THAT THOUGH THERE IS MARGINAL DELAY OF 10 DAYS IN F ILING THE RETURN OF INCOME, THE ASSESSING OFFICER PROCEEDED TO ASSESS T HE INCOME ON THE BASIS SUCH RETURN, THEREFORE, IT CANNOT BE HELD AS NOT FURNISHING THE RETURN WITHIN THE TIME ALLOWED IN THE NOTICE. HE FU RTHER ARGUED THAT THE ASSESSEE HAS PAID THE TOTAL TAX DUE ON THE UNDISCLO SED INCOME FINALLY ASSESSED CONSEQUENT TO ITAT ORDER. TO THIS EFFECT H E HAS FURNISHED COPY OF ORDER GIVING EFFECT TO ITAT ORDER, WHICH IS AVAI LABLE AT PAPER BOOK PAGE NO. 48 & 49. THE AUTHORISED REPRESENTATIVE FUR THER SUBMITTED THAT THE ADDITIONAL UNDISCLOSED INCOME DETERMINED IS BAS ED ON THE VALUATION REPORT, WHICH IS AN ESTIMATE AND PENALTY CANNOT BE LEVIED ON ADDITIONS MADE ON ESTIMATION BASIS. HE FURTHER, SUBMITTED THA T THE CIT(A) HAS RIGHTLY LEVIED THE PENALTY ON UNDISCLOSED INCOME OV ER AND ABOVE THE UNDISCLOSED INCOME ASSESSED AND RETURNED AND HIS OR DER SHOULD BE UPHELD. HE ALSO RELIED UPON THE FOLLOWING JUDGMENTS . ACIT VS. GEBILAL KANHAILAL HUF (2012) 348 ITR 561 CIT VS. DODSAL LTD (2009) 312 ITR 112 (BOM HC) CIT VS. SATYENDRA KUMAR DOSI (2009) 315 ITR 172(RAJ HC) CIT VS. HARKARAN DAS VED PAL (2011) 336 ITR 8 (DELH I HC) DCIT VS. HEERA CONSTRUCTIONS CO P. LTD 125TTJ 589 IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 6 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. WE ALSO CONSIDERED THE CASE LA WS CITED BY THE PARTIES. THE ASSESSING OFFICER LEVIED THE PENALTY U /S 158BFA(2) ON THE WHOLE ASSESSED INCOME FOR THE REASON THAT THE ASSES SE FAILED TO FILE THE RETURN FOR THE BLOCK PERIOD WITHIN THE DATE SPECIFI ED IN THE NOTICE ISSUED U/S 158BC AND NOT PAID THE ENTIRE TAX DUE ON THE AD MITTED INCOME BEFORE FILING THE RETURN OF INCOME. THE CIT(A) APPE AL DELETED THE PENALTY ON THE UNDISCLOSED INCOME DECLARED BY THE ASSESSEE AND CONFIRMED THE PENALTY ON UNDISCLOSED INCOME OVER AND ABOVE THE RE TURNED AND ASSESSED INCOME. THE REVENUE CONTENTION IS THAT, TH E FIRST PROVISO TO SECTION 158BFA(2) IS APPLICABLE, AS THE ASSESSEE DO ES NOT FULFILLED THE TWO CONDITIONS STIPULATED BY THE SECTION. THE ASSES SEE CONTENTION IS THAT NO PENALTY CAN BE LEVIED ON THE UNDISCLOSED INCOME ASSESSED BASED ON ESTIMATION BASIS, IF AT ALL PENALTY IS LEVIABLE, IT CAN BE LEVIED ONLY ON THE PORTION OF UNDISCLOSED INCOME ASSESSED OVER AND ABO VE THE RETURNED INCOME. THEREFORE, THE CIT(A), RIGHTLY DELETED THE PENALTY ON THE PORTION OF INCOME WHICH IS DISCLOSED IN THE RETURN AND CONF IRMED THE PENALTY ON UNDISCLOSED INCOME ASSESSED OVER AND ABOVE THE RETU RNED INCOME AND HENCE, HIS ORDER NEEDS NO INTERFERENCE. WE HAVE GONE THROUGH THE CIT(A), ORDER AND CONSIDERED THE CASE LAWS CITED BY THE AR. THE CIT(A), HAS DELETED THE PENALTY BY CONSIDERING THE SECOND P ROVISO TO SECTION IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 7 158BFA(2) AND ALSO RELIED UPON THE THIRD MEMBER CAS E OF COCHIN BENCH OF ITAT IN THE CASE OF DCIT VS. HEERA CONSTRUCTIONS CO P. LTD 125TTJ 589. 7. IT IS PERTINENT TO MENTION HERE THE PROVISIONS OF SECTION 158BFA(2), WHICH READS AS UNDER. (2) THE AO OR THE COMMISSIONER (A), IN THE COURSE O F 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 TA X LEVIABLE BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SO L EVIABLE IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED BY THE AO UNDER C L. (C) OF SECTION 158BC : PROVIDED THAT NO ORDER IMPOSING PENALTY SHALL BE MA DE IN RESPECT OF A PERSON IF- (I) SUCH PERSON HAS FURNISHED A RETURN UNDER CL. (A ) OF SECTION 158BC : (II) THE TAX PAYABLE ON THE BASIS OF SUCH RETURN HA S 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 IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 8 (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 PRECEDI NG PROVISO SHALL NOT APPLY WHERE THE UNDISCLOSED INCOME DETERMINED BY TH E AO IS IN EXCESS OF THE INCOME SHOWN IN THE RETURN AND IN SUCH CASES THE PENALTY SHALL BE IMPOSED ON THAT PORTION OF UNDISCLOSED INCOME DETER MINED WHICH IS IN EXCESS OF THE AMOUNT OF UNDISCLOSED INCOME SHOWN IN THE RETURN. 8. A CAREFUL STUDY OF SECTION 158BFA(2) THE FIRST PROVISO MADE IT CLEAR THAT THE ASSESSING OFFICER MAY DIRECT THE ASS ESSEE TO PAY A PENALTY IN RESPECT OF UNDISCLOSED INCOME DETERMINED BY THE AO UNDER CLAUSE (C) OF SECTION 158BC, IN CASE THE ASSESSEE FAILS TO FIL E THE BLOCK RETURN AND PAY TAXES AS PER SUCH RETURN. THE SECOND PROVISO CO MES IN TO OPERATION, ONLY WHEN THE AO DETERMINED THE UNDISCLOSED INCOME IN EXCESS OF THE RETURNED INCOME. IN THE PRESENT CASE, THE NOTICE U/ S 158BC WAS SERVED ON 2-7-2003 WITH A DIRECTION TO FILE THE RETURN WIT HIN 30 DAYS. THE PERIOD OF 30 DAYS EXPIRED ON 1-8-2003 BUT, THE RETURN WAS FILED ON 11-08-2003. THOUGH THERE WAS MARGINAL DELAY OF 10 DAYS IN FILIN G THE RETURN, THE SAME WAS CONSIDERED BY THE AO AND COMPLETED THE ASS ESSMENT BASED ON SUCH RETURN AND THE ASSESSEE PAID THE TAXES ON T HE ASSESSED INCOME WHICH IS EVIDENT FROM THE ORDER GIVING EFFECT TO IT AT ORDER. THE IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 9 ASSESSEE PLEADED THAT, THE DELAY IN LATE FILING OF RETURN AND PAYMENT OF TAXES IS UNINTENTIONAL. THE ASSESSEE FILED A LETTER ALONG WITH RETURN AND REQUESTED FOR TIME TO PAY TAXES AS IT IS UNABLE TO MOBILISE FUNDS FOR PAYMENTS OF TAXES, THE FACT WAS NOT DISPUTED BY THE REVENUE. THE QUESTION WHETHER THERE WAS A REASONABLE CAUSE BECAU SE OF WHICH, THE REQUIREMENT OF RELEVANT PROVISIONS COULD NOT BE COM PLIED WITH IS PRIMARILY ESSENTIAL QUESTION OF FACT AND IT HAS TO BE DECIDED IN EACH CASE ON CONSIDERATION OF MATERIAL PLACED BEFORE THE CONC ERNED AUTHORITY. LEVY OF PENALTY UNDER S. 158BFA(2) IS NOT AUTOMATIC. BEF ORE LEVYING PENALTY, THE CONCERNED OFFICER IS REQUIRED TO FIND OUT THAT EVEN IF THERE WAS ANY FAILURE REFERRED TO IN THE CONCERNED PROVISION THE SAME WAS WITHOUT A REASONABLE CAUSE. THE INITIAL BURDEN IS ON THE ASSE SSEE TO SHOW THAT THERE EXISTED REASONABLE CAUSE WHICH WAS THE REASON FOR THE FAILURE REFERRED TO IN THE CONCERNED PROVISION. THEREAFTER, THE OFFICER DEALING WITH THE MATTER HAS TO CONSIDER WHETHER THE EXPLANA TION OFFERED BY THE ASSESSEE OR THE PERSON, AS THE CASE MAY BE, AS REGA RDS THE REASON FOR FAILURE, WAS ON ACCOUNT OF REASONABLE CAUSE. IN OUR OPINION, THE DELAY OF 10 DAYS IN FILING THE RETURN IS WELL WITHIN THE KNO WLEDGE OF THE ASSESSEE AND THE ASSESSEE IS AWARE OF THE CONSEQUENCES OF LA TE FILING OF RETURN. THEREFORE, IT IS NOT A CASE OF DELIBERATE ATTEMPT T O DELAY THE FILING OF RETURN AND AVOID PAYMENT OF TAXES. HENCE, THE AO, I S NOT RIGHT IN LEVYING IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 10 PENALTY ON THE ASSESSED INCOME INCLUDING RETURNED I NCOME BY INVOKING FIRST PROVISO TO SECTION 158BFA(2). 9. NOW, COMING TO THE SECOND PROVISO TO SECTION 15 8BF(2). THE SECOND PROVISO MANDATES THE ASSESSING OFFICER TO LE VY PENALTY, WHERE THE ASSESSED INCOME IS IN EXCESS OF RETURNED INCOME . IN THE PRESENT CASE, THE UNDISCLOSED INCOME FINALLY ASSESSED AT RS . 42,59,151/- AS PER THE CONSEQUENTIAL ORDER PASSED BY AO, GIVING EFFECT TO ITAT ORDER. THE ASSESSEE ADMITTED A UNDISCLOSED INCOME OF RS. 35,00 ,000/- IN THE BLOCK RETURN. THUS, THERE WAS DIFFERENCE OF RS. 7,59,151/ - IN THE ASSESSED INCOME IN EXCESS OF RETURNED INCOME. THE CIT(A), AF TER CONSIDERING THE FACTUAL POSITION AND ALSO CONSIDERING THE THIRD MEM BER DECISION OF ITAT COCHIN BENCH IN THE CASE OF DCIT VS. HEERA CONSTRUC TIONS CO P. LTD 125TTJ 589, CONFIRMED THE PENALTY ON THIS PORTION O F UNDISCLOSED INCOME. THE DECISION OF ITAT COCHIN BENCH CASE WAS EXAMINED. THE THIRD MEMBER IN THE CASE HELD AS UNDER. IN THE CASE IN HAND AND EVIDENT FROM THE QUESTION R EFERRED 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 SHO ULD NOT BE TAKEN INTO ACCOUNT FOR PURPOSES OF LEVY OF PENALTY UNDER S. 158BFA(2). IT IS NOT ANYBODYS CASE THAT NO ORDER OF PENALTY CAN BE MADE IN THIS CASE. THEREFORE, QUESTI ON OF CONSIDERING WHETHER THAT FOUR CONDITIONS/CIRCUMSTANCES MENTIONED IN THE FIRST PRO VISO ARE SATISFIED DOES NOT ARISE AT ALL. IN MY VIEW, THE LEARNED CIT(A) AND LEARNED AM WERE NOT REQUIRED TO CONSIDER WHETHER CONDITIONS/CIRCUMSTANCES OF FIRST PROVISO ARE SATIS FIED 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 WI LL NOT SERVE ANY PURPOSE. FOR THIS REASON, I AM NOT REFERRING TO THE DETAILED REASONIN G ADOPTED BY THE LEARNED CIT(A) AND LEARNED AM FOR HOLDING THAT ON FACTS CONDITIONS OF F IRST PROVISO SHOULD BE TAKEN TO BE SATISFIED. SECOND PROVISO TO S. 158BFA(2) IS APPLIC ABLE TO CASES WHERE THE PROVISION OF THE PRECEDING FIRST PROVISO SHALL NOT APPLY. THEREFORE, BOTH PROVISOS CANNOT APPLY TO THE CASE. IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 11 HOWEVER, THE LEARNED CIT(A) AND LEARNED AM TRIED TO APPLY BOTH THE PROVISOS. AS THEY HAD ALLOWED THE BENEFIT OF SUM OF RS. 79,10,182 SHO WN BY THE ASSESSEE AS UNDISCLOSED INCOME IN THE RETURN, THE MATTER IN MY VIEW IS FULL Y GOVERNED UNDER SECOND PROVISO TO THE STATUTORY PROVISION. THERE IS NO QUESTION OF APPLIC ATION OF MAIN PROVISION OF SUB-S. (2) FOR IMPOSING PENALTY EVEN ON THE UNDISCLOSED INCOME SHO WN IN THE RETURN IN FORM NO. 2B. THE CASE BEFORE ME IS FULLY COVERED BY THE SECOND P ROVISO TO THE SUB-SECTION. IT IS SETTLED LAW THAT PENAL PROVISIONS ARE REQUIRED TO BE CONSTR UED STRICTLY AND NOTHING, WHICH IS NOT PROVIDED, CAN BE ASSUMED. THE CONDITIONS/CIRCUMSTAN CES 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 P AYMENT 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 MEMB ERS 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 PRECEDIN G PROVISO, 'SHALL NOT APPLY' IF THE CASE IS COVERED BY THE SECOND PROVISO. THERE IS NO JUSTIFIC ATION 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 AO AND CONFIRMED THE IN THE P ROPOSED ORDER OF THE JM. 10. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTA NCES OF THE CASE, WE ARE OF THE OPINION THAT THE CIT(A) RIGHTLY DELET ED THE PENALTY LEVIED U/S 158BFA(2) BY THE AO ON UNDISCLOSED INCOME DECLA RED BY THE ASSESSEE IN THE BLOCK RETURN AND CONFIRMED THE PENA LTY ON UNDISCLOSED INCOME DETERMINED BY THE AO IN EXCESS OF UNDISCLOSE D INCOME SHOWN IN THE BLOCK RETURN. HENCE, WE INCLINED TO UP HELD THE ORDER OF CIT(A). 11. IN THE RESULT, THE REVENUE APPEAL IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH OCT15. SD/- SD/- ( (( ( . .. . ) ) ) ) ( (( ( . . . . ) ) ) ) ( (( ( V. DURGA RAO ) )) ) ( (( ( G. MANJUNATHA) / // / JUDICIAL MEMBER / // / ACCOUNTANT MEMBER /VISAKHAPATNAM: 6 / DATED : 29.10.2015 VG/SPS IT(SS)A NO.2/VIZAG/2013 SRI RADHA KRISHNA VIHAR, KAKINADA 12 - + 7 / COPY OF THE ORDER FORWARDED TO :8 1. * / THE APPELLANT ITO WARD-2, KAKINADA 2. +,* / THE RESPONDENT SRI RADHAKRISHNA VIHAR, 2-2-8, SRINAGAR, KAKINADA 3. THE CIT(CENTRAL), HYDERABAD 3. ; () / THE CIT(A)-11, MUMBAI 4. +, , / // / DR, ITAT, VISAKHAPATNAM 5 . . . . / GUARD FILE / BY ORDER // TRUE COPY // @A ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM