SANGEET LODHA, J. - (1.) THESE two appeals under the provisions of Section 260A of the IT Act, 1961 (in short 'the Act of 1961' hereinafter) filed by the Revenue are directed against order dt. 13th March, 2007 passed by the Income -tax Appellate Tribunal, Jodhpur Bench, Jodhpur (in short 'Tribunal' hereinafter) in IT(SS)A No. 14/Jd/2006 and IT(SS)A No. 15/Jd/2007 in respect of block period asst. yrs. 1996 -97 to 2001 -02, whereby the appeals preferred by the Revenue against separate but similar orders dt. 18th Oct., 2005 passed by the Commissioner of Income -tax (Appeals) [in short 'CIT(A)' hereinafter] in the case of each of the respondent assessees deleting the penalty imposed under Section 158BFA(2) by the Assessing Officer (in short 'AO' hereinafter), stands confirmed.
(2.) THE respondent assessees and one Shri Virendra Kumar Dosi, are brothers, who are engaged in money -lending business jointly at Banswara. A search was conducted at their residential premises on 3rd Jan., 2002. The assessees filed their respective returns for the block period in response to the notices issued under Section 158BC of the Act of 1961, declaring the total undisclosed income of three brothers at Rs. 56,33,926. The AO assessed the total undisclosed income at Rs. 88,67,116. The assessees' undisclosed income being found much more than the income declared in the block period returns, the AO initiated the penalty proceedings against the respondent assessees and their brother Shri Virendra Kumar Dosi, under Section 158BFA(2) of the Act of 1961. After due consideration of the explanations furnished by the assessees, the AO levied penalty quantified at Rs. 19,39,913 (Shri Narendra Kumar Dosi Rs. 6,41,839, Satyendra Kumar Dosi, Rs. 6,56,235 and Virendra Kumar Dosi, Rs. 6,41,839) which comes to 100 per cent of the tax leviable on the difference of assessed and returned income. It is relevant to mention here that the appeals of the assessee in quantum proceedings were decided by the learned Tribunal and the income of the assessees after the appellate orders stands quantified at Rs. 67,17,116. The validity of penalty orders dt. 6th Aug., 2002 passed by the AO as aforesaid was challenged by each of the assessees by way of separate appeals before the CIT(A), Udaipur. After due consideration of overall facts of the case and the decisions cited on behalf of the assessees, the learned CIT(A) arrived at the finding that the difference between assessed income and returned income is not because of any concealment of income by the assessees or because of any inaccurate particulars of the income furnished by the assessees. According to the CIT(A) the difference in opening capital claimed by the assessees and allowed by the CIT(A) (in quantum appeals) was on account of different method and different calculation followed by the assessees. According to the CIT(A) the assessees did not disturb the actual concealment of the income and accordingly offered undisclosed income on the basis of Neelgagan diary seized during the course of search. Accordingly, on consideration of totality of the facts and circumstances, the learned CIT(A) arrived at the finding that non -allowance of the opening capital balance by the AO and the reduction of the opening capital balance by the CIT(A) -Central, Jaipur, from 35 lacs to 15 lacs following different method and working of the same than that of the appellant cannot be said to be undisclosed income of assessees for the purpose of levy of penalty under Section 158BFA(2). Accordingly, the penalty imposed by the AO in the case of each of the assessees was ordered to be deleted by the learned CIT(A) vide order dt. 18th Oct., 2005.
(3.) ON further appeals, before the learned Tribunal, it was contended on behalf of the Revenue that under Section 158BFA(2) a penalty on account of difference in disclosed and assessed undisclosed income has to be imposed automatically as no reasonable cause is admissible thereunder. The learned Tribunal after due consideration of the provisions of Section 158BFA and the rival submissions of the parties so also the earlier decisions of the Tribunal held that the provision of penalty as contained in Section 158BFA(2) is not mandatory. That apart, the learned Tribunal opined that in the instant case, the addition is result of estimation of the opening capital involved prior to the block period and in the block assessments while computing the undisclosed income for the block period, capital possessed by the assessees prior to the block period as revealed from the ledger and the material seized during the search could not be treated as undisclosed income of the first assessment year in the block period. Accordingly, order passed by the CIT(A) deleting the penalty in case of each of the assessees has been confirmed by the learned Tribunal by the order impugned in these appeals.;