There is a perceptional difference in the operative force of section 271(1)(c) vis-à-vis section 158BFA(2). The charge against the assessee u/s 158BFA(2) could be, why they failed to compute true disclosed income out of the seized material.

Mohd. Khasim vs. ACIT (ITAT Bangalore)

On a comparative study of the scheme of assessment of undisclosed income for the purpose of block period, penalty impossible u/s 271(1)(i)(c) and penalty impossible on the undisclosed income in the block period, we find that income for the block period has to be determined on the basis of material seized during the course of search. This material was to be supplied to the assessee before he could be asked to submit his return in response to the notice issued u/s 158BC meaning thereby the material goads any person to compute true undisclosed income. The material is already available with the Assessing Officer. From that very material, true and undisclosed income has to be computed by the assessee and to be disclosed in the block return in response to the notice received u/s 158BC. Thus there is a perceptional difference in the operative force of section 271(1)(i)(c) vis-à-vis section 158BFA(2). The charge against the assessee u/s 158BFA(2) could be, why they failed to compute true disclosed income out of the seized material. Whether the assessees have made a deliberate attempt to disclose nil undisclosed income or they have sufficient reasoning for forming belief that no undisclosed income is available in their hands which is to be disclosed in response to the notice received u/s 158BC.

The question before us is, whether at the time of filing the return, a man of ordinary prudence can form a belief that he has no undisclosed income on the basis of seized material supplied to him. Whether such formation of belief is a bonafide one having regard to the material on the record or it is merely a Performa explanation. It is to be kept in mind that if a claim was not made in the return, then the assessee would be foreclosing his right to dispute the claim and would accept the stand of the Revenue. The Hon’ble Supreme Court in the case of Reliance Petro Products Ltd [2010] 322 ITR 158 (SC) has observed that making incorrect claim does not amount to concealment of particulars, because the assessee wants to take a particular stand on the given facts