Zee Akaash News Pvt. Ltd. Vs DCIT: ITAT Upholds ₹2.05 Crore Penalty for Misreporting

By CA Vijayakumar Shetty Income Tax Judiciary October 12, 2026

TaxGuru Citation: 2026 taxguru.in 15453
Case Name: Zee Akaash News Private Limited Vs DCIT (ITAT Mumbai)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2020-21
Courts: All ITAT, ITAT Mumbai

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Zee Akaash News Private Limited Vs DCIT (ITAT Mumbai)

Surrender After Detection Does Not Erase Misreporting: ITAT Upholds 200% Penalty

The dispute The Mumbai Tribunal upheld a penalty of ₹2,05,15,192 under section 270A arising from the disallowance of expenditure, depreciation and amortisation relating to transactions held to be non-genuine. The assessee’s explanation that it had surrendered the claims to buy peace and avoid prolonged litigation did not persuade the Tribunal. On the facts, the surrender followed departmental detection and was therefore not considered voluntary. The decision illustrates the distinction between withdrawing a disputed claim and escaping penalty for an established instance of misreporting. Acceptance of the disallowance did not, by itself, wipe out the circumstances in which the original claims had been made.

Transactions with an alleged accommodation entry provider

The assessee, a television news broadcaster, filed its return declaring income of approximately ₹28.95 crore. A survey conducted on 4 January 2021 at its premises and those of its group concerns led to investigations into transactions with certain entities allegedly supplying accommodation entries at arbitrary or inflated prices.

One such entity was Mixrex Media and Cable Pvt. Ltd. The Department’s enquiries revealed that its premises were closed and no business activity was being conducted at the stated address. Its director, in statements before the GST intelligence authorities, admitted that he signed blank cheques and papers, had no knowledge of the company’s operations and received ₹5,000 per month.

Summons and notices did not produce the required information. These circumstances led the Assessing Officer to conclude that the supplier was a paper entity used to introduce layers into the transactions.

The assessee subsequently agreed to disallow ₹4,07,56,500 representing depreciation, amortisation and revenue expenditure. The assessment was completed at approximately ₹33.03 crore, and penalty proceedings were initiated for under-reporting of income in consequence of misreporting.

The assessee’s defence

The assessee maintained that the transactions were genuine and supported by invoices, bank statements, e-way bills and other records. The purchases included equipment such as a virtual studio, digital asset management system, video mixer and related broadcasting assets.

It argued that the supplier’s failure to respond to departmental notices could not automatically invalidate its purchases. It also complained that the investigation report relied upon by the Department had not been furnished to it.

According to the assessee, the surrender was made because of paucity of time and to avoid protracted litigation. It stressed that assessment and penalty proceedings are independent, and a disallowance cannot automatically establish misreporting. Since material facts had been disclosed and a bona fide explanation furnished, it also sought protection under section 270A(6).

Why the Tribunal upheld the penalty

The Tribunal found that the surrender followed adverse findings concerning accommodation entries. The claims had already been made in the original return, and the additional income was offered only after the survey and investigation.

It also noted that the Assessing Officer had undertaken independent enquiries during assessment proceedings. The supplier was not found at the stated address, and the assessee had not satisfactorily displaced the adverse findings.

The Tribunal consequently upheld the application of section 270A(9)(a), concerning misrepresentation or suppression of facts, and section 270A(9)(d), concerning false entries in the books. The penalty was therefore sustained at the rate applicable to misreporting.

Relying on MAK Data (P.) Ltd. v. CIT, 358 ITR 593 (SC), the Tribunal held that explanations such as buying peace or avoiding litigation do not provide automatic protection against penalty. Although that judgment concerned section 271(1)(c), the Tribunal considered its reasoning relevant to the present dispute.

Favourable decisions distinguished

The Tribunal distinguished Sushil Rajendra Kothari, where the issue concerned the absence of a specific penalty charge, and Kavita Jagjit Singh, which involved a bona fide omission to disclose interest on an income-tax refund.

It also distinguished Man Industries Ltd., where the addition relating to accommodation entries had been restricted to an estimated percentage. The present case, according to the Tribunal, involved established non-genuine claims rather than an estimated disallowance.

The assessee’s objection that the show-cause notices did not specify the relevant clauses of section 270A(9) was rejected because it had not been raised through a ground of appeal or an additional ground. The Tribunal thus did not decide that objection on its substantive merits.

Author’s Comments

Surrender is neither automatic immunity nor automatic proof of misreporting. The decision should be read in the context of the adverse investigation findings accepted by the Tribunal. It should not be extended to every agreed addition or withdrawal of expenditure.

Section 270A requires identification of the particular statutory category of misreporting. A rejected explanation or disallowed claim must still be examined against those requirements; section 270A(8) prescribes the enhanced penalty where under-reporting results from such misreporting.

The practical lesson is clear: a surrender letter stating “to buy peace” cannot substitute for a defence supported by evidence. Equally, a challenge to the validity of the penalty notice should be expressly incorporated in the appeal grounds or raised through an additional ground, rather than left only in written submissions.

The assessee’s appeal was dismissed, and the penalty of ₹2.05 crore was upheld.

Cases Discussed

MAK Data (P.) Ltd. v. CIT, 358 ITR 593 (SC) — Supreme Court authority that surrender after departmental detection and pleas of buying peace or avoiding litigation do not automatically avoid penalty.
Samson Maritime Ltd. v. CIT, [2017] 88 taxmann.com 671 (Bom.) — Bombay High Court decision concerning a disclosure made after notices in assessment proceedings; relied upon on the voluntary-disclosure issue.
Gangotri Textiles Ltd. v. DCIT, [2020] 121 taxmann.com 171 (Mad.) — Cited for the proposition that disclosure after detection does not itself absolve an assessee from penalty; the order notes the Supreme Court affirmation.
Mahesh N. Thakkar, [2015] 59 taxmann.com 272 (Bom.) — Cited for penalty consequences where income was offered after being pointed out by the Assessing Officer.
CIT v. Usha International Ltd., ITA No. 1696/2006 (Delhi HC) — Discussed in the order in relation to withdrawal of a claim after departmental survey and the fact-specific nature of penalty findings.
M/s Varshney Bhandu Foods Pvt. Ltd., ITA No. 2973/Del/2014 (ITAT Delhi) — Relied upon in support of sustaining penalty where accommodation-entry income was surrendered after investigation and the assessee could not substantiate the transaction.
Jyoti Laxman Konkar v. CIT, 292 ITR 163 (Bom.) — Bombay High Court decision concerning a revised return and disclosure of income after survey detection.
Sushil Rajendra Kothari v. ACIT, ITA No. 4734/Mum/2023 (ITAT Mumbai) — Distinguished because the issue was adjudicated on the absence of a specific penalty charge.
Kavita Jagjit Singh v. CIT, 157 taxmann.com 756 — Distinguished as involving a bona fide omission to disclose interest on an income-tax refund.
DCIT v. Man Industries Ltd., ITA No. 8639/Mum/2025 (ITAT Mumbai) — Distinguished because the accommodation-entry addition was restricted to an estimated 5%.
CIT v. Reliance Petroproducts (P.) Ltd., 322 ITR 158 (SC) — Cited by the assessee; the CIT(A) distinguished it on the basis that the present claim was treated as fabricated and based on non-genuine transactions.
Price Waterhouse Coopers (P.) Ltd. v. CIT, 348 ITR 306 (SC) — Mentioned in the reproduced discussion of Samson Maritime concerning a bona fide computational error; distinguished on facts.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

The instant appeal preferred by the assessee emanates from the order dated 29.08.2025 passed by the Learned Commissioner of Income-tax, Appeal, CIT(A) 48, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to penalty levied u/s. 270A of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2020-21.2. The grounds of appeal are as under:

1. Ground 1: Levy of penalty u/s 270A of the Act of Rs 2,05,15,192

1.1 On the facts and circumstances of the case, the Learned Commissioner of Income tax (Appeals)-48 (hereinafter referred to as the ‘Ld. CIT(A)’) erred in upholding the penalty order passed by the Learned Deputy Commissioner of Income-tax Central Circle -2(4) (herein referred to as ‘Assessing officer’ or ‘AO’) u/s section 270A of Income-tax Act, 1961 (‘the Act’) for under-reporting in consequence of misreporting. The reasons provided for imposing such penalty are incorrect, contrary to the facts of the case and against the provision of the law.

1.2 On the facts and circumstances of the case, the Ld. CIT(A) erred in confirming the penalty for misreporting of income u/s 270A of the Act solely on the basis of the disallowances made in the assessment order without discharging the onus and proving misrepresentation of income by the appellant.

1.3 On the facts and circumstance of the case, the Ld. CIT(A) failed to appreciate that there is neither ‘misrepresentation or suppression of facts’ nor ‘any recording of false entry in the books of account’ to warrant levy of penalty u/s section 270A (9) of the Act for under reporting in consequence of misreporting.

1.4 On the facts and circumstance of the case, the Ld. CIT(A) erred in upholding the action of the AO without appreciating the documentary evidence furnished by the appellant to discharge its onus, to prove transaction with M/s Mixrex Media & Cables Pvt Ltd is genuine.

1.5 On the facts and circumstance of the case, CIT(A) overlooked the fact that the appellant to avoid prolonged litigation and peace of mind had suo moto offered the amortization of content and depreciation for disallowance and therefore penalty is not leviable.

3. The captioned appeal has been filed by the assessee challenging the order passed by the ld. CIT(A) confirming the penalty levied by the AO vide order passed under section 270A of the Act, amounting to Rs. 2,05,15,192/-.

4. The assessee is a broadcaster of television channels engaged in operating a News channel. It had filed its return of income for the relevant year declaring income of Rs. 28,95,46,040/-.Subsequently, a survey was conducted at its the premises as well as its group concerns on 04.01.2021. During the survey action, it was found that the assessee and its associates had undertaken transactions with certain entities which were not doing any actual business but were only providing entries at inflated/arbitrary prices so that the Zee Group companies could claim expenses/depreciation/amortization. One such entity was M/s Mixrex Media and Cable Pvt. Ltd.(MMCPL).

5. During the assessment proceedings, field enquiries were conducted by the AO in respect of the above entity which revealed that its premises was shut and no business activity was conducted from the said address. Shri Shahaji Dagdu Suryavanshi, Director of this company, admitted in sworn statements before the Director General of GST Intelligence(DGGI)authorities during their investigation that he was only signing blank cheques and papers sent to him and was unaware about the day to day running of the company and he was receiving a monthly consideration of Rs. 5,000/- from his employment. He further admitted that no business activity was being carried out by the company and he was not aware of any other staff working in the company. In light of such admissions, it became apparent he was merely a dummy director in the company. During post survey enquiry, another opportunity was provided to the Company for submitting relevant details vide summons u/s 131 dated 12.03.2021. However, the summons returned undelivered with the remarks “left”. The summons was also served electronically on the registered email, however, no reply was received. Financials of the company were analyzed and it was noticed from its income tax return of A.Y. 2019-20 that the company had no fixed assets. It was also observed that the company was paying a meagre amount of Rs. 15,000/ per annum.

5.1 Based on above findings, it was noticed by the AO that neither the company MMCPL existed nor any books of account were maintained at any location. Notices u/s 133(6) of the Act were sent to the entity during assessment proceedings enquiring details of transactions undertaken with Zee group and associated entities. No reply in this regard was received from this entity. The AO therefore, concluded that the assessee company undertook entries from a bogus non-existent party which was not carrying out any actual business and was only adding layers to the transactions.

5.2 It is stated further that in view of these glaring inconsistencies and discrepancies, the assessee agreed to disallow the expenses/depreciation/amortization claimed in respect of transactions undertaken with these entities, during the course of the survey proceedings. Accordingly, depreciation/ amortization/ revenue expenditure amounting Rs. 4,07,56,500/- was disallowed and assessment was completed u/s 143(3) of the Act assessing total income at Rs. 33,03,02,540/-. Further, in respect of this disallowance, penalty proceeding u/s 270A of the Act for under-reporting of income in consequence of misreporting was initiated.

5.3 Before the AO, the assessee vide its reply primarily raised three objections to the levy of penalty claiming that the case did not fall under clauses given in sub-section (9) of section 270A and therefore, penalty for under-reporting in consequence of misreporting should not be levied, since it itself had agreed to disallow the expenditure/depreciation in respect of the transaction in question during the survey proceedings and assessment proceedings, and it had done so to avoid prolonged litigation. Besides, penalty should not be levied as the assessee had given bona fide explanation and disclosed all the material facts. The assessee in this regard also referred to the provisions of sub-section (6) of section 270A of the Act. The AO after taking into account the contentions of the assessee referred to the provisions of section 270A(9) of the Act which provide for circumstances where penalty for under-reporting in consequence of misreporting can be levied which read as under-

(a) misrepresentation or suppression of facts;

(b) failure to record investments in the books of account;

(c) claim of expenditure not substantiated by any evidence;

(d) recording of any false entry in the books of account;

(e) failure to record any receipt in books of account having a bearing on total income; and

(f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply.

5.4 It was concluded by the AO that that the assessee’s case squarely fell under clauses (a) and (d).He went on to elaborate his conclusion reiterating that during the survey action on the assessee and its associated companies, it was found that the company and its associated companies had undertaken transactions with certain entities which were not doing any actual business but were only providing entries at inflated/arbitrary prices. His findings in the assessment order are narrated in the preceding paras. Further, it was noticed during the survey and post-survey proceedings that these entries were at arbitrary/inflated prices. Any sort of SOP, business rationale was not followed when valuing these transactions. Therefore, the assessee misrepresented and suppressed facts insofar as it took entries from a bogus party which was not carrying out any actual business and was only adding layers to the transactions. The assessee also recorded false entries in its books of account since these entries were at arbitrary and inflated prices from a non- existent entity. As such, both the clauses (a) and (d) of sub-section (9) of section 270A of the Act became squarely applicable to it.

5.5 As regard the claim of the assessee that it had itself offered to disallow the expenses/depreciation/amortization claimed in respect of the transactions undertaken with MMCPL, it was noted by the AO that the assessee had claimed these expenses/depreciation/amortization in respect of these transactions in its return of income. It was only after the assessee was subjected to a survey operation and the Department found these discrepancies/inconsistencies in the transactions that the assessee agreed to disallow the same. Had the assessee not been subjected to such operation, it would have gone on to claim these expenses/depreciation/amortization as it had already claimed in its return of income. Its contention that it had agreed on disallowance to avoid prolonged litigation was only an after-thought which could not be given any credence.

5.6 The assessee’s other contention that since it had given bona- fide explanation and disclosed all the facts, penalty should not be levied in terms of provisions of section 270A(6) of the Act, was also not found tenable. The AO observed that the provisions of section 270A(6) are not applicable to the cases of under-reporting of income in consequence of misreporting. Reference is invited to sub-section (8) of section 270A in this regard, which reads as under – (8) Notwithstanding anything contained in sub-section (6) or sub-section(7), where under-reported income is in consequence of any misreporting thereof by any person, the penalty referred to in sub-section (1) shall be equal to two hundred per cent of the amount of tax payable on under-reported income.

5.7 In view of the above discussion, it was clear that the assessee’s case was fit for levy of penalty for under-reporting of income in consequence of misreporting. The AO, accordingly, imposed penalty u/s 270A of the Act.

6. The penalty order was upheld by the ld.CIT(A) before whom the assessee had preferred five substantive grounds of appeal contesting the penalty by claiming that the penalty was imposed solely on the basis of the additions without discharging the onus of proving misreporting. It was also contended that there was neither any suppression or misrepresentation of facts nor recording of false entry in the books of account in terms of section 270A(9) of the Act. The assessee suo moto offered the disallowance in view of protracted litigation and paucity of time and also it had disclosed all material facts. The ld.CIT(A) referred to its contentions in the Statement of Facts as also submissions made wherein the assessee company inter alia also relied on Reliance Petroproducts 322 ITR 158(SC) which was also distinguished by the ld.CIT(A) as therein the question pertained to incorrect claim of the provisions of law while in the instant case, the claim was fabricated and non genuine transactions with a Paper Entity.

7. Before us, the ld.AR has made both oral and written submissions. At the outset, it was claimed that during the course of the survey and post survey proceedings, vide letter dated June 4, 2021, the assessee had offered to disallow expenditure on Content Programme and depreciation claimed by it on purchase of fixed assets from MMCPL although during assessment proceedings, it filed various details before the AO to prove the genuineness of the impugned transaction. However, due to paucity of time and to avoid prolonged litigation, during the course of the survey proceedings, it had agreed to the disallowance of the aforesaid amount. It was requested that since the time-limit of filing the revised return of income had already expired, the said amount may be considered for disallowance now. Thus, the assessee offered the amount for disallowance suo motu. Pursuant to this submission, the AO passed the assessment order wherein he accepted that during the course of survey proceedings, as well as in the course of assessment proceedings, the assessee had offered to disallow the expenditure as well as depreciation. In view of the same, depreciation and the revenue expenditure amounting to Rs. 4,07,56,500/- were disallowed and added to the income of the assessee. However, the AO initiated Penalty proceedings u/s 270A of the Act.

7.1 It is submitted that though the ld. CIT(A) accepted that the assessee had furnished all necessary documents in support of the genuineness of the transactions, he observed that the mere existence of invoices, e-way bills and bank statements etc. did not prove the genuineness of the transactions, especially when the very existence and activity of the other party were found to be non-existent. We find that the ld.CIT(A) went on to hold that the investigation had clearly established that MMCPL was a paper entity created to provide accommodation entry. Therefore, by claiming expenditure on the basis of such invoices, the assessee had misrepresented the facts and recorded false entries in its books of account. It was also held that the AO had discharged his onus by bringing on record the findings of the investigation wing. He rejected the contention of the assessee that it had suo motu disallowed the expenditure and, therefore, no penalty should be levied. The ld. CIT(A) held that the contention was merely an afterthought. No disallowance was made by the assessee in its return of income, and it was only after the survey action under section 133A of the Act that the bogus nature of the transaction was unearthed and the assessee, thereafter, was left with no other option but to “agree” to the disallowance. This act was not a voluntary act but a surrender in the face of overwhelming evidence gathered by the Department. The plea of the assessee of buying peace and avoiding litigation could not be accepted as a bona fide explanation in a case; whereas it was a planned attempt to evade tax by claiming non-genuine expenditure. He confirmed the finding of the AO in connection with the assessee not having furnished any bonafide explanation and that the provision of section 270A(8) of the Act had an overriding effect over the benefit provided under section 270A(6) of the Act.

7.2 It is submitted that the assessee had discharged its primary onus by bringing on record material in support of the genuineness of the purchase. Therefore, no addition ought to have been made in the first instance and consequently, no penalty can be levied. In the course of the assessment proceedings, the assessee had furnished various documentary evidence in support of the genuineness of the transactions i.e. invoices and e-way bills in support of the delivery of the goods purchased, bank statements highlighting the payments made by the Appellant to MMCPL and Invoice for Content Programme. From the perusal of the invoices raised by MMCPL, it is evident that the invoice provided a detailed description of the capital asset acquired by the assesse. From the invoices, it is discernible that it had acquired Virtual Studio, Flyway, Digital Asset Management, Video Mixer and Coreswitch with slots. The assessee had capitalised these fixed assets in the books of account and claimed depreciation thereon. Further, the assessee had furnished e-way bills in support of the actual delivery of the goods. The e-way bills also contained the transporters’ details, along with the date of delivery.

7.3 It is further contented that the only basis for the AO’s allegation that the transactions were non-genuine was based solely on the purported discrepancy of purchase orders generated after delivery and the investigation carried out by the Investigation wing, a copy of which was never provided to the assessee, even though the penalty proceedings had concluded. Merely because the purchase orders were generated subsequently by a third-party vendor, the genuineness of the purchases made could not be doubted. The assessee had no control over the action or inaction on the part of a third-party vendor in maintaining its records. Further, it could not be doubted that products can be delivered even though the purchase orders were being placed. As explained by it in the assessment and penalty proceedings, since there was an urgent requisition of capital, the purchase order might have been generated later by a third-party vendor. In any case, a lacuna in the deduction of the amount of a third-party vendor could not dictate the allowability of depreciation as well as expenditure in the hands of the assessee. Further, with respect to the allegation made by the Investigation wing, it was submitted that, during the assessment or penalty proceedings, its report was never furnished to the assessee. Therefore, on the ground of violation of the principles of natural justice alone, no addition could be made in the hands of the assessee.

7.4 It is further argued by the ld.AR that the AO has not brought any material on record other than the purported findings of the investigation to doubt the genuineness of the transactions. He simply placed reliance upon the findings of the investigation wing. No material had been brought on record by the AO to rebut the evidence furnished. It is also argued that it is a settled position in law that penalty proceedings and assessment proceedings are independent in nature and it is incumbent upon the AO to make fresh investigation and findings in the course of the penalty proceedings. Simply because an expenditure had been disallowed in the assessment proceedings, ipso facto, penalty could not be initiated and levied. Further, the assessee, as stated above, had been able to demonstrate that the expenditure was otherwise allowable. As such, no penalty could be levied under section 270A of the Act. The assessee had not fabricated any invoice. The lower authorities had not brought any material on record to contradict the documentary evidence furnished by the assessee. Equally important, the vendor’s failure to reply to the notice under section 133(6) of the Act could not render the transaction non-genuine.

7.5 It is further submitted that the assessee, to avoid protracted litigation and due to paucity of time, suo motu disallowed the expenditure during the assessment proceedings. It is not the case that the assessee simply offered the disallowance post the issuance of notice by the AO. Initially, it contested the proposed assessment by discharging its primary onus. However, subsequently, to avoid protracted litigation, the assessee surrendered the expenditure. The finding of the ld. CIT(A) that the assessee offered the disallowance only after overwhelming evidence was unearthed by the investigation is ex facie incorrect. Reliance was placed on Co-ordinate Bench of this Hon’ble Tribunal in the case of DCIT vs. Man Industries Ltd. (ITA No. 8639/Mum/2025 dated April 27, 2026. The Hon’ble Tribunal, in an identical fact situation where the Assessee had offered income voluntarily in return of income filed pursuant to notice under section 148 of the Act, rejected the reliance placed by the Revenue on section 270A(9) of the Act. Further, a similar view has been taken in Sushil Rajendra Kothari vs. ACIT Circle- 19(3) in ITA No. 4734/Mum/2023 dated November 21, 2024 and Kavita Jagjit Singh v. CIT in 157 taxmann.com 756.Thus,no penalty can be levied once income has been offered voluntarily.

7.6 It was further contended that the assesse had disclosed all primary facts as well as furnished explanations in support of its claim. Merely because the claim of the assessee had been rejected, no penalty could be levied. By referring to section 270A(9) of the Act, the assessee could not be categorised as having misreported income without first demonstrating how any clause of section 270A(9) of the Act is attracted. There cannot be any question of suppression of facts or misrepresentation of facts, as all the facts were already available on record. Further, the allegation that the assessee had falsified the entries in the books of accounts was unsustainable, as the transactions undertaken were genuine and were supported by evidence. The evidence furnished by it had, in no manner, been rebutted by the AO in the assessment proceedings as well as penalty proceedings. It is not sufficient that provision of section 270A(9) of the Act is invoked to seek to refuse the assessee an opportunity to make a case under section 270A(6)(a) of the Act. As stated above, none of the clauses of section 270A(9) of the Act are applicable. In any case, section 270A(1) of the Act itself makes it abundantly clear that the AO has discretion in levying penalty, and the point of exercising discretion can arise only after considering the explanation of the assessee. Therefore, it could not be foreclosed from giving an explanation in support of its claim.

8. Per contra, the ld.DR vehemently, supported the orders of the lower authorities claiming that the income offered was not voluntary and only after confronted with the incriminating materials, the assessee with no other option left, surrendered such non genuine expenses etc.

9. We have carefully considered all the relevant facts of the case. Before us, the assessee has raised as many five sub-grounds under the solitary ground no.1 which are again reproduced for sake of brevity clarity and for further reference in the subsequent paras:

“ 1.1 On the facts and circumstances of the case, the Learned Commissioner of Income tax (Appeals)-48 (hereinafter referred to as the ‘Ld. CIT(A)’) erred in upholding the penalty order passed by the Learned Deputy Commissioner of Income-tax Central Circle -2(4) (herein referred to as ‘Assessing officer’ or ‘AO’) u/s section 270A of Income-tax Act, 1961 (‘the Act’) for under-reporting in consequence of misreporting. The reasons provided for imposing such penalty are incorrect, contrary to the facts of the case and against the provision of the law.

9.1 No other ground or any additional ground have been filed apart from above grounds. Sub-ground no.1.1. is general in nature while in sub-ground no.1.2, the basis of penalty being disallowance has been agitated. Further, in sub-ground no.1.3,application of clauses (a) and(d) of section 270A(9) of the Act have been contested. In sub-ground 1.4,it is claimed that onus of proving the genuineness of the transaction with MMCPL has been agitated while in sub-ground 1.5, the reasons for offering the amortization and depreciation have been attributed to avoidance of prolonged litigation and for mental peace.

9.2 After carefully going into the contents of the penalty order, the appellate order and the submissions made, it is evident that the surrender of impugned sums for taxation cannot be considered a voluntary act on part of the assessee in the light of the fact that the claim made in the return filed on 31.10.2020, was not offered for taxation in the revised return. It was only after being confronted with adverse findings establishing acceptance of bogus entries for accommodation entry providers, the assessee tried to come out clean during the survey on 04.01.2021.

9.3 It also appears that based on the information from DGGI and consequent survey by the Investigation, it came to light that the transactions with MMCPL were merely accommodation entries and not genuine transactions. The so called evidences to demonstrate the genuineness of the impugned transaction were considered by the assessee itself subsequently that they were not sufficient to prove it. Had it been so confident of the evidentiary value of these evidences, there appeared no reasons for the assessee to surrender the impugned transactions and pay taxes thereon. Thus, the contention that the surrender of such expenses was a bonafide act falsifies its own contrary action taken consequent to the investigation and adverse outcome thereof.

9.4 Moreover, even during assessment proceedings, the AO made independent enquiries based on the investigation reports which, however, could not be taken to a logical conclusion as the said concern was not found in existence at the given address. The assessee did not come forward to prove the contrary.

9.5 There is apparent contradiction in the stand of the assessee itself as admitting and surrendering the impugned expenses and offering them for taxation, proves that it suppressed the correct facts and thus, falsified the books of account. Therefore, the said provisions were correctly applied by the AO while concluding that the assessee was guilty of for under-reporting in consequence of misreporting. As evident from the above stated facts, the case of the assessee is squarely covered by the provisions of section 270A(9) of the Act. Therefore, there is prima facie case for levy of such penalty. It is a clear case of under reporting of income which is evident from relevant findings given by the AO in the assessment order, as well as, penalty order. Further, the assessee did not file revised return of income disclosing true and correct income. The assessee admitted additional income in consequent to survey and therefore, the arguments of the assessee that mere admission of income does not warrant penalty, is contrary to the facts available on record and cannot be accepted. It is therefore, evident that the disclosure was not voluntary but was made only after detection by the Department.

9.6 The legal position in this regard is well settled. The Hon’ble Supreme Court in MAK Data (P.) Ltd. vs. Commissioner of Income-tax – II[2013] 358 ITR 593 (SC) held that surrender of income after detection by the Assessing Officer could not be treated as voluntary disclosure so as to escape penalty and that explanations such as disclosure made to “buy peace” or to avoid litigation are not acceptable defences under the statute. The above quoted decision was though decided in respect of penalty u/s 271(1)(c), but the ratio related to furnishing of inaccurate particulars of income is pari materia with provisions of section 270A of the Act dealing with misreporting of income. Relevant parts of the order are extracted as under:

“2. The Appellant-assessee filed his return of income for the assessment year 2004-05 on 27th October, 2004, declaring an income of Rs.16,17,040/- along with Tax Audit Report. The case was selected for scrutiny and notices were issued under Sections 143(2) and 142(1) of the Income Tax Act. During the course of the assessment proceedings, it was noticed by the Assessing Officer (AO) that certain documents comprising of share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer deeds duly signed had been impounded. These documents had been found in the course of survey proceedings under Section 133A conducted on 16.12.2003 in the case of M/s Marketing Services (a sister concern of the assessee). The AO then proceeded to seek information from the assessee and issued a show- cause notice dated 26.10.2006. By the show-cause notice, the AO sought specific information regarding the documents pertaining to share applications found in the course of survey, particularly, bank transfer deeds signed by persons, who had applied for the shares. Reply to show-cause notice was filed on 22.11.2006, in which the assessee made an offer to surrender a sum of Rs.40.74 lakhs with a view to avoid litigation and buy peace and to make an amicable settlement of the dispute. Following are the words used by the assessee:-

“The offer of surrender is by way of voluntary disclosure of without admitting any concealment whatsoever or with any intention to conceal and subject to non-initiation of penalty proceedings and prosecution.”

3. The AO after verifying the details and calculations of the share application money accepted by the Company completed the assessment on 29.12.2006 and a sum of Rs.40,74,000/- was brought to tax, as “income from other sources” and the total income was assessed at Rs.57,56,700/-.

4. The department initiated penalty proceedings for concealment of income and not furnishing true particulars of its income under Section 271(1)(c) of the Income Tax Act. During the course of the hearing, the assessee contended that penalty proceedings are not maintainable on the ground that the AO had not recorded his satisfaction to the effect that there has been concealment of income/furnishing of inaccurate particulars of income by the assessee and that the surrender of income was a conditional surrender before any investigation in the matter. The AO did not accept those contentions and imposed a penalty of Rs.14,61,547/- under Section 217(1)(c) of the Act. The assessee challenged that order before the Commissioner of Income Tax (Appeals) by filing Appeal No.2/07-08, which was dismissed vide order dated 17.2.2010. The assessee filed an appeal being ITA No.1896/Del/10 before the Income Tax Appellate Tribunal, Delhi. The Tribunal recorded the following findings :-

“The assessee’s letter dated 22.11.2006 clearly mentions that “the offer of the surrender is without admitting any concealment whatsoever or any intention to conceal.” The Tribunal took the view that the amount of Rs.40,74,000/- was surrendered to settle the dispute with the department and since the assessee, for one reason or the other, agreed or surrendered certain amounts for assessment, the imposition of penalty solely on the basis of assessee’s surrender could not be sustained. The Tribunal, therefore, allowed the appeal and set aside the penalty order.

5. The Revenue took up the matter in appeal before the High Court by filing ITA No.415 of 2012. The High Court accepted the plea of the Revenue that there was absolutely no explanation by the assessee for the concealed income of Rs.40,74,000/-. The High Court took the view that in the absence of any explanation in respect of the surrendered income, the first part of clause (A) of Explanation 1 is attracted. Holding so, the judgment of the Tribunal was set aside and the appeal filed by the Revenue was allowed.

6. We have heard counsel on either side. We fully concur with the view of the High Court that the Tribunal has not properly understood or appreciated the scope of Explanation 1 to Section 271(1)(c) of the Act, which reads as follows :-

“Explanation 1 – Where in respect of any facts material to the computation of the total income of any person under this Act, —

A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or B) Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause

7. The AO, in our view, shall not be carried away by the plea of the assessee like “voluntary disclosure”, “buy peace”, “avoid litigation”, “amicable settlement”, etc. to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the AO, between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise.

8. Assessee has only stated that he had surrendered the additional sum of Rs.40,74,000/- with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the income tax department. Statute does not recognize those types of defences under the explanation 1 to Section 271(1)(c) of the Act. It is trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty.

9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the course of assessment proceedings has noticed that certain documents comprising of share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income Tax Returns and assessment orders and blank share transfer deeds duly signed, have been impounded in the course of survey proceedings under Section 133A conducted on 16.12.2003, in the case of a sister concern of the assessee. The survey was conducted more than 10 months before the assessee filed its return of income. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271 read with Section 274 of the Income Tax Act, 1961.

10. The AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into writing. The scope of Section 271(1)(c) has also been elaborately discussed by this Court in Union of India vs. Dharmendra Textile Processors (2008) 13 SCC 369 and CIT vs. Atul Mohan Bindal (2009) 9 SCC 589.

11. The principle laid down by this Court, in our view, has been correctly followed by the Revenue and we find no illegality in the department initiating penalty proceedings in the instant case. We, therefore, fully agree with the view of the High Court. Hence, the appeal lacks merit and is dismissed. There shall be no order as to costs.”

9.7 Likewise, in the case of Samson Maritime Ltd. [2017] 88 taxmann.com671 (Bombay) it was held by the hon’ble jurisdictional High Court as under :

“8. The grievance of the appellant-assessee before us is that it had itself brought its mistake of debiting the loss on account of foreign exchange fluctuation to determine its Non-Tonnage income to the notice of the Assessing Officer. This, according to him, is stated in its Affidavit dated 23rd June, 2010 filed during the penalty proceedings before the Assessing Officer. However, the above affidavit as filed by the appellant during penal proceedings, has been ignored by all the authorities including the Tribunal while passing the impugned order. It is submitted that the above fact itself would justify dropping of any penal proceedings against appellant-assessee. It was also submitted before us that debiting of the foreign exchange loss to arrive its non-tonnage income, was a mistake and no penalty be imposed for the mistake committed. Reliance was placed upon the Apex Court’s decision in Price Waterhouse Coopers (P.) Ltd. v. CIT [2012] 25 taxmann.com 400/211 Taxman 40/348 ITR 306 to contend that mistakes made by an assessee cannot be the basis for imposition of penalty. In the above view, it is submitted that the appeal be admitted.

9. From the record it is clear that the notice under Sections 142(1) and 143(2) of the Act were issued to the appellant on 14th January, 2009. The notice also contains an annexure, seeking details of expenses debited to Profit and Loss Account, along with details of foreign exchange expenses. Even according to the appellant, the alleged mistake on its part was pointed out by a letter dated 23rd September, 2009 during assessment proceedings where it stated that it had committed a mistake in debiting foreign exchange loss to its determine non-tonnage income, when in fact, no foreign exchange loss was involved in respect of its non-tonnage business. Thus, it is clear that so-called mistake as claimed by the appellant-assessee, was only after notices dated 14th January, 2009 were issued under Sections 142 and 143 of the Act. It was only an attempt to pre-empt the Revenue finding out the appellant had furnished inaccurate particulars. Therefore, it cannot be said that it was voluntary disclosure. In fact, the Apex Court in MAKData (P.) Ltd. (supra) has observed that ” The Assessing Officer, in our view, shall not be carried away by the plea of the Assessee like “voluntary disclosure”, “buy peace”, “avoid litigation” “amicable settlement” etc. to explain its conduct.” The Apex Court has also further observed that “It is trite law that the voluntary disclosure does not release appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty.” In the peculiar fact of the present case, the so-called voluntary disclosure was only after the Assessing Officer initiated proceedings under Section 142 of the Act. Thus, it was not a voluntary disclosure. In fact, the Assessment Order dated 24th December, 2009 under Section 143(3) of the Act also records the fact of verification by the Assessing Officer, leading to a finding that the appellant-assessee had debited foreign exchange loss to arrive its non- tonnage income. This order was accepted and no grievance in respect of the same being found by the Assessing Officer, was made by the appellant- assessee. It is only in penalty proceedings that this issue is raised for the first time. Further, the appellant-assessee besides stating it is a mistake, has not offered any explanation. Therefore, the explanation under Section 271(1)(c) of the Act was not found to be satisfactory by the authorities under the Act and penalty imposed and sustained.

10. Reliance placed by the appellant-assessee upon the decision of the Apex Court in Price Waterhouse Coopers (P.) Ltd. (supra), is inappropriate in the facts of the present case. In the above case, the Apex Court noted the fact that Tribunal had itself come to a finding that there was a silly mistake on the part of the assessee in not having added the provision for gratuity to its total income even when the documents accompanying the return of income, did show that provision for gratuity is not allowable as deduction under Section 40(7) of the Act. Thus, it was only a computation error in the return of income. In the present facts, none of the authorities including the Tribunal have found the debit of foreign exchange loss to its non-tonnage business was made on account of a mistake. Nor can it be classified as an computation error after complete disclosure. Thus, the aforesaid decision does not assist the appellant-assessee.

11. We note that all the three authorities have come to a finding of fact, adverse to the appellant, that the so-called voluntary disclosure was not voluntary, but made only in response to notices under Sections 142 and 143 of the Act. This finding of fact is not shown to be perverse and/or arbitrary, warranting interference. In view of the above, the question as framed does not give rise to any substantial question of law.”

9.8 We also draw support from the decision of the Hon’ble Madras High Court in the case of Gangotri Textiles Ltd. [2020] 121 taxmann.com 171 (Madras), affirmed by the Hon’ble Supreme Court in [2022] 137 taxmann.com 198 (SC), wherein it has been held that voluntary disclosure of income after detection by the Assessing Officer does not absolve the assessee from penalty. Similarly, reliance could also be placed on the decision of the Hon’ble Bombay High Court in the case of Mahesh N. Thakkar [2015] 59 taxmann.com 272 (Bom), wherein it was held that where income is offered only after being pointed out by the Assessing Officer, penalty under section 271(1)(c) is clearly attracted. The hon’ble Delhi High Court in CIT vs.Usha International Ltd. in ITA 1696/2006 inter alia held that:

“2. The assessee, which is the appellant, is a public limited company. It filed a return of income for the assessment year 1983-84 on 20.06.1983 declaring an income of `80,52,020/-. A revised return was filed on 05.12.1983 declaring income of `90,50,770/-. Another revised return was filed on 05.03.1985 declaring an income of `91,28,350/-. In making the assessment under Section 143(3) of the Act, the assessing officer noted that the assessee had made a claim for deduction of `10,00,000/- in terms of Section 35CCA in the original return filed on 20.06.1983, which represented a donation purportedly made to Shri Morarjibai Desai Grammonati Trust. He further noted that this claim was withdrawn in the revised return of income filed on 05.12.1983. According to the assessee, the claim was withdrawn in the revised return because “certain facts have come to our notice which show that this donation of `10,00,000/- may not have reached the Trust”.

3. The assessing officer further observed that the assessee had filed the revised return of income withdrawing the claim for deduction only as a result of survey action taken by the income tax department on 06.10.1983 under Section 133A of the Act in the assessee‟s premises, in the course of which the cash book maintained by the assessee was impounded as it contained the entry made for the donation, which was bogus as revealed by a series of searches conducted by the income tax authorities under Section 132 of the Act in the premises of certain persons stated to be connected with “the racket of making false claim under Section 35CCA in respect of certain donations”. It was in the course of such investigation that the tax authorities came to know that even the donation made by the assessee was bogus, which prompted them to conduct a survey on the assessee‟s premises on 06.10.1983. It was further noticed by the assessing officer that the assessee knew that the trust was not genuine but still proceeded to make the donation only to claim a false deduction under Section 35CCA and thereby to reduce its taxable income. The donation was found to have been made by the assessee by means of a cheque which was initially crossed as “account payee only”, which was later cancelled under the signature of the Manager (Accounts) and the senior advisor of the assessee company to ordinary crossing (“& Co.”). This act, according to the assessing officer, showed the involvement of the assessee in the making of bogus donations with a view to reducing the taxable income. He accordingly disallowed the claim in the assessment order passed on 30.09.1982. The disallowance was accepted by the assessee.

4. Penalty proceedings for concealment of income were initiated under Section 271(1)(c) of the Act. The assessee‟s explanation was called for and after examining the same, the assessing officer came to the conclusion that the assessee concealed its income as well as furnished inaccurate particulars thereof, by making a bogus claim of deduction under Section 35CCA in the original return filed on 28.06.1983. He accordingly imposed the maximum penalty of `13,00,000/-, being 200% of the tax sought to be evaded.

8. The assessing officer also referred to the fact that the original return was filed on 28.06.1983, about four months before the date of survey/ impounding of cash book and it was only after the survey that the assessee chose to file a revised return on 05.12.1983 withdrawing the claim for deduction under Section 35CCA. Apparently he wanted to stress the point that the revised return was not filed voluntarily but was filed only when the assessee was cornered and evidence had been collected by the income tax authorities regarding the falsity of the assessee‟s claim.

9. The assessing officer further referred to the fact that donations were made by the assessee in the past but they were not of huge amounts and it was only in the year under consideration that a substantial amount of `10,00,000!- was donated to Morarjibai Desai Grammonati Trust and `40,00,000/- to Aparna Ashram, New Delhi.

10. In the course of the proceedings before the assessing officer it would appear that an affidavit dated 28.11.1983 was obtained from Vipin Mehra which showed that after withdrawing the amount of `10,00,000/- from the bank, a part of it was kept in one of the lockers and part of it was invested in bearer bonds, etc. It was also noticed that no proceedings or action was taken by the assessee company against Vipin Mehra despite the attempt to show that the assessee was also victimised. A search of Mehta’s residence was again made on 26.11.1983, but no bearer bonds were found in his possession.

11. The assessing officer further noticed that the assessee had not made any donations of such magnitude in the past and that there was undue haste in obtaining the approval of the Board of Directors; the approval was granted in an extra ordinary general body meeting of the shareholders held on 26.03.1982 to make an additional donation up to `35,00,000/- over and above the limit of `5,00,000/-. It would appear that the board authorised the director, Charat Ram to make the donation. Apparently, the assessing officer was trying to drive home the point that it was unusual for a company to convene an extra ordinary general body meeting to obtain an authorisation for making donation.

12. Taking into consideration the cumulative effect of the aforesaid facts, the assessing officer came to the conclusion that the assessee concealed its income as well as furnished inaccurate particulars thereof by making a bogus claim of deduction under Section 35CCA in the original return filed on 28.06.1983. The CIT (Appeals) referred to certain orders of the Tribunal in other cases where penalty imposed under the similar circumstances was cancelled and following those orders, cancelled the penalty in the present case also. He did not give any independent reasons on the facts of the present case for cancelling the penalty. The Tribunal endorsed the finding of the CIT (Appeals) and based its conclusion on an order of Tribunal in the case of Deepak Singh and family reported in 48 ITD 465, which was also a case where a claim of deduction was made under Section 35 CCA in respect of donations made through Vipin Mehra and Prem Prakash. It appears that in that case the Tribunal had cancelled the penalty on the ground that the filing of the revised return before any concrete evidence was gathered by the income tax authorities would exonerate the assessee from any guilt. It was on this basis that the Tribunal in the present case endorsed the finding of the CIT (Appeals). The Tribunal also did not examine the facts of the present case but chose to rely on another order of the Tribunal in which the modus operandi adopted by that assessee was the same and the persons involved were also the same, namely, Vipin Mehra and Prem Prakash.

13. In the aforesaid backdrop of facts, it is for our consideration whether the Tribunal was right in endorsing the conclusion of the CIT (Appeals) that the penalty imposed was not justified. On a careful consideration of the matter, we are of the view that the Tribunal was not right in upholding the cancellation of the penalty. It cannot be denied that there were searches and investigations which resulted in the income tax authorities unearthing a concerted design to enable the reduction of the taxable income of income tax assessees by making use of the provisions of Section 35(2A), Section 35(1)(ii) and Section 35CCA of the Act.

………………………….However, as noted by the Madras High Court in CIT v. Ramdas Pharmacy, (1970) 77 ITR 276, the filing of a revised return “will not expatiate the contumacious conduct if any, on the part of the assessee in not having disclosed the true income in the original return”; and it was observed at the same time that the Court was “not willing to accept the contention put forward on behalf of the revenue that the filing of the second return is of no consequence at all”, while considering the liability of the assessee under Section 28(1)(c) of the old Act (now Section 271(1) (c) of the 1961 Act). The Madras High Court proceeded to observe that it is not possible to construe the original return alone in isolation without reference to the conduct of the assessee subsequent to the filing of the original return and that all the facts and circumstances commencing with the filing of the original return and ending with the assessment may be taken as relevant for considering the liability of the assessee for penalty.

20. In the judgment by a Division Bench of this Court in CIT v. S.A.S. Pharmaceuticals, (2011) 335 ITR 259 the factual position was different. A survey was carried out at the business premises and godown of the assessee on 06.01.2003 during which certain discrepancies in cash, stock and renovation details were found. The assessee surrendered an amount of `88.14 lakhs during the survey on account of the discrepancies. However, at the time of the survey, the assessee was not under any obligation to file the return of income for the year ended 31.03.2003 as he still had time to do so. In the return filed for the assessment year 2003-04, relevant to the year ended on 31.03.2003, the assessee included the surrendered amount and filed a return of income declaring `87.71 lakhs. The assessment was made including the surrendered amount obviously on the basis of return filed. Penalty proceedings for concealment of income were initiated on the ground that the surrender was made during the survey only when the discrepancies were brought to the notice of the assessee. The assessing officer was of the view that had there been no survey the assessee would have succeeded in concealing the income and evading tax. The CIT (Appeals) and the Tribunal held that it was not a case of concealment of income as the surrendered income had been included in the return filed by the assessee. This Court upheld the finding of the Tribunal holding that there could not be any penalty on the basis of assumptions, surmises and conjectures and since the assessee had included the surrendered income in the return filed, there was no non-disclosure or concealment which could be penalised. This decision is not a case of revised return. It, therefore, does not have any relevance to the present case.

21. Both the CIT (Appeals) and the Tribunal, with respect, have not examined the facts of the present case in the manner expected of them. The Tribunal has merely based its conclusion on certain previous orders without any discussion of the facts of the present case. The question of concealment of income and whether the revised return was filed voluntarily or not is a question of fact to be examined and decided upon the facts and circumstances of the each case and, therefore, it was not permissible to the Tribunal to merely rely on earlier orders where this issue was considered and penalties were cancelled. It may be that in those cases also similar claims for deduction were involved; nevertheless, the question of concealment and the relevance of filing a revised return withdrawing the claim for deduction are all fact – dependent, and merely because in one case it was held that there was no concealment, it does not follow, as a matter of law, that in all such cases penalty cannot be imposed. At best, those earlier cases could only have a persuasive value. We are of the view that the Tribunal has committed an error in upholding the order of the CIT (Appeals) cancelling the penalties, without assigning any valid reason and without examining the facts.

22. For the above reasons we reverse the order of the Tribunal and hold that the penalty under Section 271(1)(c) was rightly imposed; the substantial question of law is answered in the negative, in favour of the Revenue and against the assessee. The penalty order passed by the assessing officer on 22.03.1993 is restored and the appeal filed by the Revenue is allowed. The assessee shall pay the costs of the revenue, which we assess at `20,000/-.

9.9 In M/S. Varshney Bhandu Foods Pvt. Ltd.in ITA No.2973/Del/2014 dated 30 January, 2018 similar decision was rendered as under:

“2. Brief facts of the case are that the assessee company is dealing in trading and manufacturing of Skimmed Milk Powder and Desi Ghee. The return was filed declaring a loss of Rs. 45,79,569/- on 25.08.2008. Subsequently, on the basis of information received from the Directorate of Investigation, New Delhi in respect of alleged bogus accommodation entries provided by one Shri Aseem Kumar Gupta, the assessee’s case was reopened u/s 147 of the Act as the name of the assessee figured in the list of beneficiaries of the alleged bogus accommodation entries. As per the information received from the Directorate of Investigation, the assessee had received an entry of Rs. 65 lakh during the year under consideration. During the course of reassessment proceedings, the assessee surrendered Rs. 55 lakh on the ground that it wanted to avoid litigation and for peace of mind. No appeal against this quantum addition made on account of surrender was filed by the assessee. Subsequently, the Assessing Officer imposed penalty of Rs. 16,99,500/- Assessment year 2008-09 u/s 271(1)(c) of the Act which was also confirmed by the Ld. Commissioner of Income Tax(A). The assessee has now approached the ITAT and has challenged the imposition of penalty.

5. We have heard the Ld. Sr. DR and have also perused the material available on record. The facts of the case are undisputed. In this case, the assessment was reopened on the basis of information obtained through investigation by the Investigation Wing. During the course of re-assessment proceedings, the assessee could not furnish documentary evidences in support of the genuineness of its claim of having received the impugned money. It is also undisputed that the assessee’s name appeared in the list of beneficiaries of the alleged bogus accommodation entries provided by Shri Aseem Kumar Gupta. It is apparent that when the assessee could not establish the genuineness of the impugned transaction before the Assessing Officer that it decided to surrender Assessment year 2008-09 an amount of Rs. 55 lakh. Thus, the factual matrix indicates that the assessee made the surrender when it had no explanation to offer. Thus, the assessee could not prove the bona fide of its claim. The Hon’ble Apex Court in the case of MAK Data (P) Ltd. vs CIT 352 ITR 1 (SC) has held that the Assessing Officer should not be carried away by the plea of the assessee like voluntary disclosure, buy peace, avoid litigation, amicable settlement etc. to explain its conduct. The Hon’ble Apex Court further held that the burden is on the assessee to rebut the presumption of concealment as contained in Explanation 1 to section 271(1)(c) of the Act by cogent and reliable evidence. In the facts of the present case, we are afraid that the assessee has failed to discharge the initial onus cast upon it by cogent or reliable evidence and has simply mentioned that the amount was being surrendered as a voluntary disclosure to buy peace and avoid litigation. We are of the considered opinion that the assessee, in the present case, cannot escape the rigours of penalty as it has failed to offer any explanation and has also failed to lead any cogent or reliable Assessment year 2008-09 evidence. Therefore, respectfully following the ratio of the Hon’ble Apex Court as laid down in the case of MAK Data (P) Ltd. vs CIT (supra), we find no reason to interfere with the adjudication of the Ld. Commissioner of Income Tax (A) and we dismiss the grounds raised by the assessee.

6. In the final result, the appeal of the assessee is dismissed.”

9.10 The Hon’ble Bombay High Court in the case of Jyoti Laxman Konkar V CIT 292 ITR 163 held as under:

“3. The assessee had filed a return on 25th Nov., 1999 for the asst. yr. 1999- 2000 declaring an income of Rs. 7,40,510. Not satisfied therewith, the AO carried out a survey under Section 133A of the Act and during the survey found that there was a discrepancy in stock to the tune of Rs. 18,28,706 which was brought to the notice of the assessee and the assessee filed a revised return disclosing additional income of Rs. 18,28,706, and the AO found that the said income was suppressed by the assessee but the said revised return was finalized but at the same time a notice under Section 271(1)(c) of the Act to impose penalty was issued to the assessee and which was disposed of by order dt. 25th May, 2001 and a penalty of Rs. 2,75,000 was imposed upon the assessee. In the said order, the AO observed that the assessee had come forward with the revised return out of compulsion since suppression of income was detected in survey carried out under Section 133A and, therefore, the act of filing a revised return was not voluntary. He also found that the assessee had deliberately attempted to conceal the income.

4. The assessee carried an appeal to the CIT which came to be disposed of by order dt. 21st Sept., 2001. In allowing the assessee’s appeal, the CIT relied upon the decision in the case of CIT v. Suresh Chandra Mittal as affirmed by the Supreme Court in CIT v. Suresh Chandra Mittal Revenue carried an appeal to the Tribunal (Income-tax Appellate Tribunal) and Tribunal by order dt. 2nd Jan., 2006 was pleased to allow the same. In disposing of the said appeal of the Revenue, the Tribunal observed that whether an assessee had concealed income or not was a matter of fact and one need not go into the gamut of cases which were decided on the facts of the respective cases. The Tribunal also observed that the filing of the second return (sic-revised) spoke loudly about the conduct of the assessee which could not be said anything else than mala fide (sic-dishonest) and filing of another return did not obliterate the fact of the earlier mala fide (sic-dishonest) return and that the assessee had furnished wrong particulars of the stock with a view to suppress the income and, therefore, was liable to be penalized and thus the AO was justified in levying the minimum penalty in view of the subsequent conduct of the assessee filing another return and paying the due tax.

5. At the time of admission, Mr. S.V. Pikale, the learned Counsel on behalf of the assessee, has submitted that the assessee was entitled to file a revised return in terms of Section 139(5) of the Act at any time as prescribed therein and having filed the same and the AO having accepted the same there was no room to levy any penalty.

6. Reliance has been placed on behalf of the Revenue by Mr. S.R. Rivonkar, learned Government advocate, on the judgments in the cases of Century Flour Mills Ltd. v. CIT (2000) 162 CTR (SC) 407, CIT v. Rhone Poulenc Ltd. and CIT v. K.P. Sampath Reddy . In the first case, the apex Court observed that the Tribunal having arrived at the finding of concealment of income on the basis of the material on record, no question of law arose, reference of which could be called for. In the second case, the Division Bench of this Court held that whether there was concealment of income or not is a finding of fact and, therefore, no substantial question of law arose on the facts of that case. In the third case, the Karnataka High Court, in a fact situation very similar to the facts of the case at hand, observed that the concealment of the income in the return filed by the assessee was a glaring fact. It further held that the assessee had to thank himself that the ITO levied the limited penalty only.

7. In the case of K.C. Builders v. Asstt. CIT relied upon on behalf of assessee, the Supreme Court stated that the word “concealment” inherently carried with it the element of mens rea and that the fact that some figures or some particulars have been disclosed by itself, even if it takes out the case from the purview of non-disclosure, would not by itself take out the case from the purview of furnishing inaccurate particulars and mere omission from the return of the item of receipts amounts neither to concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances are found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. In Bharat Rice Mill v. CIT , a Division Bench of Allahabad High Court reiterated the view that mens rea is an important factor in relation to concealment of income. That was a case where there was non-disclosure of certain profits due to mistake and, therefore, it was held that penalty could not be imposed under Section 271(1)(c) of the Act. In the case of West Bengal State Electricity Board v. Dy. CIT and Anr. , a Division Bench of Calcutta High Court held that the question regarding jurisdiction of the AO can be raised for the first time before the Tribunal.

8. In our view, the AO as well as the Tribunal having come to the conclusion that the assessee had filed the initial return dishonestly with a view to conceal the income and the revised return was filed out of compulsion, i.e. after having found that the assessee had concealed the income and. filed a false return with a view to avoid tax liability, in our view, no substantial question’s of law arises in this case either in the manner formulated on behalf of the assessee in the memorandum of appeal or otherwise. The CIT allowed the appeal of the assessee by misapplying the said decision of the Division Bench of Madhya Pradesh High Court which had no relevance to the fact situation prevailing in the case at hand. Whether there is concealment of income or not has to be decided with reference to the facts of a given case and the fact finding authorities under the Act having come to the conclusion that in the facts of the case, the assessee had concealed the income initially with a view to avoid the payment of tax, we are of the view that no substantial question of law is involved in this case requiring the admission of the appeal. Consequently, the same is hereby dismissed.”

10. The ld.AR in the written submission, has placed reliance on certain coordinate bench decisions in support of the contentions that voluntary disclosure by the assessee could not attract the provisions of section 270A of the Act. However, on going through the contents thereof, we find that none of the decisions apply to the facts of case and are distinguishable. In the case of Sushil Rajendra Kothari vs. ACIT Circle-19(3) in ITA No. 4734/Mum/2023,the issue was adjudicated based on lack of specific charge of penalty while in Kavita Jagjit Singh v. CIT in 157 taxmann.com 756,the issue pertained to a bonafide omission to disclosed interest on Income tax refund. Likewise, in the case of DCIT vs. Man Industries Ltd. in ITA No. 8639/Mum/2025,the addition was made in respect of accommodation entry availed from bogus entry providers which was restricted by the authorities on estimate basis to 5% for which it was held that no penalty could be levied.

11. It may be stated that before us, in the written submission made,the ld.AR has raised the issue that in the absence of a specific clause(s) of section 270A(9) of the Act mentioned in the nature of the show cause notices, the imposition of penalty deserves to be quashed.

12. On careful consideration, such a request is fit to be rejected outrightly in view of the fact that the issue does not emanate from the orders of the lower authorities. As discussed in the preceding paras, in the contentions made by the assessee before them, it never raised such issue either in the submissions before the AO or in the grounds of appeal before the ld.CIT(A).Even before us, neither such specific ground of appeal has been filed in Form no.36 nor by way of additional ground. Therefore, the contentions are rejected in toto.

13. In the light of the above discussion and legal position emerging from the cited decisions as referred above, we have no hesitation in concluding that on the facts and the circumstances of the case, the contention of the assessee that surrender of bogus expenses i.e depreciation and amortization was voluntary, is rejected. The stress on buying peace and avoiding prolonged litigation also falls flat as the Act provides for escape under the provisions of section 270AA of the Act and the assessee was at liberty to take shelter of such provisions which provide for immunity from penalty under Section 270A and potential prosecution under Act which it never opted for. Thus, all the above grounds of appeal are dismissed.

14. In the result, the appeal of the assessee is dismissed.

Order pronounced in the open court on 08/10/2026.