If assessee surrenders an amount with a condition that no penal action shall be taken, to avoid further litigation and to buy peace, no penalty u/s. 271(1)(c) can be imposed
IN THE ITAT DELHI BENCH ‘I’
Income-tax Officer
v.
Rakesh Kumar Gupta
IT APPEAL NO. 2690 (DELHI) OF 2009
[ASSESSMENT YEAR 2005-06]
FEBRUARY 24, 2012
ORDER
U.B.S. Bedi, Judicial Member – This appeal of the department is directed against the order passed by the CIT(A)-Meerut, dated 24.03.2009 relevant to assessment year 2005-06 whereby deletion of addition of penalty of Rs. 5,08,557/- imposed u/s 271(1)(c) of the I.T. Act, 1961 has been challenged.
2. The facts of the case indicate that during the assessment proceedings, the assessee surrendered an amount of Rs. 16,95,190/- under the head “sundry creditors” being difference in the sundry creditors’ list submitted by the assessee and that received from sundry creditors. This amount was surrendered to avoid further litigation though the payment was not made to the parties. The Assessing Officer imposed penalty on the concealment of income amounting to Rs. 5,08,557/- by observing that surrender was after issue of a notice u/s 133(6) of the Act.
3. Action of the Assessing Officer was challenged in appeal before first appellate authority and it was contended that surrender was made prior to detection by the Assessing Officer. It was voluntarily and moreover Assessing Officer did not have any incriminatory material in his possession before surrender of income and to support the contention, Ld. AR of the assessee relied upon on the following decisions:
Variety Cloth Centre v. ITO [1996] 59 ITD 377 (Pune),
ITO v. Patil Automobiles [2004] 91 ITD 1 (Pune) (TM)
Dy. CIT v. Rajan H. Shinde [2005] 93 ITD 1/143 Taxman 36 (Mag.) (Pune) (TM)
Kumar Agencies (India) v. Asstt. CIT [2003] 87 ITD 69 (Mum.) (TM)
Dr. Mrs. Sudha Kankariya v. CIT [2004] 270 ITR 296/136 Taxman 686 (Bom.)
CIT v. Saran Khandsari Sugar Works [2000] 246 ITR 216/[2002] 120 Taxman 319 All.)
Mrs. Usha A. Kalwani v. S.N. Soni [2005] 272 ITR 67/[2004] 136 Taxman 708 (Bom.)
CIT v. Kohinoor Impex (P) Ltd. [2004] 270 ITR 381/141 Taxman 304 (Delhi)
K.C. Builders v. Asstt. CIT [2004] 265 ITR 562/135 Taxman 461 (SC)
CIT v. Smt. Shashi Aggarwal [2005] 272 ITR 36/143 Taxman 199 (All.)
Bharat Rice Mill v. CIT [2005] 278 ITR 599/148 Taxman 145 (All.)
Cheap Cycle Stores v. CIT [2006] 281 ITR 166/154 taxman 284 (All.)
CWT v. Someshwar Saran Kothiwal [2006] 285 ITR 185/[2007] 160 Taxman 132 (All.)
CIT v. M.M. Gujamgadi [2007] 290 ITR 168/162 Taxman 211 (Kar.)
Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/161 Taxman 218 (SC)
V.V. Projects & Investments (P.) Ltd. v. Dy. CIT [2008] 300 ITR 40/171 Taxman 62 (AP)
Star International (P.) Ltd. v. Asstt. CIT [2009] 308 ITR (AT) 33 116 ITD 408/[2008] 23 SOT 88 (Luck)
4. Before CIT(A), it was further submitted that assessee gave a bona fide explanation and undeservedly gave all the documents and information without holding any information relating to the computation of assessee’s total income, the assessee explanation unless found to be false, would deserve acceptance for purpose of penalty imposable u/s 271(1)(c) of the Act, so no penalty should be exigible. In other words, if any assessee offers an explanation, which is not found to be false, he can save himself of penalty, even if he were not able to substantiate his case as long as he places all the relevant material to the computation of his total income irrespective of fact that same explanation was not accepted for the purpose of assessment. The assessee relied upon further decisions:
