2015 (7) TMI 4 - ITAT DELHI

Penalty imposed u/s 271(1)(c) - addition on account of undisclosed business income - Held that:- AO while framing the assessment u/s 143(3) r.w.s 147 of the Act nowhere recorded the satisfaction that the assessee either concealed the income or furnished inaccurate particulars of income. He simply stated that the penalty notice u/s 271(1)(c) of the Act was being issued separately, therefore, in view of the ratio laid down by the Hon’ble Jurisdictional High Court in the aforesaid referred to cases the penalty u/s 271(1)(c) of the Act was not leviable. In the present case, the AO had not arrived at a requisite satisfaction during the assessment proceedings, he simply initiated the penalty proceedings without observing as to whether it was a case of concealment of income or furnishing of inaccurate particulars of income, moreover, when the original assessment was framed u/s 143(3) of the Act, copy of bank account issued by Canara Bank was available to the AO which he later on had considered as fabricated. However, during the course of original assessment proceedings the same was accepted and no fault was found in the said account, even when assessment was framed u/s 143(3) of the Act. However, letter on the case was reopened u/s 147 of the Act by issuing the notice u/s 148 of the Act and the AO inquired about the source of ₹ 50 lac which was entered in the books of accounts by the assessee, the source of the said amount was explained as advance money amounting to ₹ 40 lac received on account of sale of two houses at Charthawal and Muzaffarnagar. The another amount of ₹ 10 lac was claimed to have been received from the father during the family arrangements in the earlier years, but the assessee was unable to produce the parties from whom the advances were received. He, therefore, surrendered the amount of ₹ 50 lac voluntarily and paid the tax on the said surrendered amount subject to no penal action. In the instant case the assessee himself agreed for surrender, so it was a good case to make the addition, however the said surrender itself cannot be considered as a concealment of particulars of income because all the relevant information were already available with the AO who framed the original assessment u/s 143(3) of the Act, it can also not be said to be a case of concealment of income because the AO in the body of assessment order has not stated that it was a concealed income of the assessee or the income for which inaccurate particulars were furnished by the assessee. Accordingly, the penalty confirmed by the ld. CIT(A) which was levied by the AO u/s 271(1)(c) of the Act is deleted. - Decided in favour of assessee.