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2011 (12) TMI 390 - AT - Income TaxPenalty u/s 271(1)(c) - Undisclosed income - the expression 'in the course of any proceedings under this Act' - survey u/s 133A - assessee was keeping two sets of books and documentary evidence was found exhibiting the involvement of assessee in selling the goods out of books and recording expenditure. - held that:- When the survey is conducted by a survey team, the question of satisfaction of AO or the CIT(A) or the CIT does not arise. We have to keep in mind that it is the AO who initiated the penalty proceedings and directed the payment of penalty. He had not recorded any satisfaction during the course of survey. Decision to initiate penalty proceedings was taken while making assessment order. It is, thus, obvious that the expression 'in the course of any proceedings under this Act' cannot have the reference to survey proceedings in this case. Penalty - surrender of income during survey - held that:- the assessee had surrendered a whopping sum of Rs.1.6 crores during the course of survey/search and seizure operation. While furnishing its return of income, the appellant had declared its income including the amount so surrendered. - However, while framing the assessment order, the learned AO initiated penal proceedings on the premise that the assessee had furnished inaccurate particulars by suppressing and under-reporting the investment in bank accounts and on account of income deemed to have accrued to it. - penal proceedings initiated and subsequent imposing of penalty under s. 271(l)(c) of the Act in the present appellant's case are not in accordance with the provisions of s. 271(l)(c) as envisaged in the Act. - Decided in favor of assessee.
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