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2015 (8) TMI 129 - AT - Income TaxNon compete Fee - revenue v/s capital receipt - Nature of surrendered income - voluntary or not - Penalty u/s 271 - Held that:- In the statement of Director of Shri. Deepak Babbar, it has been clearly stated in response to question No.2 as noted by the ld. CIT(A) that the company has no business activities since 1997 much before the year 1998 in which it has been claimed by the assessee company that it has entered into an agreement with Swiss company for not doing any business to Russian Federation on account of which, it is being claimed that the assessee company has received a compensation of ₹ 32,51,697/- as non-complete fees. The ld. CIT(A) accordingly observed that a collusion between the assessee company and the USA company cannot be ruled out and even on query no document has been produced from the USA company to show that Shri. Rajiv Gosain was authorized by them as being their authorized signatory. It was also observed by the ld. CIT(A) that during the course of assessment proceedings, the Assessing Officer has raised certain queries and asked the assessee to furnish the details of USA company along with name and address, balance sheet, etc. But nothing was submitted before the Assessing Officer and he accordingly doubted the genuineness of the USA Company. It was concluded by the ld. CIT(A) that Shri. Deepak Babbar was a dummy Director of the assessee company and he has no knowledge of the affairs of the assessee company, as all its affairs were managed by Shri. K.K. Gosain and his son Shri. Rajiv Gosain. When the assessee was cornered with all these facts collected by the Assessing Officer, the assessee came forward and made a surrender of ₹ 32,51,697/- through its letter dated 10.3.2003 though with certain conditions. On the basis of the surrender statement, the Assessing Officer has made addition of this amount of ₹ 32,51,697/-. Assessing Officer has no power or jurisdiction to enter into an agreement with any of the assessee. He has no right to waive the interest or penalty. He has to act in accordance with the law. Therefore, where the assessee has surrendered the aforesaid amount, the Assessing Officer has taxed the same. Moreover, it is not a case of voluntary surrender where the assessee has came forward and made a surrender statement. It is a case where the Assessing Officer has made detailed investigation and when the assessee was cornered, he come forward with the proposal of surrender. Therefore, the contention of the assessee that it was conditional surrender and cannot be accepted in part, cannot be accepted. - Levy of penalty confirmed. Thus we are of the considered opinion that the lower authorities have rightly doubted this transaction and treated it to be sham. Accordingly we find no infirmity in the order of the ld. CIT(A) who has rightly confirmed the addition made by the Assessing Officer. - Decided against assessee.
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