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2015 (11) TMI 1784 - AT - Income TaxLevy of penalty u/s. 271(1)(c) - addition on account of purchase of demand drafts and unaccounted cash - income surrendered of the unaccounted income in his income tax return by assessee - HELD THAT:- Assessee himself has surrendered the unaccounted income in his income tax return, because the assessee claimed to have surrendered the amount of ₹ 4,95,000/- to buy peace of mind and to avoid the protracted litigation; Second, when the revenue has statutory power to proceed against the assessee by reopening the assessment of a particular assessment year and then initiating the penalty proceedings, it cannot be allowed to proceed mechanically to invoke the penal provisions. So initiating the penalty proceedings on the basis of void assessment order are not sustainable in the eyes of law. Assessee is well within his right to take this defence of challenging the assessment order even though assessment order has not been challenged, at the time of challenging the penalty order. In the case entitled ACIT v. Smt. Surinder Kaur [2008 (4) TMI 367 - ITAT LUCKNOW-A] decided the identical issue in the identical circumstances in favour of the assessee, which is applicable to the facts and circumstances of the case. So, when the foundation of addition on unaccounted income of ₹ 4,95,000/-, though not challenged by the assessee, is not sustainable in the eyes of law, the question of imposing penalty qua the said amount, does not arise. The impugned order passed by Ld. CIT(A) confirming the penalty @ 300%, the amount of ₹ 4,95,000/- is not sustainable in the eyes of law, hence, hereby set aside and the appeal of the assessee is allowed.
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