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2017 (11) TMI 1056 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance made on ad-hoc basis and the assessee to buy peace with the Department made the surrender - Held that:- Since, the assessee was in custody during the relevant period, when the assessee was asked to produce the necessary documents, to substantiate its claim, it may not be possible to furnish the same. The assessee to buy peace with the Department made a surrender and paid the taxes thereupon. In such a situation, the decision in CIT v. SDV Chandru (2003 (12) TMI 40 - MADRAS High Court ) wherein it was held by the Hon'ble High Court that where the assessee has not disclosed his income in the returns filed for the previous years which have ended prior to the date of search and in the statement given u/s 132(4), the assessee admits the receipt of undisclosed income for those years and therefore pays taxes on the undisclosed income, such undisclosed income would be immunized from the levy of penalty. Quantum and penalty additions are all together different and since ad-hoc disallowance was made by the assessee and during the relevant period, the assessee, being in judicial custody, could not file the necessary evidence and made surrender to buy peace with the Department and paid taxed thereupon, therefore, at least, the penalty u/s 271(1)(c) will not survive. Thus, this appeal of the assessee is allowed.
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