TMI Blog2008 (1) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... on record and there is no material on record to prove that the assessee had concealed his income and furnished wrong statement. We may also add here that the surrender made by the assessee was voluntary and the Department failed to detect any concealment of income. Thus, the penalty levied by the AO and confirmed by the CIT(A) is not sustainable in law and, therefore, we cancel the same. In the result, the appeal is allowed. - Member(s) : H. L. KARWA., D. C. AGRAWAL. ORDER-H.L. KARWA, J.M.: This appeal, filed by the assessee, is directed against the order of CIT(A)-I, Agra dt. 7th Sept., 2006 in confirming the penalty of Rs. 6,31,800 imposed under s. 271(1)(c) of the IT Act, 1961 for the asst. yr. 2000-01. 2. Briefly stated, the facts of the case are that the assessee is a partner in M/s R.P. Fragrances, which is engaged in the business of perfumes and derives income from the partnership firm and other sources. For the asst. yr. 2000-01, the assessee filed the return on 30th Nov., 2000 declaring an income of Rs. 5,94,641. The said return was processed under s. 143(1) of the IT Act, 1961 on 17th Sept., 2001. The assessee had some credits in his account amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee chose to surrender the amount of Rs. 9,00,000 on 29th April, 2002 and further amount of Rs. 8,50,000 on 3rd Oct., 2003. According to AO, none of the above surrenders were voluntary. In fact, the revised return filed on 24th Dec., 2003 was not a revised return as contemplated under s. 139(5) of the Act. According to AO, the revised return filed by the assessee on 24th Dec., 2003 was barred by limitation. He therefore held that the assessee was liable for penalty under s. 271(1)(c) of the IT Act inasmuch as he has concealed the particulars of income and furnished wrong statement. The amount of Rs. 17,50,000 surrendered by the assessee was treated as his concealed income. Further, a sum of Rs. 50,000 as unexplained deposit was also treated as concealed income of the assessee. Taking into consideration the entire facts of the case, the AO imposed minimum penalty @ 100 per cent amounting to Rs. 6,31,800 under s. 271(1)(c) of the IT Act, 1961. 5. On appeal, the CIT(A) confirmed the penalty concluding as under: "4.6 The appellant alone knew the true nature and source of deposits he had himself made his bank accounts which he had originally accounted for as gifts but subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment and not in fear when caught. Learned counsel for the assessee further submitted that the assessee had received some amounts aggregating to Rs. 17,50,000 through banking channels vide account payee cheques during the year and surrendered the same as income vide aforesaid two letters dt. 29th April, 2002 and 3rd Oct., 2003 addressed to AO and vide revised return to avoid litigation and to buy mental peace. He further submitted that the receipts of such credits and the particulars submitted were not controverted during the assessment proceedings. It was also submitted that the assessee had proved the identity of the depositors. genuineness of the transactions and capacity of the depositors. He therefore submitted that penalty proceedings under s. 271 (1)(c) have been initiated without assigning the specific reasons/grounds. He further submitted that where the assessee bona fide surrendered the amounts as undisclosed income. it could not be considered as concealment and no penalty under s. 271(1)(c) of the IT Act can be levied. Learned counsel for the assessee also submitted that the expression "has concealed the particulars of his income" used the word concealed. It means tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the mistake was bona fide. Learned Departmental Representative further submitted that there is no material on record to show that the assessee had surrendered the amount in question voluntarily. He also submitted that the amount of Rs. 17,50,000 was offered for taxation only when Investigation Wing of Kanpur unearthed a fake gift racket and found that certain persons on payments by cheque to a large number of persons and the payments so made were shown as credits. It was also submitted by learned Departmental Representative that the return filed by the assessee on 24th Dec., 2003, declaring the amounts offered as unexplained cash credits is obviously not a revised return within the meaning of s. 139(5) of the IT Act, 1961. He further pointed out that even the letter surrendering Rs. 9,00,000 dt. 29th April, 2002 was filed after the expiry of time limit prescribed under s. 139(5) of the Act. It was also stated that the further surrender of Rs. 8,50,000 was made vide letter dt. 3rd Oct., 2003, i.e. after expiry of limitation specified under s. 139(5) and still further surrender of Rs. 50,000 was made much later in the course of assessment proceedings. Accordingly, it was submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us gifts in the original return and revised return was filed after the Investigation Wing had unearthed a fake gift racket, the assessee being one of the recipient of such gifts. Penalty imposed was confirmed by CIT(A) observing that assessee had surrendered gifts to avoid roaming enquiries. In second appeal, the Tribunal cancelled the penalty observing as under: "8. There is no dispute to the fact that the assessee had offered the sum of Rs. 3 lakhs as her income in the revised return by offering gifts stated to be received from six persons of Rs. 50,000 each as her income. We observe that the AO has considered the said amount of Rs. 3 lakhs as undisclosed income of the assessee on the ground that Investigation Directorate, Kanpur, unearthed a fake gift racket and-it was found that certain persons of Kanpur had made payments by cheques to a large number of other persons and the payments so made were shown as gifts etc. There is no dispute to the fact that there is no such investigation by the Investigation Directorate against the assessee on the date assessee revised her return and surrendered the said sum of Rs. 3 lakhs as her income by filing revised return of income. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had revised her return on 12th Aug., 2002 to offer the said gifts of Rs. 3 lakhs as her income and as on that date, i.e., 12th Aug., 2002, there was no material or information against the assessee with the AO that the gifts stated to be received by the assessee were fake or bogus. The authorities below are obliged to establish, based on material or evidence, that gifts received by assessee were bogus or fake and the assessee surrendered the same only on being detected by the Department. The penalty proceedings are quasi criminal proceedings. Therefore, the Department is obliged to establish with authentic evidence that assessee concealed her particulars of income or furnished inaccurate particulars of income to justify penalty under s. 271(1)(c) of the Act. We observe that no such evidence or material is available on record to show that gifts were bogus and they were concealed income of the assessee. Hence, the above case of CIT vs. K.P. Sampath Reddy does not support the case of the Department and has not been correctly relied upon by the authorities below." 10. In the above case, the Tribunal, Lucknow Bench has categorically held that the Department has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and the amount added represents assessee's income. The Hon'ble High Court further held that it is well settled that a mere fact that the assessee agreed to inclusion of cash credit and other amounts in the total income on account of inability to prove source or to avoid protracted litigation would not justify Department in levying penalty. The Hon'ble Madras High Court categorically held that it is for the Department to prove that there was conscious and deliberate concealment on the part of the assessee and the amount added represented assessee's income. 13. Recently Lucknow Bench 'A' of the Tribunal, in the case of Asstt. CIT vs. Shiva Poly Plast (P) Ltd. (ITA No. 710/Luck/2006 relating to asst. yr. 2001-02, dt. 31st Oct., 2007) held that there should be some discussion in the assessment order that assessee is guilty of contumacious conduct or addition is based on some positive material reflecting that assessee had filed inaccurate particulars of income or has concealed the particulars of income. The Tribunal further held that though a formal record of satisfaction as held in the decision of Hon'ble Allahabad High Court in Shyam Bin Works (P) Ltd. vs. CIT (2003) 185 CTR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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