TMI Blog2006 (3) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... es were inflated by the assessee. The surrender of the assessee is a conditional one with a request not to levy penalty and is specifically mentioned that it is to buy peace of mind and also to ward off unnecessary litigation. There may be number of valid reasons for making a surrender of income at the time of survey and penalty u/s 271(1)( c ) of the Act cannot be imposed merely on the basis of the conditional surrender made by the assessee and particularly in a case where apart from the admission of the assessee, there is no other evidence or material brought on record by the Revenue to prove that the assessee has concealed its income. The argument of the ld DR that but for the survey operations, the assessee would not have come forward w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee surrendered an amount of Rs. 60 lakhs on account of its expenses not being fully verifiable and being supported by only self-made vouchers. The amount of Rs. 60 lakhs was surrendered in four assessment years as under : Assessment year Amount (in lakhs) 1998-99 12.5 1999-2000 13.5 2000-2001 14.0 2001-2002 20.0 Total 60.0 The learned counsel submitted that during the course of survey under section 133A, the statement of Shri Ashok Bhagat, partner of the firm, was recorded and during the course of recording of statement, Shri Ashok Bhagat specifically mentioned surrender is being made on account of expenses being not fully verifiable and that a request was made not to levy penalty on these amounts and it was made clear that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmental Representative has opposed the submission of learned counsel for the assessee. He submitted that but for the issue of notice under section 148 or survey operations under section 133A of the Act, the assessee would not have come forward with admission that the expenses claimed by it are inflated or not fully vouched. He submitted that by making a surrender of income, the assessee has stopped the Department from making further investigations in the matter. The return of income for the assessment year 2001-01 was filed after the survey operations and even then the assessee has not added the amount surrendered by and later on revised its return of income. He has relied on series of decisions in support of his argument reported as Kamal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome disclosed 1998-1999 Rs. 12,50,000 (Rs. Twelve Lakhs fifty thousand only) 1999-2000 Rs. 13,50,000 (Rs. Thirteen Lakhs fifty thousand only) 2000-2001 Rs. 14,00,000 (Rs. Fourteen lakhs only) 2001-2002 Rs. 20,00,000 (Rs. Twenty lakhs only) Total Rs. 60,00,000 (Rs. Sixty lakhs only) The above disclosure is made by me voluntarily and without any undue pressure or coercion. I promise to pay the necessary taxes for the above disclosure with a request not to levy penalty and to buy peace of mind and also ward off unnecessary litigation. The above disclosure has been made by me over and above my regular income. 5. The surrender made by the assessee is clearly a conditional surrender and the Department has chosen to accept part of the proposal fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has concealed its income. The argument of the learned Departmental Representative that but for the survey operations, the assessee would not have come forward with the surrendered amount, we find that this proposition is too hypothetical and penalty for concealment of income or filing of inaccurate particulars of income cannot be levied merely on a mere possibility. In this case, the penalty for concealment of income of filing of inacurrate particulars of income was imposed without any objective material brought on record and by accepting only a part of the conditional offer of the assessee, which is unsustainable in law and accordingly, we cancel the penalty imposed under section 271(1)( c ) of the Act for all the three years on the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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