TMI Blog2014 (1) TMI 1303X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity to show that the surrendered amount was in reality his undisclosed income or that it was for certain other reasons that the assessee had made surrender of the amount - no addition on account of sundry creditors can be made unless the trade liability had ceased to exist, even if no confirmations are filed – Relying upon CIT vs. Sita Devi Juneja [ 2009 (12) TMI 34 - PUNJAB AND HARYANA HIGH COURT]. Mere fact of surrender could not necessarily be an admission of assessee that amount surrendered was undisclosed income and liable to be subjected to penalty – Relying upon CIT of CIT vs. Punjab Tyres [1986 (7) TMI 77 - MADHYA PRADESH High Court] - no penalty u/s. 271(1)(c) can be levied when the assessee has surrendered certain amount in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and export of bags. While completing the assessment, penalty proceedings u/s 271(1)(c) of the Act were initiated for furnishing inaccurate particulars of income. The assessee did not prefer appeal against the assessment order. During the course of penalty proceedings, a show cause notice for levy of penalty u/s 271(1)(c) of the Act was issued to the assessee on 09.06.2010. In compliance, the assessee submitted that in respect of sundry creditors, the liability did not cease to exist but the outstanding amount was surrendered to avoid litigation and no penalty was leviable. The AO, has however, held that the assessee cannot escape penalty merely on the ground that he had surrendered the amount and imposed penalty of Rs.6,26,911/-, being 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to offer these creditors for taxation in the return of income. Therefore, the contention that assessee filed inaccurate particulars is not tenable at law at all. It is well settled law that there cannot be unilateral cessation/remission of liability. 2.2 It is the assessee himself who furnished complete details of creditors with names and addresses. It was only to cooperate with the department that the amount was offered for taxation. How could assessee anticipate that at the time of assessment proceedings the parties will not cooperate. There was no cause for the assessee to offer these creditors for taxation in the return of income. Therefore, the contention that assessee filed inaccurate particulars is not tenable at all. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of penalty. When the appellant agreed to the inclusion of additional amount on account of surrender of sundry creditors in the income declared by him in his return to purchase peace or to avoid botheration or litigation, any admission surrendering a particular amount as his income would not by itself justify the imposition of penalty, unless there was an evidence showing that the assessee had consciously concealed the particulars of his income or furnished inaccurate particulars of income. It has been held by the Hon'ble Madhya Pradesh High Court in the case of Addl. CIT vs. Bhartiya Bhandar (122 ITR 622) that when a surrender is made to purchase peace or for other similar reasons or to avoid botheration, the surrender cannot amount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) can be levied when the assessee has surrendered certain amount in the assessment proceedings. In the case of Gumani Ram Siri Ram Vs. CIT 5 ITR 67), the Hon'ble Punjab and Haryana High Court has held that in the only circumstances that the amount was surrendered by the assessee, an inference had been drawn that the amount represented the income of the assessee. This conclusion was not inevitable. There might be hundred reasons for the assessee to surrender this amount irrespective of the fact whether it was his income or not and it was incumbent, in view of the observations of the Supreme Court in CIT v. Anwar Ali case (76 ITR 696). for the ITO to find on evidence that the amount represented the income of the assessee. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y by holding that no penalty u/s 271(1)(c) can be levied when the assessee has surrendered certain amount in the assessment proceedings. As per Explanation 1 to Section 271(1)(c) penalty is clearly leviable in this case. The assessee's claim that he had made the surrender to buy peace with the IT Department would also not prevent levy of penalty for concealment of income as there can be no agreement or estoppel against the statute. In the case of K.P. Madhusudhanan vs, CIT (2001) 169 CTR (SC) 489 : (2001) 251ITR 99 (SC), it was held that it cannot be laid down as a general prescription that no penalty can be levied for assessment. 2.6 Reliance was placed on Delhi High Court decision in the case of CIT Vs. Mak Data Ltd. dated 22.01.2013; a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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