TMI Blog2016 (4) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... was conducted during the Diwali season and the firm has ordered large quantity of stocks and such stock of goods were received only one day prior to the date of survey and due to which the assessee could not tally the stock on date of survey and also assessee voluntarily offered additional income of 1,50,000/-. In order to buy peace with the department and avoid protracted litigation the assessee has paid taxes and not filed appeal against the order u/sec.143(3) of the Act, the penalty proceedings are not automatic and they are separate and distinct. We draw support from the principles laid down in case of case of CIT vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT ] and Accordingly direct the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per Books of Accounts. In assessment proceedings, the ld. Assessing Officer found cash payments in excess of =21,000/- to one of the supplier and provisions of Sec.40A(3) of the Act are attracted and disallowed 20% of the cash payment =4,200/-. The ld. Authorised Representative appeared from time to time and submitted explanations. The Assessing Officer completed assessment u/s.143(3) of the Act dated 11.12.2009 with above additions and assessed income of =1,79,940/-. Subsequently, the Assessing Officer issued notice u/s.271(1) (c) of the Act for initiating levy of penalty and calling for the explanations. The assessee complied with the notice and submitted that in textile business, it is a regular practice for the seller of the textile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession and the stocks have just arrived one day before date of survey the assessee inorder to buy peace has cooperated and agreed to offer additional income of =1,50,000/-. The Revenue made adhoc addition without any substantive facts on records. Assessee has established the bonafides by payment of the taxes inspite of financial crisis and genuine difficultly. The ld. Authorised Representative relied on the Apex Court decision Dilip Sheroff vs. DCIT (2007) 291 ITR 590 were held that the penalty is not levyable on the basis of assessee s conduct and bonafides and explanations are satisfactory and there is no contumacious conduct to evade tax. In the present case the assessee has furnished all the details in assessment proceedings and paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al calculations or incrementing material unearthered by the Department came forward to offer additional income of =1,50,000/- to buy peace with the Revenue. Prime facie the Department has not found any incriminating material in survey. Further, the ld. Commissioner of Income Tax (Appeals) erred in giving a finding that the assessee could not tally the stock and excess stock was found. It is an undisputed fact that survey team has not made any inventory of stock except the statement recorded. Further, ld. Authorised Representative relied on the CBDT Board letter F.No.286/2/2003-IT (Inv), Dt. 3.10.2003 on confession and another letter of CBDT dated 18th December, 2014 on the admission of undisclosed income under coercion/pressure during searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees have claimed that they have been forced to confess the undisclosed income during the course of the search seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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