TMI Blog1997 (9) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings for the aforementioned assessment years, it was observed by the AO that assessee had reflected a sum of ₹ 5,00,000 and ₹ 3,07,500 for the asst. y₹ 1986-87 and 1988-89 respectively, as having received from number of parties as gifts. These amounts had either been received by cheques or by drafts. Assessee furnished confirmations from the donors. The AO required the assessee to produce the parties before him. Notices were issued to eight parties, out of which six parties appeared before the AO and admitted having gifted the respective amounts. They were able to explain the source of the amount gifted to the assessee. Assessee was asked to produce all other parties. The assessee however could produce only tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there could be no manner of doubt that assessee was guilty of concealment. Reliance was placed on the decision of the MP High Court in the case of Addl. CIT vs. Bharatiya Bhandar (1980) 122 ITR 622 (MP), in support of the finding that when assessee includes the cash credits in the return filed in response to the notice under s. 148, it amounts to admission of concealed income and that constitutes evidence of concealment. According to the learned CIT(A), assessee had originally filed the returns of income without disclosing the additional income. Subsequently, the AO had resorted to investigation and scrutiny, and the assessee made an offer of surrender only after investigation had been launched by the AO. The penalty having been imposed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om). It was accordingly urged that the penalty imposed for both the assessment years may be cancelled. 7. The learned Departmental Representative, on the other hand, urged to sustain the penalty imposed. It was contended that the assessee had introduced gifts of 100 parties in the asst. yr. 1986-87. Out of which only 8 parties could be produced. Affidavits of 32 persons were filed before the AO but in respect of 60 donors assessee could neither produce the parties nor file affidavits at the time of assessments. Assessee had specifically expressed their inability to produce the parties. In such circumstances, assessee had no option to escape from the clutches of law. The mere fact that the assessee agreed to the addition, does not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dits. However, the AO initiated penalty proceedings on the ground that the offer had been received at the eleventh hour after scrutiny. 9. In the penalty proceedings assessee tried to improve his case by furnishing additional evidence in the form of affidavits of all the creditors appearing in its books of accounts. The AO did not make any enquiry except insisting upon the personal presence of the donors. It is on these facts, we were called upon to decide as to whether penalty under s. 271(1)(c) is justified. Reliance has been placed on various judgments on both sides referred to elsewhere in the order. In our considered view whether penalty is attracted in a case or not is fundamentally dependent on the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, the mere fact that the assessee has offered income for assessment would not be sufficient to uphold the levy of penalty. Reliance is placed on the decision of the Bombay High Court in the case of CIT vs. Kiran Co. (supra). In that case there was a search in the course of which the IT authorities discovered certain discrepancy in the records maintained by the assessee in respect of stocks. Assessee had made a conditional offer for settlement subject to the condition that no penalty would be levied. Assessee had stated that due to strike and other difficulties, the stock register could not be properly maintained. The AO accepted the offer made by the assessee but also imposed the penalty for concealment. The Tribunal had deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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