Penalty for voluntary surrender of share application money rejected where no material proved concealment or inaccurate particulars.

Penalty under section 271(1)(c) was held not leviable where the assessee voluntarily surrendered the share application money and the Revenue failed to bring any independent material showing concealment or furnishing of inaccurate particulars. The Tribunal noted that the addition rested only on the surrender itself, and that a surrender made after notice or questionnaire did not, by itself, establish deliberate default. Penalty was therefore not automatic and could be imposed only on evidence of concealment or inaccurate particulars; the issue was decided in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the assessee had voluntarily surrendered the amount of share application money and the Revenue had not established concealment of income or furnishing of inaccurate particulars.

Analysis: The amount in question was surrendered by the assessee at the first instance with a request that penalty proceedings should not be initiated. The addition was made on the basis of such surrender, and no independent material, detection, or evidence was brought on record to show that the share application money was bogus or that any concealment had been unearthed by the Assessing Officer. In the absence of material showing deliberate default, the mere fact that the surrender was made after a notice or questionnaire did not by itself establish concealment. The Tribunal relied on the principle that penalty is not automatic and can be imposed only where the record shows concealment or furnishing of inaccurate particulars.

Conclusion: Penalty under section 271(1)(c) was not justified and the issue was decided in favour of the assessee.

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