Penalty under section 271(1)(c) upheld after voluntary surrender was found inapplicable to MAK Data principles.

Penalty under section 271(1)(c) was examined on the facts, with the court considering whether the assessee's surrender of income was voluntary and whether MAK Data applied. The assessee had produced books of account, bank statements, vouchers and other supporting material during assessment, and the surrender was made after further enquiry to buy peace. As there was no finding of failure to disclose material particulars or of an unsatisfactory explanation for the returned income, MAK Data was held inapplicable on these facts. The challenge to penalty therefore failed and the penalty was not interfered with.

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Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 was justified on the facts of the case, and whether the assessee's surrender of income was voluntary so as to take the case outside the rule in MAK Data.

Analysis: The assessee had produced books of account, bank statements, vouchers and other supporting material during the assessment proceedings. The surrender was made after further enquiry, with the explanation that the amount was offered to tax to buy peace. There was no finding that the assessee had failed to disclose material particulars or that the explanation regarding the returned income was unsatisfactory. On these facts, the ruling in MAK Data was held inapplicable because the surrender was not treated as one made after detection of concealed income in the manner found in that case.

Conclusion: The penalty was not liable to be interfered with, and the assessee's challenge failed.

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