High Court affirms ITAT decision, quashing penalty under Income Tax Act.

The High Court upheld the decision of the Income Tax Appellate Tribunal (ITAT) in favor of the appellant, setting aside the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act. The ITAT emphasized the voluntary nature of the offer made by the assessee to buy peace, distinguishing it from the non-voluntary surrender of income in the Supreme Court ruling in MAK Data case. The High Court found no substantial question of law, as the facts of the case did not align with those in the MAK Data case, ultimately dismissing the appeal.

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Issues involved:
1. Penalty imposed by the Assessing Officer.
2. Contradiction with Supreme Court ruling in MAK Data Pvt Ltd. v. Commissioner of Income Tax.

Detailed analysis:
1. The appellant challenged an order of the Income Tax Appellate Tribunal (ITAT) upholding the assessee's appeal against the penalty imposed by the Assessing Officer. The appellant reported income of Rs. 4,35,757 for the assessment year 2009-2010, primarily from the business of supplying earth soil purchased from farmers for construction purposes. The Assessing Officer raised concerns regarding payments to suppliers and transactions in shares, leading to penalty proceedings under section 271(1)(c) of the Income Tax Act. The AO imposed a penalty of Rs. 47,96,000, later reduced to 150% of the tax payable by the CIT (Appeals). The ITAT allowed the appeal, emphasizing the voluntary nature of the offer made by the assessee to buy peace, distinct from the scenario in MAK Data case.

2. The appellant argued that the ITAT's decision contradicted the Supreme Court ruling in MAK Data case, where the surrender of income was deemed non-voluntary due to detection during a search in the sister concern of the assessee. The Supreme Court in MAK Data case emphasized the statutory duty of the assessee to disclose true income, holding that the surrender was not voluntary as it followed detection by the AO. In contrast, the present case involved the voluntary offer of Rs. 75 lakhs by the assessee, supported by adequate documentation, without any findings of concealment or failure to disclose material particulars by the AO. The High Court concluded that the facts did not align with the scenario in MAK Data case, dismissing the appeal as no substantial question of law arose from the matter.

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