Tribunal cancels penalty for concealed income due to lack of evidence and AO's failure to obtain necessary approval.

The Tribunal partially allowed the appeal by Revenue, canceling the penalty under section 271(1)(c) related to the addition resulting from a higher profit rate estimation, as it could not be considered concealed income without evidence. The penalty related to the remaining concealed amount was also canceled due to the AO's failure to obtain necessary approval for levying a penalty exceeding Rs. 10,000. The Tribunal directed verification of prior approval, and if not obtained, cancellation of the penalty related to the concealed amount was mandated.

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Issues:
1. Dispute over cancellation of penalty under section 271(1)(c) by the AO.

Detailed Analysis:
The appeal by Revenue was against the order of CIT(A), Jodhpur, for the assessment year 1990-91, challenging the cancellation of penalty levied under section 271(1)(c). The Revenue contended that the penalty was rightly imposed due to alleged concealment of income by the assessee. The Departmental Representative argued that the surrender in the revised return does not nullify the concealment from the original return, placing the onus on the assessee to prove no fraud or wilful neglect. The assessee's representative argued that the revised return, which included the surrendered amount, was accepted by the Department, thus no penalty should be levied. Various legal precedents were cited by the assessee's representative to support their case.

The Tribunal considered the contentions of both sides, along with the cited decisions. It was noted that the ultimate addition sustained after CIT(A)'s order comprised of two components: an amount related to investments and another due to a higher profit rate application. The Tribunal found that the addition resulting from the higher profit rate estimation could not be considered as concealed income, especially in the absence of positive evidence proving concealment by the assessee. Therefore, the penalty related to this amount was deemed not sustainable in law and was canceled.

Regarding the remaining concealed amount, the Tribunal acknowledged that the inclusion of this amount in the revised return after a survey did not constitute voluntary disclosure. However, it was observed that the AO did not obtain the required prior approval from the Dy. CIT for levying a penalty exceeding Rs. 10,000. As the penalty was not supported by the necessary approval, it was deemed untenable in law. The Tribunal directed the AO to verify the prior approval status, and if not obtained, the penalty related to the concealed amount was to be canceled. The appeal by Revenue was partially allowed based on these findings.

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