Penalty Cancelled for Undisclosed Investment and Margin Money; Voluntary Disclosure Accepted, Appeal Dismissed.

The Tribunal upheld the CIT(A)'s decision to cancel the penalty under s. 271(1)(c) for the assessee's undisclosed investment in Balaji Apartments, citing voluntary disclosure and lack of evidence for intentional concealment. Additionally, the penalty for unexplained margin money of Rs. 80,000 for a truck was also cancelled, with the Tribunal accepting the assessee's cash flow statements. The Judicial Member dissented, arguing for penalty imposition due to alleged deliberate concealment. However, the Third Member sided with the majority, affirming the voluntary nature of the disclosure and dismissing the appeal, thereby upholding the CIT(A)'s order.

---

---

Issues Involved:
1. Cancellation of penalty u/s 271(1)(c) for undisclosed investment in Balaji Apartments.
2. Unexplained margin money of Rs. 80,000 for the truck.

Summary:

Issue 1: Cancellation of penalty u/s 271(1)(c) for undisclosed investment in Balaji Apartments
The assessee's initial return declared NIL income. The assessment added Rs. 6,65,010 on a protective basis for unexplained investment in Balaji Apartments. The CIT(A) cancelled the penalty, concluding that the investment might belong to Shri Banne, not the assessee, and further enquiry was necessary. The assessee's disclosure was voluntary, following a settlement with Shri Banne. The Tribunal upheld the CIT(A)'s decision, noting the absence of independent evidence proving the assessee's concealment of income. The penalty was deemed unjustified as the disclosure was made under specific circumstances without evidence of intentional concealment.

Issue 2: Unexplained margin money of Rs. 80,000 for the truck
The assessee failed to prove the source of Rs. 80,000 used as margin money for a truck. The CIT(A) found that the assessee had sufficient cash receipts to justify the investment and cancelled the penalty. The Tribunal agreed, noting the absence of books of accounts and accepting the cash flow statement provided by the assessee.

Separate Judgment by Judicial Member:
The Judicial Member disagreed with the majority, emphasizing that the assessee's disclosure came only after detailed investigation and was not voluntary. The penalty was justified due to the deliberate concealment of investment in Balaji Apartments and unexplained margin money for the truck. The Judicial Member argued that the CIT(A) erred in cancelling the penalty.

Third Member Opinion:
The Third Member concurred with the Accountant Member, emphasizing that the disclosure was voluntary and not due to any incriminating evidence found during the search. The penalty was not justified as there was no independent proof of concealment. The appeal was dismissed, and the CIT(A)'s order was upheld.

---