1979 (6) TMI 62

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....ing to Rs. 6,500 as representing the income of the assessee firm from undisclosed sources. This addition was represented by two cash credits appearing in the names of the following two persons:- Name Amounts (i) Smt. Sushila Devi Karla Rs. 4,000 (ii) Smt. Krishna Devi Rs. 2,500 Total Rs. 6,500 This addition made by the ITO has been upheld by the Tribunal,Delhi, Bench 'C' in I.T.A. No. 5107(Del)/75-76 dt.3rd June, 1977. It is with reference to this addition of Rs. 6,500 that the ITO imposed the penalty of Rs. 6,500. Under s. 271(1)(c) of the IT Act for alleged concealment of income. He pointed out that in response to the notices issued the assessee had not filed any reply. He, therefore, presumed that the assessee ....

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....be reversed and the penalty levied by the ITO should be restored. 5. Shri Ramanand Aiyar, the learned Chartered Accountant for the assessee, submitted that when the assessee was allowed by the Department to withdraw the disclosure petition, it was not open to the Department to rely on the alleged admission in the said petition to justify the imposition of the penalty under s. 271(1)(c) of the Act. He pointed out that most of the additions made in the assessment of the firm in the subsequent years including the cash credits in the names of these two ladies have been deleted by the Tribunal and that similar penalties levied under s. 271(1)(c) for cash credits sustained were also cancelled by the Tribunal. He further submitted that it was w....

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....es to deposit these amounts with the assessee firm in the light of the voluntary disclosure petition filed by the firm. But at the same time, it is an accepted fact that the assessee in its application dt.14th Jan., 1971, submitted to the CIT that it might be permitted to withdraw its disclosure petition filed on20th Nov., 1968as it would be possible then for it to prove and establish the sources of the various credits amounting to Rs. 84,784 before the ITO in the course of the assessment proceedings. This letter was accepted by the CIT as could be seen from the subsequent years. If the Department proposes to rely on this admission of the assessee in its petition dt.20th Nov., 1968, the assessee's offer in the said petition was subject to t....