2006 (8) TMI 271

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....f M/s Verma & Company on 27th Sept., 1988, which is a sister-concern of the assessee. The loose papers seized by the Department revealed that substantial number of transactions were not accounted for in the regular books of account maintained by the assessee. The peak amount of Rs. 1,32,280 involved in these transactions, was taken as. concealed income and was added m asst. yr. 1988-89. A statement of the partner of the assessee-firm was recorded during the course of search, in which he agreed to surrender a sum of Rs. 5,00,000 against loose papers in the hands of the assessee-firm. The peak amount of Rs. 1,32,280 relates to asst. yr. 1988-89, for the reason that unaccounted transactions relate to the period from April, 1987 to September, 1....

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....s been argued before me that the AO did not record his satisfaction to initiate penalty proceedings in the assessment order and simply mentioned that a notice under s. 271(1)(c) is being issued separately. In this regard, the decision of the Hon'ble Delhi High Court in the case of CIT vs. Auto Lamp Ltd. (2005) 196 CTR (Del) 459 : (2005) 278 ITR 32 (Del) has been referred to by the learned Authorised Representative. 5. I have considered the rival submissions on this point as well. It is true that the AO is required to record his satisfaction and has to record the same before or at the time and initiate penalty proceedings under s. 271(1)(c) of the Act. Merely because the penalty proceedings have been initiated, it cannot be assumed that s....

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....er satisfaction for the purpose of initiating the penalty. Reliance is placed on the abovementioned decisions of the Hon'ble Delhi High Court. This view has been followed in numerous decisions of the Tribunal all over India, including this Bench in the case of Narendra Kumar vs. ITO in ITA No. 449/Jd/2001, asst. yr. 1997-98, dt. 25th Feb., 2005 [reported at (2005) 94 TTJ (Jd) 156-Ed.] of which I was author. It was held that a penalty under s. 271(1)(c), levied for additions made on the basis of surrender of income and after rejection of explanation does not, ipso facto, lead to levy of penalty under s. 271(1)(c) of the Act. 7. The learned Authorised Representative Shri Suresh Ojha has also drawn my attention towards page No. 1 of his pap....