TaxTMI 
TaxTMI 
2014 (1) TMI 1303
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....72,15,074/- was filed by the assessee on 31.10.2007. the assessment was completed u/s 143(3) of the Act on 18.12.2009 determining total income at Rs. 93,35,070/- after making several additions/disallowance including addition of Rs. 18,59,478/- on account of unconfirmed trade creditors surrendered by the assessee. The assessee is engaged in the business of fabrication and export of bags. While completing the assessment, penalty proceedings u/s 271(1)(c) of the Act were initiated for furnishing inaccurate particulars of income. The assessee did not prefer appeal against the assessment order. During the course of penalty proceedings, a show cause notice for levy of penalty u/s 271(1)(c) of the Act was issued to the assessee on 09.06.2010. In c....
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....erally decide that the liability has ceased to exist. It is the assessee himself who furnished complete details of creditors with names and address. It was only to cooperate with the department that the amount was offered for taxation. How could assessee anticipate that at the time of assessment proceedings the parties will not co-operate. There was no cause for the assessee to offer these creditors for taxation in the return of income. Therefore, the contention that assessee filed inaccurate particulars is not tenable at law at all. It is well settled law that there cannot be unilateral cessation/remission of liability. 2.2 It is the assessee himself who furnished complete details of creditors with names and addresses. It was only to co....
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....ake any compliance. On being asked to produce the creditors, the assessee contended that the creditors had not ceased to exist but in order to avoid litigation, the amount was surrendered. It cannot be held as an inflexible rule that when the assessee agrees to have certain items included in his total income, he makes an admission which by itself would warrant the imposition of penalty. When the appellant agreed to the inclusion of additional amount on account of surrender of sundry creditors in the income declared by him in his return to purchase peace or to avoid botheration or litigation, any admission surrendering a particular amount as his income would not by itself justify the imposition of penalty, unless there was an evidence showin....
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....render could not necessarily be an admission of assessee that amount surrendered was undisclosed income and liable to be subjected to penalty. The decisions In the cases of CIT of CIT vs. Punjab Tyres (162 ITR 517)(MP), Krishan Lal Shivchand Rai (88 ITR 293) (P&H) and S. V. Electrical Pvt. Ltd. (274 ITR 334) (MP) clearly support the case of appellant that no penalty u/s. 271(1)(c) can be levied when the assessee has surrendered certain amount in the assessment proceedings. In the case of Gumani Ram Siri Ram Vs. CIT 5 ITR 67), the Hon'ble Punjab and Haryana High Court has held that in the only circumstances that the amount was surrendered by the assessee, an inference had been drawn that the amount represented the income of the assessee. Thi....
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....f the case, the Ld. CIT(A) has erred on the facts and in law, in appreciating the fact that surrender was not made suo mota by assessee but on being confronted by Assessing Officer that explanation offered by him were found to be false and remained unproved, On the facts and circumstances of the case, the Ld. CIT(A) has erred on the facts and in law, in deleting the penalty by holding that no penalty u/s 271(1)(c) can be levied when the assessee has surrendered certain amount in the assessment proceedings. As per Explanation 1 to Section 271(1)(c) penalty is clearly leviable in this case. The assessee's claim that he had made the surrender to buy peace with the IT Department would also not prevent levy of penalty for concealment of income a....