TaxTMI 
TaxTMI 
2007 (3) TMI 743
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.... capital gains, the assessee filed the following : 1.Copies of purchase bill No. 1507 dated 6-4-1994. 2.Copies of scrips of Nilamber Holdings Ltd. showing distinctive numbers folio numbers, certificate numbers and number of shares. 3.Copy of bill No. 3207 dated 25-5-1995 from M/s. Maheshwari Sons confirming payment of Rs. 2,97,850 by cheque to the assessee. The Assessing Officer considered the evidence, but did not make any adverse comment about the same. However, he referred to certain investigations carried out by the Directorate of Income-tax, Gurgaon in the case of Maheshwari Sons, the broker firm and the statement made by several persons in that connection, including the chartered accountant of the firm and came to the conclusion that the broker firm was indulging in certain mal practices and obliging assessees who wanted to bring into their books their unaccounted income in the guise of capital gains on sale of shares. Since the assessee also had purchased and sold the shares through Maheshwari Sons, the Assessing Officer was of the view that amount shown as sale proceeds of shares was nothing but the undisclosed income of the assessee brought in....
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....ectors of M/s. Nilamber Holdings Ltd. and M/s. Ultimate Investment Ltd. and, examination of the scripts supplied by M/s. Nilamber Holdings Ltd., there is little doubt left that the assessee had not made any genuine gains on any sale of shares of M/s. Nilamber Holding Ltd. and the whole transactions enacted by the assessee were sham. I therefore treat the receipts of Rs. 2,97,850 as assessee's income from undisclosed sources initiating penalty proceedings under section 271(1)(c)." 4. The assessee would appear to have filed an appeal to the CIT (Appeals) against the aforesaid addition, but did not press the same. 5. In reply to the penalty notice, the assessee replied that he had disclosed all the facts relating to the transaction, but did not include the resultant income in the return on the bona fide belief that the income was eligible for exemption under section 54F and from the mere fact that the assessee's claim was negatived by the Assessing Officer it does not follow that the assessee concealed his income or furnished inaccurate particulars thereof and that the mere fact that the assessee had agreed to be assessed on an income higher than the returned income is not proof....
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....tal gains in the manner required by the Assessing Officer which is not sufficient to impose penalty for concealment as held by the Gujarat High Court in National Textiles v. CIT [2001] 249 ITR 125. (j)A surrender of the income by the assessee merely to put an end to the protracted litigation and to buy peace of mind cannot be considered to be decisive for levying penalty for concealment as held by the Supreme Court in the case of S.C. Mittal, 259 ITR 9 (sic) and by the Delhi High in CIT v. Aggarwal Pipe Co. [1999] 240 ITR 880 . (k)No satisfaction that the assessee has concealed his income or furnished inaccurate particulars thereof has been recorded in the assessment order which is a jurisdictional defect which cannot be cured as held by the Hon'ble Delhi High Court in the case of CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568 and Diwan Enterprises v. CIT [2000] 246 ITR 571. (l)The Assessing Officer cannot accept the assessee's surrender of the income and at the same time reject the claim for immunity from penalty as held by the Pune Bench of the ITAT in Kantilal & Bros. v. Asstt. CIT [1995] 51 TTJ (Pune) 513. On the basis of the above submi....
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....he recording of the satisfaction, the Ld. Sr. DR again relied on the last paragraph of the assessment order where the Assessing Officer has clearly stated that there is no doubt that the assessee had not made any genuine gains on the sale of shares and that the entire transaction enacted by the assessee was sham. These findings or observations made by the Assessing Officer amount to a clear recording of the requisite satisfaction according to the learned Sr. DR. He also pointed out that the facts in the decisions cited on behalf of the assessee were also distinguishable and hence those decisions were not applicable to the assessee's case. On the basis of these submissions, the Ld. Sr. DR contended that the penalty was rightly imposed by the Assessing Officer and confirmed by the CIT (Appeals). 10. We have carefully considered the facts and the rival contentions. We are in agreement with the Ld. Sr. DR on the question of satisfaction having been recorded in the assessment order. The last paragraph before the computation of the income in the assessment order contains observations sufficient to hold that the Assessing Officer was satisfied that the assessee concealed his income or ....