2005 (3) TMI 94

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....ponse to which the partner of the assessee attended and produced the books of account. Besides that, the Assessing Officer added back profit on the undisclosed sales of Rs. 28,195/-. It was also detected during a survey under section 133A at the assessee's premises on September 25, 1992, that certain loose slips showing sale to different parties and pertaining to the assessment years 1992-93 and 1993-94. Thereupon, the assessee surrendered the amount in the assessment years to the tune of Rs. 38.37 Iakhs. Finally, besides making certain additions in the account of the assessee, the Assessing Officer added a sum of Rs. 3,20,868/- to the total income of the assessee while observing as under: "This would mean addition of Rs. 3,20,....

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....es to trading in gift items and is not in any way connected with the business of the assessee. She has never been in this line and she knew nothing about pumps. Under the circumstances, it is held that the commission paid to the extent of Rs. 40,630/- is not genuine but only is an accommodatory entry in the name of Smt. Archana Gupta, Prop. Attraction for giving a colour of genuineness to the commission paid or otherwise no services were actually rendered by her. Hence, this amount is disallowed and added to the income of the assessee." 3. This order of the Assessing Officer is dated March 26, 1993, where he also directed penalty proceedings to be initiated under section 271(1)(c) of the Act. The assessee preferred an appeal which was pa....

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....en by the hon'ble Delhi High Court by placing reliance on the decision of the hon'ble Supreme Court in the case of CIT v. S. V. Angidi Chettiar [1962] 44 ITR 739. We have seen the facts of the present case and found that he has recorded no such satisfaction there that penalty proceedings on this amount are accordingly initiated. On the amount of addition of Rs. 3,20,868/- made in trading account, the Assessing Officer in the body of the order has specifically mentioned that penalty on this amount is initiated, as he was satisfied that the assessee has not disclosed the true profits. However, we noted that while making disallowance of commission of Rs. 40,630/-, no such satisfaction has been recorded. Even it is not mentioned that pe....