2011 (4) TMI 888 - DELHI HIGH COURT

Penalty u/s 271(1)(C) - assessee had itself voluntarily surrendered the amount to avoid litigation and to buy peace of mind and had not concealed any income - Held that:- It is a settled position of law as enunciated in various judicial pronouncements that “penalty cannot be based on presumptions and surmises”. Section 271(1)(c) is a penal provision and such a provision has to be strictly construed. Unless the case falls within the four corners of the said provision, penalty cannot be imposed.

No penalty can be imposed unless the conditions stipulated in the said provisions are duly and unambiguously satisfied. Since the assessee was exposed during survey, may be, it would have not disclosed the income but for the said survey, however there cannot be any penalty only on surmises, conjectures and possibilities. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax. When the survey is conducted by a survey team, the question of satisfaction of the Assessing Officer or the Commissioner (Appeals) or the Commissioner does not arise - Decided in favour of the assessee