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Issues involved: Appeal against penalty orders u/s.271(1)(c) of the Income-tax Act, 1961 for seven consecutive assessment years 2001-02 to 2006-07.
Summary: The Appellate Tribunal ITAT Bangalore heard the appeals filed by the assessee against the penalty orders passed by the Commissioner of Income-tax(A) for seven assessment years. The Assessing Officer had levied penalties u/s.271(1)(c) for the years in question based on income concealed by the assessee. During a survey u/s.133A, certain creditors reflected in the books of account were found to be unverifiable, leading the assessee to offer those credits as additional income for the assessment years. The assessee did not contest the quantum additions and accepted them without further appeals. However, the assessee argued that there was an understanding with the department that no penalty would be levied as cooperation was shown in offering additional income. Despite this, the Assessing Officer proceeded to levy penalties. The Tribunal noted that a significant portion of the credits offered as income actually belonged to earlier assessment years and should not have been considered for the current years. The Tribunal found that the assessee had already suffered additional tax due to this oversight and deemed it unfair to levy penalties on top of this. Consequently, the penalties for all seven assessment years were deleted, and the appeals filed by the assessee were allowed. In conclusion, the Tribunal ruled in favor of the assessee, highlighting the additional tax burden suffered due to the misclassification of credits and the unfairness of imposing penalties on top of this. The decision to delete the penalties was based on the principle of fairness and the recognition of the unintended tax consequences faced by the assessee.
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