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2012 (2) TMI 16 - AT - Income TaxPlea for waiver of penalty u/s 271(1)(c) undisclosed income traced during search assessee owned unaccounted transactions divergent of opinion among the lower authorities as well as the Tribunal while deleting or sustaining the addition - whether the penalty is automatic, even if the assessee corrects his mistake or discretion vested in the officer should be used to not levy the penalty - Held that - The present case is most befitting case to exercise such discretion. Divergence of opinion among authorities concerned shows that there is no conclusive proof that the assessee concealed income or furnished inaccurate particulars of income. Further as seen from the facts of the case, to avoid litigation the assessee accepted the additions or made fresh offer in the course of the proceedings before the lower authorities. After the A.O. had the clinching evidence of concealment then the offer may not have been accepted and the same should have been proceeded on the basis of material available on record. The lower authorities relied on proceedings before A.O. for levying the penalty. The same do not constitute admission for the purpose of levying penalty. The addition made on the basis of more or less on the offer made by the assessee and the A.O. did not brought enough incriminating material for concealment and there is no material for establishing the concealment independently in the given facts and circumstances of the penalty is not leviable and the same is deleted Decided in favor of assessee.
Issues Involved:
1. Levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961. 2. Validity of additions made based on seized documents. 3. Determination and computation of undisclosed income. 4. Assessment of peak credit and interest payments. 5. Admissibility of the assessee's explanation and voluntary disclosure. Issue-wise Detailed Analysis: Levy of Penalty under Section 271(1)(c): The primary issue in these appeals is the levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961. The assessee contended that the penalty was wrongly imposed as the additions were based on seized documents and not on any deliberate concealment or furnishing of inaccurate particulars of income. The Tribunal noted that the assessee had offered additional income post-search and accepted the additions to avoid prolonged litigation. The Tribunal emphasized that penalty is not automatic and should be levied only when there is conclusive evidence of concealment or furnishing inaccurate particulars. Validity of Additions Based on Seized Documents: The additions were made based on documents identified as A/PVR/1 to A/PVR/7 and A/SUIL/100 seized during a search operation. The Assessing Officer considered these documents for computing undisclosed income. The Tribunal observed that the Assessing Officer did not provide a clear basis for the figures taken for addition and failed to explain how the amounts were arrived at. The Tribunal also noted that the CIT(A) substituted the additions made by the Assessing Officer with new figures based on the seized material. Determination and Computation of Undisclosed Income: The Tribunal reviewed the computation of undisclosed income for various assessment years. The CIT(A) accepted the additional income offered by the assessee for A.Ys. 1999-2000 to 2001-2002 and directed the Assessing Officer to substitute the additions accordingly. For A.Y. 2002-03, the CIT(A) observed that the assessee could not establish the claim with details and evidences, leading to a peak credit addition. The Tribunal further reduced the peak credit addition for A.Y. 2002-03. Assessment of Peak Credit and Interest Payments: The CIT(A) assessed the peak credit and interest payments based on the seized documents. The CIT(A) noted that the assessee was unable to provide sufficient evidence to support the claim that the transactions were related to Sujana Group or were in the nature of share capital mobilization. The Tribunal observed that the CIT(A) allowed deductions and arrived at a peak credit, which was considered as the income of the assessee. However, the Tribunal reduced the peak credit addition for A.Y. 2002-03. Admissibility of the Assessee's Explanation and Voluntary Disclosure: The Tribunal considered the explanation provided by the assessee regarding the seized documents and the additional income offered. The Tribunal noted that the assessee admitted the transactions and offered additional income due to the difficulty in reconciling old records. The Tribunal emphasized that the penalty should not be imposed merely because the assessee accepted the additions to avoid litigation. The Tribunal relied on various judgments to support the view that penalty under Section 271(1)(c) should not be levied in the absence of conclusive evidence of deliberate concealment or furnishing inaccurate particulars. Conclusion: The Tribunal concluded that the penalty under Section 271(1)(c) was not justified in this case. The Tribunal observed that there was no conclusive proof of concealment or furnishing inaccurate particulars of income by the assessee. The Tribunal emphasized that the discretion vested in the Assessing Officer should be used judiciously and in favor of the assessee when there is no clear evidence of deliberate default. Consequently, the Tribunal allowed the appeals of the assessee and deleted the penalty. Order Pronouncement: The order was pronounced in the open court on 6.1.2012.
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