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Issues Involved:
1. Confirmation of penalties u/s 271(1)(c) of the Income-tax Act, 1961. 2. Voluntariness of disclosures made by the assessee. 3. Justification for the quantum of penalties imposed. Summary: Issue 1: Confirmation of penalties u/s 271(1)(c) of the Income-tax Act, 1961 The assessee-company, engaged in manufacturing engineering equipment, faced penalties under section 271(1)(c) for the assessment years 1985-86, 1986-87, and 1987-88. The Assessing Officer (AO) initiated penalty proceedings after detecting unverified purchases during surveys conducted by the Deputy Director (Investigation) in Bombay and Surat. The AO levied penalties at the maximum rate, which were confirmed by the CIT(A), holding that the disclosures made by the assessee were not voluntary but were a result of detection by the department. Issue 2: Voluntariness of disclosures made by the assessee The assessee argued that the disclosures were voluntary and made to purchase peace with the department, claiming no concealment was involved. However, the Tribunal held that the disclosures were not voluntary as they were made after the department's detection of bogus purchases during the surveys. The Tribunal emphasized that a return filed under the constraint of exposure to adverse action by the Income-tax Department is not voluntary within the meaning of section 273A. Issue 3: Justification for the quantum of penalties imposed The Tribunal found merit in the assessee's contention that the maximum penalties were excessive and arbitrary. Considering the assessee's cooperation with the revenue in finalizing the assessments, the Tribunal held that the minimum penalty at the rate of 100% would meet the ends of justice. Consequently, the AO was directed to levy minimum penalties for the concealed amounts in the respective assessment years. Conclusion: The Tribunal upheld the principle of penalty imposition u/s 271(1)(c) but reduced the quantum to the minimum penalty rate of 100%. The appeals were allowed in part.
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