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Issues:
Penalty under section 271(1)(c) of the IT Act, 1961 for assessment year 1991-92. Analysis: The appeal was against a penalty of Rs. 6,130 imposed under section 271(1)(c) of the IT Act, 1961. The penalty was confirmed by the Deputy Commissioner of Income Tax (Appeals). The penalty related to an addition of Rs. 30,000 in the account of Smt. Damayanti Devi, which was surrendered by the assessee during the assessment proceedings. The assessee explained that the amount was deposited by Smt. Damayanti Devi from a gift received from her father in 1986. The deposit was made by cheque due to urgent banking requirements arising from a cheque dishonour issue with Hindustan Petroleum Co. Ltd. The assessee surrendered the amount with a specific condition that no penalty would be levied under sections 269SS, 269T, and 271(1)(c). The AO imposed the penalty despite the conditional surrender made by the assessee. The Tribunal considered the explanations and evidence provided by the assessee, including gift deed, gift-tax challan, and bank entries to prove the source of the deposit. The Tribunal also referred to legal precedents to emphasize that agreeing to additions during assessment does not imply concealed income, and cooperation in assessment does not equate to confession of concealed income. Additionally, the Tribunal highlighted a similar case where penalties were canceled under comparable circumstances. Based on the facts and legal principles, the Tribunal found no justification for sustaining the penalty. Consequently, the AO was directed to cancel the penalty, and the appeal by the assessee was allowed.
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