2002 (12) TMI 211 - AT - Income Tax

Summary

Issues Involved:
1. Sustenance of penalty u/s 271(1)(c) of the Income-tax Act, 1961.
2. Explanation and surrender of income by the assessee.
3. Justification of penalty based on agreed addition.

Summary:

Issue 1: Sustenance of Penalty u/s 271(1)(c)
The assessee objected to the sustenance of a penalty of Rs. 15,000 imposed by the Assessing Officer (AO) u/s 271(1)(c) of the Income-tax Act, 1961. The AO found unexplained cash credit in the capital account and initiated penalty proceedings after the assessee failed to provide complete documentary evidence for the source of capital introduced.

Issue 2: Explanation and Surrender of Income by the Assessee
During the penalty proceedings, the assessee explained that Rs. 35,000 was realized from the sale of assets of her erstwhile proprietary concerns. However, the AO did not accept this explanation due to the lack of documentary evidence and presumed that the assessee had introduced undisclosed income, leading to the imposition of the penalty. The CIT(A) upheld the penalty, stating that the assessee's surrender of income was not voluntary but due to the inability to provide evidence.

Issue 3: Justification of Penalty Based on Agreed Addition
The Tribunal considered various case laws and concluded that mere surrender of income to purchase peace does not automatically imply concealment of income. The Tribunal noted that the assessee had provided an explanation, and the surrender was made under compelling circumstances. The Department failed to provide independent material evidence to prove concealment. Consequently, the penalty of Rs. 15,000 was deemed unjustified and was cancelled.

Conclusion:
The appeal was allowed, and the penalty of Rs. 15,000 was cancelled, as the concealment of income was not established from the material on record, and the Department failed to prove the concealment independently.