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TMI Blog2005 (8) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... itantly, the assessing officer may have to exercise the, discretion in favour of such assessee as otherwise the expression 'may' in section 271(1)(c) remains a dead letter if it is understood that in a case of admitted concealment penalty is automatic. At least in some exceptional cases, discretion vested in the officer should be used to drop proceedings. In our considered view, the case before us is a more befitting case to exercise such discretion, particularly in view of the fact that at the time of filing revised returns, the Assessing Officer has not made up his mind to add the income in assessee's hand but assessee voluntarily offered it to tax and thus it cannot be said to be a case of declaring the income after detection by department. However, considering the peculiar circumstances of the case we deem it a fit case for cancelling the penalty and we direct the Assessing Officer accordingly. In the result, the appeals filed by the assessee are allowed. - HON'BLE D. MANMOHAN, JUDICIAL MEMBER AND J. SUDHAKAR REDDY, ACCOUNTANT MEMBER For the Appellant : S. Rama Rao, Adv. For the Respondent : Meenakshi Goswami, Adv. ORDER D. Manmohan, Judicial Member. 1. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed once and for all. The statements show that both deposits and withdrawals are there on various dates, money is kept in and taken out. The money revolves and circulates both as deposits and outgoings. Therefore, it is from the statement, peak credit is worked out for both the years. Detailed statement is enclosed. For the assessment year 1990-91 ending on 31-3-1990 the peak works out on 16-2-1990 is Rs. 37,500. In the assessment year 1991-92 the peak works out as per statements enclosed as on 4-3-1991 at Rs. 91,086 (excluding S.B. A/c interest at Rs. 20,415). As the money rotates and there is balance on 1-4-1990 brought forward from previous year, the amount of Rs. 37,500 is being there already in the previous year, the peak is worked out as under:- Total peak credit for the year 4-3-1991 (1991-92) Rs. 91,086 Less: Total peak credit already offered for taxation in the previous year ending 31-3-1990 (1990-91) Rs. 37,500 Balance Rs. 53,586 This fact has already been submitted in my letter dated 30-7-1992 and filed before you on 31-7-1992 even before I gave the deposition may be treated as my income and tax payable is worked out on this basis. This income now offered for two years i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aments about 5 tolas. 4. Rs. 8,000 Misc. expenses for which no details are available. 5. Rs. 30,000 Cash on hand now with friends without interest and with myself. The two deposits of demand drafts of Rs. 10,000 and Rs. 15,000 credited into the Bank on 17-11-1990 and withdrawn on the same date is drafts brought my parties and given to me for cashing the same and to be returned to them to avoid identification problem from the Bankers. I do not have details. If I am given details of places and names of purchasers of D.Ds, I can explain in detail. Even these amounts have gone into peak credit, offered for taxation. As regards the proposal to levy of penalty under section 271(1)(c) I have placed before your, all the cards even before enquiry. If telling truth is punishable, I have little defense. I never wished to carry the guilt all to myself till I am alive. It had to be corrected and I did the same. To punish or not to punish will be in your good hands. The law has every force to punish a person. Should it not encourage a person when he wants to reform himself. A prose has no place in taxation. But yet permit me to quote a historical fact: A mother sought from Napoleon the pardon of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as, the assessee voluntarily came forward to offer the peak credit as his income much before the Assessing Officer could decide upon the taxability of the credit in assessee's hands. Further the assessee fully co-operated with the department. (a) Sir Shadilal Sugar General Mills Ltd. v. CIT [1981] 168 ITR 705 (SC). (b) CIT v. Suresh Chandra Mittal [2001] 251 ITR 92 (SC) (c) CIT v. M.M. Rice Mills [2002] 253 ITR 17 (Punj. Hal.) 9. On the other hand, learned Departmental Representative strongly relied upon the orders of the tax authorities. She submitted that assessee initially denied the transactions in the Bank account and filed returns only upon detailed enquiry. Learned Departmental Representative, therefore, contended that there was intention to evade payment of tax. 10. We have carefully considered the rival submissions and perused the record. Admittedly the assessee owned the transactions in the Bank account only upon enquiry by the assessing officer. It is not a case where the assessee offered an explanation to state that the income assessed to tax is not his income. He categorically submitted that he owned the responsibility of maintaining a bank account in a benami na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court held that penalty should not be imposed merely because it is lawful to do so. The Assessing Officer has to exercise his discretion judicially. The Hon'ble Madhya Pradesh High Court (Indore Bench) in the following cases observed that if an assessee files a revised return, though at a later stage, and disclosed true income, penalty need not be imposed. (a) CIT v. S.V. Electricals (P.) Ltd. [2005] 274 ITR 334 (MP) (b) CIT v. Shyamlal M. Soni [2005] 276 ITR 156 (MP - Indore) 11. No doubt mere filing of revised return will not automatically protect an assessee from levy of penalty but, in a given case, where an assessee comes forward with clean breast though after detection, and files returns of income offering additional income and expresses remorse for his past conduct unhesitantly, the assessing officer may have to exercise the, discretion in favour of such assessee as otherwise the expression 'may' in section 271(1)(c) remains a dead letter if it is understood that in a case of admitted concealment penalty is automatic. At least in some exceptional cases, discretion vested in the officer should be used to drop proceedings. In our considered view, the case before u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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