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TMI Blog2007 (5) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... surrendered the amount of Rs. 6.50 lakhs as additional income to be added to his total income for income-tax purposes. The assessee could neither produce donors nor furnish any explanation about nature and source of alleged gifts. Hence, assessment was completed treating the amount to the tune of Rs. 6.50 lakhs as unexplained cash credit under s. 68 of the Act. The AO also initiated proceedings under s. 271 (1)(c) of the Act in this case. In response to show-cause notice, assessee vide his reply dt. 10th Aug., 2005 requested that penalty proceedings initiated under s. 271 (1)(c) of the Act may be dropped in view of the following facts: "A sum of Rs. 6.50 lakhs was voluntarily surrendered during assessment proceedings just to purchase peace with a condition that no penalty proceedings will be initiated because the humble practitioner had all documentary evidences of gifts but was unable to produce the donor and as such this harsh step was taken. Interest and tax on this surrendered amount itself is so heavy that it is like penalty and further imposition of penalty will ruin the humble petitioner because practically there was no concealment except a compromise to avoid litigation." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Smt. Brij Bala Chaudhary vs. ITO (2004) 82 TTJ (Lucknow) 355. Further, assessee also cited decision of the Hon'ble Supreme Court of India in the case of CIT vs. Suresh Chandra Mittal (2001) 170 CTR (SC) 182 : (2001) 251 ITR 9 (SC). 5. The learned CIT(A) cancelled the penalty, observing as under: "I have carefully considered the submission of Authorised Representative, perused the assessment order and penalty order. It is a fact that the amount of gifts was duly shown in the return of income. Details of gifts were also produced during the course of assessment proceedings as has been mentioned in the assessment order by the AO himself. The word 'conceal' is derived from the Latin word 'concolare' that implies 'to hide'. Webster's New International Dictionary equates its meaning to 'hide or withdraw from observation; to cover or keep from sight; to prevent the discovery of; to withhold knowledge of. The offence of concealment is thus a direct attempt to hide an item of income or a portion thereof from the knowledge of IT authorities. In the present appeal it is not the case of the AO that the appellant has concealed the amounts of gifts. The case is that the appellant in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee being gifts and loan received from parties by bank drafts which were duly credited in his savings bank account No. 13568 with Bhagirath Gramin Bank, Sitapur. In support of this claim, assessee submitted gift deed, income-tax assessment records, PAN and other relevant records of the concerned donors and creditors. All these details are available at pp. 8 to 13 of assessee's paper book. The learned Authorized Representative of the assessee submitted that donors refused to co-operate in assessment proceedings at later stage. Inspite, of the fact that all the evidences were filed, assessee submitted an application and requested that he is surrendering Rs. 6.50 lakhs voluntarily just to buy peace with a condition that no penalty proceedings will be initiated. The assessee had already submitted all evidences with regard to gifts but unable to produce donors. The learned Authorized Representative of the assessee submitted that the AO imposed impugned penalty without bringing out any contrary material or evidence. According to the learned Authorized Representative of the assessee, the AO simply relied on the submissions and surrender application of the assessee and made additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also given his PAN. A photocopy of return of Sri Irfanur Rehman Kidwai relating to asst. yr. 2002-03 is available at p. 9 of assessee's paper book. Further, a copy of confirmation letter of Dr. S.S. Agarwal is available at p. 11 of assessee's paper book. Dr. Agarwal confirmed having given a loan of Rs. 1.30 lakhs to the assessee. It is seen that Sri Amit Agarwal s/o Sri Madan Murari Agarwal has gifted a sum of Rs. 2.50 lakhs to the assessee vide D.D. No. 021819 dt. 4th Oct., 2001 drawn on SBI, Delhi. A copy of gift deed is available at p. 12 of assessee's paper book. Sri Amit Agarwal is assessed to income-tax and copy of return filed for asst. yr. 2001-02 is available at p. 14 of assessee's paper book. A copy of wealth-tax assessment order dt. 27th March, 2001 of Sri Amit Agarwal relating to asst. yr. 1999-2000 is available at p. 15 of assessee's paper book. The assessee vide his application dt. 9th March, 2005 during the course of assessment proceedings surrendered amount of Rs. 6.50 lakhs on the plea that details of gift could not be supported by documentary evidences. It is an admitted fact that the amount of gifts was duly shown in return of income. The details of gifts were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of income, is not found Lo be established from the material on record and the Department has also failed to prove by independent material that the assessee had concealed her income or particulars thereof. So far as the addition of Rs. 5,000 is concerned, although about this addition, no explanation was submitted by the assessee during the proceedings of penalty, but from the assessment order, it is found that this addition has also been made just on estimate basis and it cannot be said that it represents or discloses concealed income; hence, penalty is not leviable on the basis of this agreed addition of Rs. 5,000. In view of the above, the view taken by the CIT(A) cannot be upheld. Thus, the penalty is cancelled." 10. In view of the above decision, it can be safely held that assessee could not be said to have concealed his income merely because he surrendered certain amount to buy peace with the Department, as he could not prove genuineness of the gifts. 11. In the case of Kumar Agencies (India) vs. Asstt. CIT, the Tribunal following the decision of Hon'ble Supreme Court of India in the case of CIT vs. Suresh Chandra Mittal held as under: "In the instant case, the addition wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted assessee's income. The Hon'ble High Court further held that it is well-settled that a mere fact that assessee agreed to inclusion of cash credits and other amounts in the total income on account of inability to prove source or to avoid protracted litigation, would not justify Department in levying penalty. The Hon'ble Madras High Court categorically held that it is for the Department to prove that there was conscious and deliberate concealment on the part of the assessee and the amount added represented assessee's income. It was also held by the Hon'ble High Court that proceedings for waiver of penalty are entirely different proceedings and it is not open to the ITO to rely upon the statement made by the assessee for the purpose of waiver of penalty to come to the conclusion that there was concealment of income. 15. In view of the above discussion, it is clear that assessee could not be said to have concealed his income merely because he surrendered certain amount to buy peace with Department, as he could not prove genuineness of gifts or on the basis of agreed addition. The Hon'ble Supreme Court of India in the case of CIT vs. Suresh Chandra Mittal held that if the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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