Kamla Devi, Ludhiana V. ACIT, Ludhiana

ITA 1221/CHANDI/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 8469 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 22-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: S R CHHABRA
• Keywords: Gift; Question of law; Liquidation
• Section: 271(1)(c); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1221/CHD/2000 ASSESSMENT YEAR: 2006-07 SMT. KAMLA DEVI, VS. THE ACIT, CIRCLE-II, D/O SHRI MANGAL CHAND LUDHIANA LUDHIANA PAN NO. ADJPS6739G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S,R.CHHABRA RESPONDENT BY: SHRI N.K.SAINI, DR ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A)-I, LUDHIANA DATED 30.9.2009 RELATING TO ASSESSMENT YE AR 2006-07 AGAINST THE ORDER PASSED UNDER SECTION 271 (1)(C) OF THE I.T. ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL:- . THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE ASSESSING OFFICER ORDER LEVYING PENALTY U/S 271 (1)(C) IN RESPECT OF THE ADDITION OF RS. 20,09,845/- AND RS. 8,19,199/- WITHOUT APPRECIATING THE ASSESSEES SUBMISSIONS IN THIS REGARD. 3. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT BROKE RAGE AMOUNTING TO RS. 35,19,624/- WAS SHOWN AS PAYABLE. THE ASSESSING OFFICER REQUISITIONED THE ASSESSEE TO FURNISH NAMES AND ADDRESSES OF THE PARTIES TO WHOM BROKERAGE HAD BEEN PAID OR PAYABLE FOR THE LAST THR EE YEARS ALONG WITH THE RELEVANT AMOUNT OF BROKERAGE PAID / PAYABLE. THE A SSESSING OFFICER FROM THE PERUSAL OF DETAILS NOTED THAT THERE WERE A ROUND 123 INDIVIDUALS TO WHOM BROKERAGE WAS PAID / PAYABLE. THE ASSESS EE WAS ASKED TO PRODUCE THE ADDRESSES OF THE SAID PERSON, COPIES OF ACCOUNTS OF MAJOR BROKERS, THE RETURNS FILED BY THEM, COPY OF BANK AC COUNTS ALONGWITH MODE OF PAYMENT AND SERVICES RENDERED. THE ASSESSEE IN REPLY EXPLAINED THAT IT HAD MADE SALES OF RS. 20.37 CRORES ON BEHALF OF MILLS RECEIVED ON CONSIGNMENT AND HAD ALSO EARNED OVERRIDING COMMISSI ON ON DIRECT SALE BY THE MILL TO THE PURCHASER OF RS. 2.66 CRORES. IN ORDER TO ACHIEVE SUCH HUGE SALES, THE ASSESSEE WAS DEPENDENT ON THE BROKE RS WHO PROCURED ORDERS AND COLLECTED PAYMENTS FROM THE PURCHASERS. THE ASSESSEE FURNISHED THE DETAILS OF BROKERAGE PAID DURING THE YEAR UNDER CONSIDERATION WHICH WAS CLAIMED AS AN EXPENDITURE I N THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE ALSO FURNISHED THE DETAILS OF BROKERAGE PAYABLE UNDER TWO HEADS I.E. BROKERAGE PAYABLE FOR THE PERI OD ENDING 31.3.2006 AND BROKERAGE PAYABLE FOR EARLIER YEARS. THE ASSES SEE ALSO EXPLAINED THAT IN CASE OF ANY DELAY IN THE PAYMENT, THE PRINCIPALS NOT ONLY CONCENTRATES ON THE COLLECTION BUT ALSO ON THE RECOVERY OF INTER EST FROM THE PARTY FOR DELAYED PAYMENTS. IN ORDER TO PRESSURIZE THE BROK ERS TO BRING THE PAYMENT OF INTEREST FROM THE PARTIES, THE ASSESSEE DOES NOT RELEASE THE COMMISSION TO THE RESPECTIVE BROKERS AS THE ACCOUNT S ARE PENDING. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD FURNI SHED THE NAMES OF THE BROKERS BUT HE IS UNABLE TO GIVE ADDRESSES OF THE B ROKERS NOR HE HAD OPENED SEPARATE ACCOUNTS IN HIS BOOKS IN THE NAMES OF THESE BROKERS. THE ASSESSEE FAILED TO FURNISH COPY OF ACCOUNTS IN RESP ECT OF ANY OF THE BROKERS. IT WAS ALSO NOTED BY THE ASSESSING OFFICE R THAT THE ASSESSEE HAD FURNISHED COMPLETE DETAILS IN RESPECT OF COMMIS SION PAYABLE AS ON 31.3.2006, WHICH WAS PAID IN THE SUCCEEDING YEAR. THE ASSESSEE IN REPLY EXPLAINED THAT OUT OF TOTAL COMMISSION OF RS. 23,04 ,579/- OUTSTANDING FOR THE EARLIER YEARS, CERTAIN AMOUNTS HAVE BEEN RELEAS ED TO THE RESPECTIVE BROKERS UPTO 8.10.2007 THROUGH ACCOUNT PAYEE CHEQUE S AND THE BALANCE OUTSTANDING FOR EARLIER YEARS WAS RS. 20,09,845/-. THE ASSESSING OFFICER ON CONSIDERATION OF THE REPLY OF THE ASSESSEE NOTED THAT THE ASSESSEE HAD NOT BEEN ABLE TO IDENTITY THE PERSONS IN WHOSE NAME S THE HUGE COMMISSION WAS SHOWN TO BE PAYABLE AND OBSERVED THAT THE GENUI NENESS OF THE COMMISSION COULD NOT BE ACCEPTED. 5. THE SECOND ASPECT CONSIDERED BY THE ASSESSING O FFICER FROM THE PERUSAL OF BALANCE SHEET WAS INTEREST PLAYABLE OF R S.10,20,169/-. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD WAS THAT THE SYSTEM OF SALES AND RECOVERIES WAS FULLY CONTROLLED BY THE PRINCIPLES A ND WHEREVER THERE IS A DELAY IN THE PAYMENTS, THE DEBIT NOTES FOR THE INTE REST RECEIVABLE ARE GENERATED AND IN THE BOOKS OF ACCOUNT OF THE ASSESS EE SEPARATE INTEREST PAYABLE ACCOUNT IS OPENED BY DEBITING THE PARTY ACC OUNT AND CREDITING THE INTEREST PAYABLE ACCOUNT. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE HAD BEEN DEALING WITH M/S JAISHREE TEXTILES, RCM UNIT, RISHRA (WEST BENGAL) AND THERE WAS HUGE DELAYED PAYMENTS DUE TO THE QUAL ITY OF THE GOODS, WHICH WAS NOT UPTO THE MARK. THOUGH THE INTEREST PA YABLE ACCOUNT WAS BEING CREDITED AND THE PARTIES ACCOUNTS WERE BEING DEBITED, THE INTEREST WAS RECOVERED MUCH LATER. HOWEVER, AS THE MILL WAS CLOSED AND WAS STILL UNDER THE PROCESS OF LIQUIDATION, THE PAYMENT WAS N OT RELEASED TO THEM. THE ASSESSEE EXPLAINED THAT THE INTEREST DUE PAYMEN TS FOR ALL THE PARITIES WERE RECOVERED BY THE ASSESSEE EXCEPT THE PAYMENT O F SURYA SYNTHETIC OF RS. 2,00,970/- . THE ASSESSEE THUS EXPLAINED THAT THE AMOUNT STILL OUTSTANDING IN THE INTEREST PAYABLE ACCOUNT FOR WHI CH THE JUSTIFICATION IS TO BE GIVEN IS RS. 819199/-. THE ASSESSEE FURNISH ED THE DETAILS OF INTEREST PAYABLE IN RESPECT OF DIFFERENT PARTIES WH ICH ARE INCORPORATED IN PAGE 6 OF THE ASSESSMENT ORDER IN PARA 6 AT PAGES 1 1 TO 13 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED THAT THE INTEREST PAYABLE WAS ACCUMULATED FROM YEAR TO YEAR AND MOST OF THE I NTEREST PAYABLE WAS QUITE OLD. AS THE ASSESSEE HAD FAILED TO FURNISH AN Y EVIDENCE TO SHOW THAT THE INTEREST WAS EVEN PAYABLE AND IS PAYABLE TILL D ATE, THE GENUINENESS OF THE LIABILITY WAS HELD TO BE NOT PROVED BY THE ASSE SSING OFFICER. THE ASSESSEE WAS AGAIN ASKED TO FURNISH EVIDENCE TO PR OVE GENUINENESS OF THE LIABILITIES REGARDING COMMISSION PAYABLE AND INTERE ST PAYABLE. THE ASSESSEE VIDE REPLY DATED 10.11.2008 SUBMITTED THAT THE INTEREST OF RS. 8,19,199/- WAS ON ACCOUNT OF INTEREST WHICH WAS REC OVERED BY THE ASSESSEE FROM THE DEBTORS ON BEHALF OF THE PRINCIPL ES BUT THE PAYMENT TO THE PRINCIPAL NAMELY JAISHREE TEXTILES WAS NOT RELE ASED / PAID BY THE ASSESSEE AS THE MILL WAS CLOSED AND WAS UNDER LIQUI DATION. THE ASSESSEE FURTHER CONTENDED THAT THE SAID AMOUNT WAS NEVER CL AIMED BY THE ASSESSEE AS A DEDUCTION IN THE TRADING ACCOUNT / PROFIT AND LOSS ACCOUNT AND THEREFORE, THE PROVISIONS OF SECTION 41(1) OF THE ACT WERE NOT APPLICABLE. IT WAS FURTHER EXPLAINED BY THE ASSESSEE THAT SHE W AS A SENIOR CITIZEN AND HER HUSBAND WAS ABOVE 70 YEARS OF AGE AND THEY HAD NO MALE ISSUE. THE BUSINESS WAS EXPLAINED TO BE CARRIED ON BY THE PERS ONS IN-CHARGE AND THE ACCOUNTS WERE BEING HANDLED BY THE EMPLOYEES. IT W AS FURTHER CONTENDED THAT THE ASSESSEE WAS NOT ABLE TO GIVE COMPLETE AN D PLAUSIBLE EXPLANATION IN RESPECT OF COMMISSION PAYABLE TO THE BROKER, HOW EVER, IT WAS NOT DISPUTED THAT THE SALES WERE MADE THROUGH THE SAID BROKERS AT A SET PERCENTAGE OF COMMISSION. IN ORDER TO AVOID LITIGA TION AND TO BUY MENTAL PEACE THE ASSESSEE OFFERED A SUM OF RS. 2009,845/- ON ACCOUNT OF COMMISSION PAYABLE AND RS. 8,19,199/- ON ACCOUNT OF INTEREST PAYABLE TOTALING RS. 28,29,044/- AS INCOME FOR THE YEAR SUB JECT TO NO PENALTY OR ANY OTHER SIMILAR ACTION AGAINST THE ASSESSEE. THE ASSESSING OFFICER REJECTING THE PLEA OF THE ASSESSEE THAT THE PROVISI ONS OF SECTION 271(1)(C) OF THE ACT WERE NOT ATTRACTED, COMPUTED THE INCOME AFTER INCLUDING THE SURRENDERED AMOUNT OF RS. 28,29,044/- AS INCOME OF THE ASSESSEE. IN THE PENALTY PROCEEDINGS INITIATED U/S 271(1)(C) OF THE ACT, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE FURNISHED INACCU RATE PARTICULARS OF INCOME AND IMPOSED THE PENALTY OF RS. 10,10,000/- O N ACCOUNT OF THE SURRENDERED INCOME AND ADDITION MADE U/S 14A OF THE ACT. 6. THE CIT(A) NOTED THAT THE ASSESSEE HAD BEEN SHOW ING LIABILITY ON ACCOUNT OF BROKERAGE AND INTEREST PAYABLE OF RS. 20 ,09,845/- AND RS. 8,19,199/- RESPECTIVELY. THE CIT(A) FURTHER NOTED THAT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE SAID LIABILI TY AS SHE DOES NOT EVEN HAVE THE ADDRESSES OF THE PARTIES TO WHOM THE BROKE RAGE / COMMISSION AND INTEREST WAS PAYABLE. EVEN NO LEDGER ACCOUNTS OF T HESE PARTIES WERE MAINTAINED BY THE ASSESSEE TO HER BOOKS OF ACCOUNT. THE CIT(A) REJECTING THE PLEA OF THE ASSESSEE WITH REGARD TO THE SURREND ER BEING MADE AND NO PENALTY BEING LEVIED, HELD THAT THE SURRENDER WAS PROMPTED BY SENSE OF FEAR TO ESCAPE THE RIGOUR OF SECTION 271(1)(C) OF T HE ACT AND AS THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF OUT STANDING LIABILITIES, THE ASSESSEE WAS HELD TO HAVE NOT DISCHARGED THE BURDEN AND WERE LIABLE FOR PENALTY ON THE AFORESAID OUTSTANDING LIABILITIES. I N RESPECT OF THE DISALLOWANCE MADE U/S 14A OF THE ACT, THE PENALTY W AS DELETED BY THE CIT(A). THE ASSESSEE IS IN APPEAL AGAINST THE SAI D ORDER OF THE CIT(A) IN LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. 7. THE LEARNED AR FOR THE ASSESSEE DREW OUR ATTENTI ON TO THE FACTUAL ASPECTS OF THE CASE AND POINTED OUT THAT BOTH THE A MOUNTS OF LIABILITIES WERE OUTSTANDING AMOUNTS AND THE SURRENDER WAS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN ORDER TO BUY PEACE WIT H A RIDER THAT NO PENALTY IS TO BE LEVIED U/S 271(1)(C) OF THE ACT. RELIANCE WAS PLACED ON VARIOUS JUDGMENTS OF THE HIGH COURTS INCLUDING CIT VS. JASWANT RAI [142 CTR (P&H) 49] AND CIT VS. KIRAN & CO [217 ITR 326 (BOM)] , CIT VS. SMT. SUDHARASH GUPTA [(2008) 10 DTR (P&H) 184]. FURTHER RELIANCE WAS PLACED ON ITO VS. DR. SAMIR KANT AGGARWAL [(200 9) 34 SOT 12 (LKO) (UCK URO)]. THE LEARNED DR PLACED RELIANCE O N THE ORDER OF CIT(A) AND THE FINDING OF THE CIT(A) IN PARAS 3.3 & 3.4 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ADDITIONS IN THE CASE WERE MADE ON ACCOUNT OF OUTST ANDING LIABILITIES OC COMMISSION PAYABLE AND INTEREST PAYABLE AMOUNTING T O RS. 20,09,845/- AND 819199/- RESPECTIVELY. THE ASSESSEE HAD SHOWN THE AFORESAID LIABILITY AS PAYABLE IN ITS BALANCE SHEET FOR THE Y EAR ENDING 31 ST MARCH 2006. THE ASSESSING OFFICER ON THE VERIFICATION OF THE NATURE OF THE ENTRIES WAS OF THE VIEW THAT THERE WAS NO JUSTIFICA TION IN THE LIABILITIES CLAIMED BY THE ASSESSEE. WHEN CONFRONTED, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED THAT AS THE BUSINESS WAS BEING RUN BY THE EMPLOYEES BECAUSE OF HER AND HER H USBANDS ADVANCED AGE, AND THE ACCOUNTS BEING ALSO HANDLED BY THE SAI D EMPLOYEES, NECESSARY DETAILS AND CONFIRMATIONS WERE NOT AVAILA BLE AND IN ORDER TO BUY PEACE AND SETTLE THE ISSUE, THE AFORESAID OUTST ANDING LIABILITIES WERE OFFERED TO TAX AS INCOME OF THE YEAR UNDER CONSIDER ATION. THE SAID SURRENDER OF INCOME WAS MADE SUBJECT TO THE RIDER T HAT NO PENALTY U/S 271(1)(C) OF THE ACT IS TO BE LEVIED. THE ASSESSIN G OFFICER THOUGH ACCEPTED THE SURRENDER OF INCOME BY THE ASSESSEE BU T WAS NOT CONVINCED WITH THE STAND OF THE ASSESSEE THAT IN THE PRESENT CIRCUMSTANCES, THERE WAS JUSTIFICATION FOR NON LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER IMPOSED THE PENALTY U/S 271(1 )(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE WHICH WAS UPHELD BY THE CIT(A). IN THE OPINION OF THE CIT( A) THE SAID SURRENDER SUBJECT TO NO PENALTY HAD NO MERIT AS THE ASSESSEE HAD MADE THE SURRENDER ONCE SHE WAS CORNERED. 9. FROM THE PERUSALS OF THE DETAILS FURNISHED, THE ORDERS OF THE AUTHORITIES BELOW AND THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND THE LEARNED DR FOR THE REVENUE, WE FIN D THAT THE PENALTY U/S 271(1)(C) OF THE ACT HAS BEEN LEVIED ON ACCOUNT OF TWO ADDITION I.E. LIABILITIES ON ACCOUNT OF COMMISSION PAYABLE AND IN TEREST PAYABLE. IN RESPECT OF INTEREST PAYABLE, THE CLAIM OF THE ASSES SEE WAS THAT NO SUCH EXPENDITURE WAS BOOKED AS A DEDUCTION AND CONSEQUEN TLY WHETHER THE SAME IS REAL, ACTUAL OR BOGUS WOULD NOT EFFECT THE INCOME OF THE ASSESSEE AS THE SAME COULD NOT BE SAID TO HAVE BEEN COVERED UNDER THE PROVISIONS OF SECTION 41(1) OF THE ACT. THE ASSESSEE IN NONE OF THE YEARS HAD CLAIMED THE SAID AMOUNT AS AN EXPENDITURE. THE ASSE SSEE WAS ONLY MAKING BOOK ENTRIES ON ACCOUNT OF INTEREST RECEIVABLE FROM VARIOUS PARTIES AND IN TURN BEING DUE TO THE PRINCIPALS. THE TRANSACTIONS WAS NOT ROUTED FROM THE PROFIT AND LOSS ACCOUNT BUT FOR THE MERE ENTRY IN THE BALANCE SHEET. ONCE THE EXPENDITURE IS NOT CLAIMED AS AN ALLOWABLE DEDUCTION WHILE COMPUTING THE INCOME OF THE YEAR IN WHICH SUCH CLAI M AROSE, THOUGH THE AMOUNT HAS BEEN SURRENDERED AND OFFERED TO TAX BUT THE SAME DOES NOT SATISFY THE REQUIREMENTS OF SECTION 41(1) OF THE AC T. UNDER THE CIRCUMSTANCES, THE ASSESSEE CANNOT BE SAID TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE AMOUNT OUTS TANDING ON ACCOUNT OF INTEREST PAYABLE AMOUNTING TO RS. 8,19,199/-. PEN ALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE IN ALL SUCH CASES WHERE THE ASS ESSEE HAS EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME. IN THE CIRCUMSTANCES, THERE IS NO JUSTIFICATION FOR LE VY OF PENALTY U/S 271(1)(C) OF THE ACT ON SUCH AMOUNTS SURRENDERED BY THE ASSESSEE AND ADDED AS INCOME OF THE ASSESSEE. UNDER THE CIRCUMS TANCES WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON SUCH DECLARATION OF OUTSTANDING INTEREST PAYABL E ACCOUNT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DE LETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT IN RESPECT OF THE OUTSTAND ING INTEREST PAYABLE ACCOUNT. 10. NOW COMING TO THE SECOND ASPECT OF THE ISSUE OF PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON COMMISSION PAYABLE AMOUNTIN G TO RS. 20.09,845/- ADMITTEDLY, THE SAID AMOUNT OF COMMISSION PAYABLE WAS AN OUTSTANDING LIABILITY SHOWN BY THE ASSESSEE FROM YEAR TO YEAR. THE DEDUCTION ON ACCOUNT OF SUCH EXPENDITURE OF COMMISSION PAYABLE T O BROKER WAS CLAIMED IN THE EARLIER YEARS AND DURING THE YEAR UNDER CONS IDERATION THE ASSESSEE HAD SHOWN COMMISSION PAYABLE AMOUNTING TO RS. 23,04 ,579/- RELATING TO SUCH YEARS. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSEE FURNISHED DETAILS OF PERSONS TO WHOM AMOUNTS HAD BE EN PAID ON ACCOUNT OF COMMISSION PAYABLE UPTO 8.10.2007. THE SAID PAY MENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. HOWEVER, THE BALAN CE OUTSTANDING LIABILITY OF COMMISSION RELATING TO EARLIER YEARS, AMOUNTING TO RS.20,09,855/- WAS SURRENDERED TO TAX BY THE ASSESS EE, AS ADDITIONAL INCOME OF THE YEAR. THE ASSESSING OFFICER THOUGH IN THE ASSESSMENT PROCEEDINGS HAD FOUND NO EVIDENCE TO DISPROVE THE C LAIM OF DEDUCTION IN THE EARLIER YEARS ON ACCOUNT OF THE SAID OUTSTANDIN G COMMISSION PAYABLE TO BROKERS. SIMILAR PAYMENT ON ACCOUNT OF COMMISS ION PAYABLE TO BROKERAGE WAS CLAIMED AND ALLOWED IN THE HANDS OF T HE ASSESSEE, WHICH WAS RELATABLE TO THE FINANCIAL YEAR 2005-06. THE A SSESSEE HAD FURNISHED ON RECORD THE EVIDENCE IN RESPECT OF THE SAID COMMI SSION PAYABLE AS ON 31.3.2006, WHICH WAS PAID IN THE NEXT YEAR. THE EX PLANATION GIVEN BY THE ASSESSEE WAS NOT PROVED TO BE FALSE THOUGH THE SAME HAS NOT BEEN FULLY SUBSTANTIATED BY THE ASSESSEE. THE ASSESSING OFFIC ER HAD MADE THE ADDITIONS PURSUANT TO THE SURRENDER OF INCOME OFFER ED BY THE ASSESSEE BUT NO FINDINGS HAD BEEN RECORDED BY THE ASSESSING OFFI CER THAT THE EXPLANATION OF THE ASSESSEE WAS NOT BONAFIDE. IN T HE ABSENCE OF ANY FINDING RECORDED BY THE ASSESSING OFFICER THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS FALSE, THERE IS NO MERIT IN THE LE VY OF PENALTY U/S 271(1)(C) OF THE ACT. WE ACCORDINGLY HOLD THAT NO PENALTY IS LEVIABLE U/S 271(1)(C) OF THE ACT ON ACCOUNT OF ADDITION OF OUTS TANDING LIABILITY OF COMMISSION PAYABLE. WE FIND SUPPORT FROM THE RATIO S LAID DOWN BY VARIOUS COURTS:- 11. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. JASWAANT RAI [(1997) 142 CTR (P&H) 49] HAD HELD UNDER:- FROM THE FINDING GIVEN BY THE TRIBUNAL, IT IS APPA RENT THAT THE ASSESSEE HAD, IN EACH CASE AGREED FOR CERT AIN ADDITIONS IN THE ASSESSMENT YEAR 1984-85 THOUGH ONL Y PART OF THE INCOME RELATED TO THIS YEAR. BY AGREEIN G FOR THE ADDITION TO BE MADE IN ONE ASSESSMENT YEAR, THE ASSESSEE SUBJECTED HIMSELF TO HIGHER TAX. IT GIVES RISE TO A NATURAL PRESUMPTION THAT THE AGREEMENT WAS CONVEYED TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS SO AS TO BUY PEACE OF MIND AND TO AVOID LITIGATION ON AN UNDERSTANDING AND ASSURANCE THAT NO FURTHER PROCEEDINGS FOR THE LEVY OF PENALTY WOULD BE INITIATED. THIS FINDING OF FACT GI VEN BY THE TRIBUNAL DOES NOT GIVE RISE TO ANY QUESTION OF LAW. 12. THE LUCKNOW BENCH OF THE TRIBUNAL IN ITO VS. S AMIR KANT AGRAWAL [2009) 34 SOT 12 (LUCK)(URO)] ON SIMILAR IS SUE OF SURRENDER OF INCOME AND THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT HELD AS UNDER:- IT WAS AN ADMITTED FACT THAT THE AMOUNT OF GIFTS W AS DULY SHOWN IN RETURN OF INCOME. THE DETAILS OF GIF TS WERE ALSO PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS HAD BEEN MENTIONED IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER HIMSELF. THUS, IN T HE INSTANT CASE, THE ASSESSEE HAD MADE SURRENDER ONLY TO BUY PEACE WITH THE DEPARTMENT. IT WAS PERTINENT TO STATE THAT THE ASSESSING OFFICER HAD FAILED TO PROV E BY INDEPENDENT MATERIAL THAT THE ASSESSEE HAD CONCEALE D HIS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. FURTHER, THE ASSESSING OFFICER HAD NOT RECORDED ANY FINDING THAT EXPLANATION OFFERED BY TH E ASSESSEE WAS FALSE AND BONA FIDE WAS NOT PROVED. I N VIEW OF THE AFORESAID, IT WAS CLEAR THAT THE ASSESS EE COULD NOT BE SAID TO HAVE CONCEALED HIS INCOME MERE LY BECAUSE HE SURRENDERED CERTAIN AMOUNT TO BUY PEACE WITH THE DEPARTMENT, AS HE COULD NOT PROVE THE GENUINENESS OF GIFTS. AS A RESULT, PENALTY UNDER SE CTION 271(1)(C) COULD NOT BE LEVIED. 13. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF T HE CASE AND IN VIEW OF THE RATIO LAID DOWN BY HON'BLE PUNJAB & HARYANA HI GH COURT IN CIT VS. JASWAANT RAI (SUPRA) AND LUCKNOW BENCH OF THE TRIBU NAL IN ITO VS. SAMIR KANT AGRAAWAL (SUPRA), WE DIRECT TO ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCO RDINGLY, THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS ALLOWED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF SEPTEMBER, 2010. SD/- SD/- (G.S.PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH SEPTEMBER, 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR