The ITO, Ward-2(2)., Vijayawada v. Sri N Ravindra Kumar, Vijayawada

1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SRI B.R. BASKARAN ACCOUNTANT MEMBER I.T.A. NO 355/VIZAG/2007 ASSESSMENT YEAR : 2005-06 NADENDLA RAVINDRA KUMAR VIJAYAWADA VS. ITO WARD -2(4) VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.ABGPN 4071 N I.T.A. NO 366/VIZAG/2007 ASSESSMENT YEAR : 2005-06 ITO WARD -2(2) VIJAYAWADA VS. NADENDLA RAVINDRA KUMAR VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.ABGPN 4071 N APPELLANT BY : SHRI C. SUBRAMANYAM CA RESPONDENT BY : SHRI G.S.S. GOPINATH DR O R D E R PER B..R. BASKARAN ACCOUNTANT MEMBER : THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DA TED 23.5.2007 OF LD CIT(A) VIJAYAWADA AND THEY PERTAIN TO THE ASSESSME NT YEAR 2005-06. 2. THE PENALTY OF RS.12 06 988/- LEVIED U/S 271 (1)(C) OF THE ACT HAVING BEEN DELETED PARTIALLY BY THE LD CIT(A) BOTH THE PARTIE S ARE IN APPEAL BEFORE US. 3. THE FACTS RELATING TO THE ISSUE ARE SET OUT IN BRIEF. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 01-6-2005 DECLARING A TOTAL 2 INCOME OF RS.20 810/- AND AGRICULTURAL INCOME OF RS .1 60 900/-. SUBSEQUENTLY HE FILED A REVISED RETURN OF INCOME 06-06-2005 DECL ARING A TOTAL INCOME OF RS.1 86 410/- AND THE SAME AGRICULTURAL INCOME AS D ISCLOSED IN THE ORIGINAL RETURN OF INCOME. 3.1 THE DEPARTMENT CARRIED OUT A SURVEY OPERATI ON ON 7.10.2005 IN THE HANDS OF ASSESSEES WIFE AND ALSO IN THE PREMISES OF A CO MPANY NAMED M/S SUBHA PRIYA CHIT FUND PVT. LTD IN WHICH THE ASSESSEE IS THE MA NAGING DIRECTOR. CONSEQUENT TO THE SURVEY OPERATION A STATEMENT WAS RECORDED F ROM THE ASSESSEE ON 26.10.2005 WHERE IN THE SOURCES FOR THE DEPOSITS O F RS.18 96 200/- FOUND IN HIS BANK ACCOUNT NO.10012226374 WERE QUESTIONED. SIMIL ARLY THE DETAILS OF ENTRIES IN THE NAME OF FOUR PERSONS AGGREGATING TO RS.15.00 LAKHS FOUND RECORDED IN A LOOSE SHEET FOUND FROM THE CHIT FUND COMPANY STATED ABOVE WERE ALSO QUESTIONED. THE SOURCES FOR THE BANK DEPOSIT WERE EXPLAINED BY THE ASSESSEE AS CASH CREDITS. AS PER THE EXPLANATIONS OF THE ASSES SEE THE CREDITORS ARE AGRICULTURISTS WHO ARE NOT ASSESSED TO INCOME TAX. HENCE HE VOLUNTARILY AGREED TO DISCLOSE THE DEPOSIT AMOUNT OF RS.18 96 200/- AL ONG WITH THE INTEREST THEREON AMOUNTING TO RS.1 89 620/-AS HIS ADDITIONAL INCOME FOR THE ASSESSMENT YEAR 2005-06. WITH REGARD TO THE NOTING OF RS.15.00 LAK HS THE ASSESSEE ADMITTED THAT THEY WERE HAND LOANS GIVEN TO THE FOUR PERSONS AND FURTHER THESE LOANS WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. ACCORDINGLY HE AGREED TO OFFER THE ABOVE SAID SUM OF RS.15.00 LAKHS ALSO AS HIS ADDITIONAL I NCOME. 3.2 ACCORDINGLY THE ASSESSEE FILED ANOTHER REV ISED RETURN OF INCOME ON 30.11.2005 DISCLOSING A TOTAL INCOME OF RS.37 72 23 0/- AND AGRICULTURAL INCOME OF RS.1 60 900/-. THE AO BY JUST STATING THAT THE AS SESSEE AGREED TO OFFER ADDITIONAL INCOME DURING THE COURSE OF SURVEY CONDU CTED IN HANDS OF THE ASSESSEES WIFE COMPLETED THE ASSESSMENT ON 30.1.2 006 BY ACCEPTING THE SECOND REVISED RETURN OF INCOME. THE AO DID NOT MA KE ELABORATE DISCUSSIONS 3 WHICH LED TO THE OFFER OF ADDITIONAL INCOME. IN T HE ASSESSMENT ORDER THE AO FURTHER STATED THAT THE PENALTY PROCEEDINGS U/S 271 (1)(C) ARE INITIATED SEPARATELY. SUBSEQUENTLY BY PASSING A PENALTY ORDER DATED 26.7 .2005 THE AO LEVIED A MINIMUM PENALTY OF RS.12 06 988/- BY CONSIDERING TH E ADDITIONAL INCOME OF RS.35 85 820/- AS THE CONCEALED INCOME OF THE ASSES SEE. THE BREAK UP DETAILS OF THE ADDITIONAL INCOME OF RS.35 85 820/- ARE GIVEN B ELOW FOR THE SAKE OF REFERENCE. A) CASH CREDIT AND INTEREST THERE ON 20 85 8 20 B) UNRECORDED ADVANCE PAYMENTS 15 00 000 -------------- 35 85 820 ========= 4. IN THE PENALTY PROCEEDINGS THE ASSESSEE OFF ERED FOLLOWING EXPLANATIONS BY WAY OF WRITTEN SUBMISSIONS: I AM CARRYING ON BUSINESS OF MONEY LENDING. DURING THE COURSE OF MONEY LENDING BUSINESS I USED TO ACCEPT DEPOSITS A ND ADVANCE LOANS. WHEN THE SURVEY PROCEEDINGS WERE CONDUCTED I N THE BUSINESS PREMISES OF MY WIFE I HAVE ASKED SOURCE C ONFIRMATION LETTERS FROM MY DEPOSITORS. OUT OF THEM 8 CREDITOR S EXPRESSED THEIR UNWILLINGNESS TO GIVE SOURCE LETTERS. SINCE P ROVING THE GENUINENESS OF THE CREDIT IS ON MY SHOULDERS AND WI THOUT THEIR COOPERATION I CANT PROVE THE SAME BEYOND DOUBT AND UP TO YOUR SATISFACTION I CHOSE THE ALTERNATIVE WAY OF SURREND ERING THEM FOR TAX VOLUNTARILY AND PAY TAX. ACCORDINGLY I HAVE OFF ERED THEM AND PAID TAX AND FILED RETURN AND COOPERATED WITH THE D EPARTMENT. THOUGH THE CREDITS ARE NOT BELONG TO ME TO HAVE PEA CE WITH THE DEPARTMENT I HAVE OFFERED THE SAME. THE UNSECURED LOANS WERE GIVEN TO 4 PERSONS TOTALIN G ABOUT 15 LAKHS. THOUGH THE SOURCE FOR THIS INVESTMENT IS THE CREDITS REFERRED ABOVE I HAVE VOLUNTARILY ADMITTED THEM FOR THE PURP OSE OF TAXATION. UNILATERAL ADMISSION BY ME WITHOUT CORROB ORATIVE EVIDENCE WILL NOT ATTRACT PENALTY AND YOUR GOODSELV ES ARE REQUESTED TO DROP THE PENALTY PROCEEDINGS INITIATED I THIS REGARD. 4 5. WITH REGARD TO THE CASH CREDITS NUMBERING EI GHT THE ASSESSEE AGREED TO OFFER THE SAME AS HIS ADDITIONAL INCOME AS ACCORDI NG TO THE ASSESSEE THE SAID CREDITORS EXPRESSED THEIR UNWILLINGNESS TO GIVE CON FIRMATION LETTERS. HOWEVER BEFORE THE LD CIT(A) THE ASSESSEE FURNISHED THESE CONFIRMATION LETTERS ALONG WITH SUPPORTING DOCUMENTS. THE LD CIT(A) FORWARDED THOSE DOCUMENTS TO THE AO TO VERIFY THE CASH CREDITS WITH RESPECT TO THE T HREE MAIN INGREDIENTS VIZ. IDENTITY OF THE CREDITORS THEIR CREDIT WORTHINESS AND GENUINENESS OF CASH CREDITS. BASED ON THE REPLY FURNISHED BY THE AO VIDE HIS RE PORT DATED 23.3.2007 THE LD CIT(A) DELETED PENALTY RELATING TO THE CASH CREDITS WITH THE FOLLOWING OBSERVATIONS: DURING THE COURSE OF APPELLATE PROCEEDINGS APPELL ANT HAS FILED LOAN CONFIRMATIONS FROM THESE CASH CREDITORS ALONG WITH SUPPORTING EVIDENCES FOR SUBSTANTIATING THEIR IDENTIFY AND SOU RCE OF THEIR INCOME. THE PENALTY PROCEEDINGS ARE INDEPENDENT PRO CEEDINGS AND THEREFORE THE MATTER WAS REMANDED TO THE A.O TO VE RIFY THE THREE BASIC CONDITIONS (I) IDENTITY OF THE CASH CREDITOR (II) CREDITWORTHINESS OF THE CREDITORS AND (III) GENUINENESS OF THE CREDI TS. THE A.O HAS CONDUCTED ENQUIRY AND REPORTED THAT THESE CREDITORS ARE IN EXISTENCE AND THEY ARE HAVING CREDITWORTHINESS. THE APPELLANT HAS SURRENDERED THESE CASH CREDITS ONLY JUST TO BUY PEACE WITH THE DEPARTMENT BUT WITH A CONDITION THAT NO PENALTY PROCEEDINGS WOULD BE INITIATED. THE APPELLANT HAS NOT CONCEALED THE PARTICULARS IN RESP ECT OF THESE CASH CREDITS. THESE CASH CREDITS AMOUNTING TO RS.20 85 8 20/- HAVE BEEN REFLECTED IN THE ORIGINAL RETURN. DURING THE COURSE OF APPELLATE PROCEEDINGS APPELLANT HAS ESTABLISHED THREE BASIC REQUIREMENTS FOR CASH CREDITS. THE A.O HAS ALSO EXAMINED AND REPORTE D THAT THESE CASH CREDITORS ARE IN EXISTENCE AND THEY HAVE THE C APACITY TO ADVANCE LOANS TO THE APPELLANT. KEEPING IN VIEW THE SE FACTS CONCEALMENT PENALTY LEVIED U/S 27(1)(C) I RESPECT O F CASH CREDITS OF RS.20 85 820 HEREBY DELETED. 6. BEFORE US THE REVENUE IS OBJECTING TO THE ORD ER OF THE LD CIT(A) IN DELETING THE PENALTY RELATABLE TO THE CASH CREDITS. ACCORDI NG TO LD DR THE LD CIT(A) SHOULD NOT HAVE GIVEN RELIEF AS THE AO IN HIS REM AND REPORT HAS ACTUALLY EXPRESSED DISSATISFACTION ABOUT THE CREDIT WORTHINE SS. ON THE CONTRARY THE CASE 5 OF THE LD AR IS THAT THE INSPECTOR WHO CONDUCTED TH E ENQUIRY WAS FULLY SATISFIED WITH THE CREDIT WORTHINESS OF THESE CREDITORS AND T HE SAME WAS FINALLY ENDORSED BY THE AO. HENCE THE LD CIT(A) IS FULLY JUSTIFIED I N DELETING THE PENALTY RELATABLE TO THE CASH CREDITS. 6.1 ON A PERUSAL OF THE REMAND REPORT FURNISHED BY THE AO WE NOTICE THAT THE AO HAD DEPUTED HIS INSPECTOR INCOME TAX TO CONDUCT ENQUIRIES ON THE EIGHT CASH CREDITORS. THE INSPECTOR MET ALL THE EIGHT PERSONS AND CONDUCTED ENQUIRIES. ALL THE EIGHT CREDITORS CONFIRMED THAT THEY HAVE GIVEN THE LOAN TO THE ASSESSEE BY WAY OF DEMAND DRAFTS. ACCORDINGLY BOTH THE INSPECT OR AND AO EXPRESSED OPINION THAT THERE CANNOT BE ANY DOUBT ABOUT THE GE NUINENESS OF THE CREDIT. WITH REGARD TO THE AVAILABILITY OF AGRICULTURAL INC OME AND DIARY INCOME CLAIMED BY THESE CREDITORS TO THE TUNE OF RS.1.20 LACS TO RS.1 .30 LAKHS PER ANNUM THE AO EXPRESSED HIS RESERVATIONS ON THE CREDIT WORTHINESS . HOWEVER HE FINALLY STATED THAT THE INSPECTOR OF INCOME TAX HAS REPORTED THAT ALL THE PERSONS ARE HAVING CREDIT WORTHINESS BY CONSIDERING THEIR STYLE OF LIV ING. 6.2 THUS IT CAN BE SEEN THAT THE INSPECTOR WHO CONDUCTED THE FIELD ENQUIRIES WAS SATISFIED WITH THE IDENTITY AND CREDIT WORTHINE SS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. HOWEVER THE AO H AS EXPRESSED RESERVATIONS ON CREDIT WORTHINESS OF THE CREDITORS ONLY BY CONSI DERING THE DOCUMENTS AVAILABLE ON RECORD; HOWEVER FINALLY EXPRESSED THE VIEWS GIVE N BY THE INSPECTOR. 6.3 BE THAT AS IT MAY THE PRESENT APPEAL IS WI TH REGARD TO THE PENALTY PROCEEDINGS. THE CASH CREDITS ARE TREATED AS THE I NCOME OF THE ASSESSEE IN VIEW OF THE LEGAL FICTION CREATED UNDER SECTION 68 OF TH E ACT. IT WAS HELD BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES V CIT (2001) 249 ITR 125 (GUJ) THAT NO PENALTY CAN BE IMPOSED IF THE FAC TS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMO UNT DOES NOT REPRESENT 6 CONCEALED INCOME AS WITH THE HYPOTHESIS THAT IT DOE S. IT WAS FURTHER HELD THAT IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E. IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE R EASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEES CASE IS FALSE THE EX PLANATION 1 BELOW SECTION 271(1)(C) CANNOT HELP THE DEPARTMENT BECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS THE INCOME OF THE A SSESSEE. 6.4 IN THE INSTANT CASE THOUGH THE ASSESSEE AG REED TO OFFER THE CASH CREDITS AS HIS ADDITIONAL INCOME FOR THE REASONS BEST KNOW N TO HIM YET DURING THE COURSE OF PENALTY PROCEEDINGS HE HAS FILED NECESS ARY CONFIRMATION LETTERS AND OTHER DOCUMENTS. UPON MAKING FURTHER ENQUIRIES TH E INSPECTOR OF INCOME TAX WAS SATISFIED WITH ALL THE THREE INGREDIENTS. THOU GH THE AO WAS SATISFIED WITH THE IDENTITY AND GENUINENESS OF THE TRANSACTIONS HE HA S ONLY EXPRESSED HIS RESERVATIONS ON THE CREDIT WORTHINESS. AS OBSERVED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES SUPRA BOTH THE HYPOTHESIS WEIGHS EQUALLY. THE RESERVATIONS EXPRESSED BY THE AO MAY BE ACCEPTA BLE IN THE ASSESSMENT PROCEEDINGS BUT NOT IN PENALTY PROCEEDINGS. IN VIE W OF THE FOREGOING DISCUSSIONS WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LD CIT(A) IN DELETING THE PENALTY RELATABLE TO THE CASH CREDITS. 7. THE NEXT ISSUE RELATES TO THE PENALTY RELATA BLE TO THE UNDISCLOSED ADVANCES OF RS.15.00 LAKHS. IN A LOOSE PAPER FOUND AT THE PREMISES OF M/S SUBHA PRIYA CHIT FUND FOLLOWING DETAILS WERE FOUND TO BE MANUA LLY WRITTEN. 16.3.2005 V.POORNA CHANDRA RAO 10.00 LAKHS 20.3.2005 N.SOMESWARA RAO 2.00 LAKHS 22.3.2005 SAMBASIVA RAO 1.50 LAKHS 24.3.2005 NAGESWARA RAO 1.50 LAKHS ------------- 15.00 LAKHS ======= 7 THE ASSESSEE AGREED THAT THESE WERE HAND LOANS GIVE N BY HIM AND THEY WERE NOT RECORDED IN HIS BOOKS OF ACCOUNT. HE FURTHER AGREE D TO OFFER THE SAID AMOUNT OF RS.15.00 LAKHS AS HIS ADDITIONAL INCOME AS HE WAS N OT ABLE TO EXPLAIN THE SOURCES FOR THE SAID AMOUNT. ACCORDINGLY HE FILED HIS RETU RN OF INCOME ALSO. DURING THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE EXPLAIN ED THAT THE CASH CREDITS OF RS.18.96 LAKHS THAT WAS OFFERED AS ADDITIONAL INCOM E WAS USED FOR GIVING THE ABOVE CITED ADVANCES AND ACCORDINGLY CONTENDED THAT UNILATERAL ADMISSION BY THE ASSESSEE WITHOUT CORROBORATIVE EVIDENCE WILL NOT AT TRACT PENALTY. HOWEVER THE AO HAS STATED THAT THE ASSESSEE HAS BORROWED THE CA SH CREDITS TO PART FINANCE THE PURCHASE OF COMMERCIAL COMPLEX BY HIS WIFE AND HENCE THE ASSESSEE COULD NOT HAVE HAD THOSE FUNDS FOR THE PURPOSE OF MAKING THE IMPUGNED ADVANCES. 7.1 HOWEVER BEFORE LD CIT(A) THE ASSESSEE SUB STANTIATED HIS CLAIM OF AVAILABILITY OF CASH WITH THE FOLLOWING EXPLANAT ION. ON 2-6-04 A CHEQUES NO.970004 FOR RS.50 00 000 DR AWN ON SBI WAS ISSUED IN FAVOUR OF M. SUBRAMANYAM FOR MAKING P AYMENT FOR BUILDING ON BEHALF OF HIS WIFE. HOWEVER THIS ENTIR E AMOUNT OF RS.50 00 000 WAS RETURNED BY SRI M. SUBRAMANYAM ON 8-7-04 VIDE CHEQUES NO.008757 AND SAME WAS DEPOSITED IN THE ACC OUNT OF APPELLANT WITH IOB VIJAYAWADA. ON 8-7-2004 APPELL ANT WITHDREW RS.24 75 000 FROM THIS BANK AND A CASH OF RS.21 46 750 WAS RE- DEPOSITED IN HIS BANK ACCOUNT ON VARIOUS DATES. HOW EVER A CASH BALANCE OF RS.3 28 250 WAS STILL THERE WITH THE APP ELLANT AS ON 28- 12-04. APPELLANTS SON SRI N. RAKESH WHO IS ALSO A SSESSED TO TAX IN WARD-2(4) VIJAYAWADA AND STUDYING IN USA HAD CASH IN HAND OF RS.12 67 002 WHICH WAS WITH THE APPELLANT FOR MANAG EMENT. A CASH OF RS.46 695/- BELONGING TO SUBHA PRIYA CHIT F UND PVT. LTD. WAS ALSO WITH THE APPELLANT. THUS THE APPELLANT WA S HAVING CASH BALANCE OF RS.16 41 947 (RS.3 28 250 + 12 67 002 + RS.46 695) AND THE SAID CASH HAND LOANS WERE GIVEN OUT OF ABO VE CASH IN HAND AND THESE CASH HAND LOANS WERE RECEIVED BACK I N THE MONTH OF APRIL 2005. THE LD CIT(A) DID NOT ACCEPT THESE EXPLANATIONS FOR THE REASON THAT THE ASSESSEE HAS FAILED TO MAKE NECESSARY ENTRIES IN HI S BOOKS OF ACCOUNT AS WELL AS 8 IN THE BOOKS OF HIS SON SRI N. RAKESH. ACCORDINGLY HE SUSTAINED THE PENALTY RELATABLE TO RS.15.00 LAKHS. AGGRIEVED THE ASSESS EE IS IN APPEAL BEFORE US. 8. THE FIRST OBJECTION OF THE ASSESSEE IS THAT TH E AO IS NOT ENTITLED TO LEVY PENALTY IN THE ABSENCE OF RECORDING ANY SATISFACTI ON ABOUT THE CONCEALMENT OF INCOME IN THE ASSESSMENT ORDER. ACCORDING TO LD AR THE AMENDMENT MADE IN SUB SECTION (1B) OF SECTION 271 BY THE FINANCE ACT 2008 WITH RETROSPECTIVE EFFECT IS NOT APPLICABLE. ACCORDING TO LD AR THE SAID AME NDMENT WILL APPLY ONLY WITH RESPECT TO THE AMOUNT ADDED OR DISALLOWED IN COMPUT ING THE TOTAL INCOME OR LOSS OF AN ASSESSEE. IN THE INSTANT CASE THE AO HAS AC CEPTED THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE WITHOUT MAKING ANY ADD ITION OR DISALLOWANCE. 8.1 HOWEVER WE ARE UNABLE TO AGREE WITH THE CONT ENTIONS OF THE LD AR. THE REVISED RETURN HAS BEEN FILED AFTER SURRENDERING TH E ADDITIONAL INCOME IN THE SWORN STATEMENT TAKEN FROM HIM AND HENCE IN OUR OPI NION THE SAID PROVISIONS OF SECTION 271(1B) SHALL APPLY TO THE ASSESSEE. THE A O HAS ALREADY RECORDED IN THE ASSESSMENT ORDER THAT HE IS INITIATING PENALTY PROC EEDINGS SEPARATELY. 9. IT IS A FACT THAT THE SURVEY WAS NOT CONDUCT ED IN THE HANDS OF THE ASSESSEE. THE SURVEY WAS CONDUCTED ON 7.10.2005 ONLY IN THE H ANDS OF THE ASSESSEES WIFE AND ALSO IN A CONCERN IN WHICH THE ASSESSEE IS THE MANAGING DIRECTOR. SUBSEQUENT TO THE SURVEY OPERATION A SWORN STATEME NT WAS RECORDED FROM THE ASSESSEE ON 26.10.2005. IN THE SWORN STATEMENT TH E ASSESSEE AGREED TO OFFER THE IMPUGNED AMOUNT OF RS.15.00 LAKHS AS HIS ADDITI ONAL INCOME AS HE WAS UNABLE TO EXPLAIN THE SOURCES SINCE THEY WERE NOT R ECORDED IN THE BOOKS OF ACCOUNT. IN THE SWORN STATEMENT THE ASSESSEE ALSO REQUESTED THE DEPARTMENT NOT TO INITIATE ANY PENALTY PROCEEDING. THE LD CIT (A) HAS PLACED RELIANCE ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CAS E OF BILAND RAM HARGAND DASS (171 ITR 390) WHERE IN IT WAS HELD THAT SURRENDER OF INCOME MADE IN THE REVISED 9 RETURN WAS NOT VOLUNTARY BUT AS A RESULT OF DETECTI ON BY THE AO. BUT THE CRUCIAL POINT TO BE NOTED HERE IS THAT THE ASSESSEE HAD EXP LANATION FOR THE SAID AMOUNT OF RS.15.00 LAKHS BUT SINCE HE COULD NOT IMMEDIATE LY GATHER THE EXPLANATIONS AT THE TIME OF SWORN STATEMENT HE AGREED TO SURRENDER THE SAME AS HIS ADDITIONAL INCOME. THE ASSESSEE HAS ALSO FURNISHED THE DETAIL S OF BANK WITHDRAWALS MADE NET CASH AVAILABLE WITH HIM THE CASH AVAILABLE WIT H HIS SON AND IN HIS COMPANY TO FURTHER SUPPORT HIS EXPLANATIONS. 10. THE ASSESSEE HAS RELIED UPON THE DECISION O F HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. M.PANCHAMUTHU REPORTED IN (2007 ) 295 ITR 502. FOR THE SAKE OF REFERENCE WE EXTRACT BELOW THE HEAD NOTES THERE OF.:- PENALTY U/S 271(1)(C) CONCEALMENT ADDITION ON MERE ADMISSION OF ASSESSEE DURING SURVEY NO CONCEALMENT HAVING BEEN DISCOVERED DURING THE COURSE OF SURVEY NO PENALTY U/S 271(1)(C) COULD BE IMPOSED ON THE BASIS OF ADDITION AGREED BY ASSESSEE. 11. IN THE INSTANT CASE THE ASSESSEE HAS AGREED TO THE ADDITION IN THE SWORN STATEMENT TAKEN FROM HIM SUBSEQUENT TO THE SURVEY I N THE HANDS OF HIS RELATIVE. THE ASSESSEE HAS ALSO RELIED UPON FOLLOWING DECISIO NS TO SUBMIT THAT THE SURRENDER OF INCOME TO BUY PEACE WOULD NOT ATTRACT PENALTY. A) CIT VS. SURESH CHANDRA MITTAL (2001) 251 ITR 9 (SC) B) CIT V RAJIV GARG & ORS. (2009) 313 ITR 256. C) AMIR CHAND V ITO (1994) 48 TTJ (DEL) 308. D) ADDL CIT V PREM CHAND GARG (2009) 31 SOT 97 (DEL) ( TM) IN THE INSTANT CASE THE ITEMS NOTICED BY THE NOTIC ED ARE MANUAL NOTING IN A PIECE OF PAPER WHICH THE ASSESSEE HAS AGREED TO OFFER AS HIS ADDITIONAL INCOME. IN THE SWORN STATEMENT THE ASSESSEE HAS ALSO REQUESTED FO R NOT LEVYING THE PENALTY. DURING THE PENALTY PROCEEDING AS WELL AS BEFORE THE LD CIT(A) THE ASSESSEE HAS EXPLAINED THE SOURCES FOR THE SAID AMOUNT OF RS.15. 00 LAKHS. THE REJECTION OF THE SAID EXPLANATIONS MAY LEAD TO THE ADDITION TO THE T OTAL INCOME. HOWEVER AS 10 STATED EARLIER IN THE PENALTY PROCEEDINGS THE MAT TER HAS TO BE LOOKED AFRESH. HENCE ON A CONSPECTUS OF THE MATTER WE ARE OF THE VIEW THAT THE VOLUNTARY SURRENDER OF RS.15.00 LAKHS WHICH WAS NOT ESTABLISH ED TO BE THE CONCEALED INCOME OF THE ASSESSEE WOULD NOT JUSTIFY LEVY OF P ENALTY. ACCORDINGLY THE ORDER OF LD CIT(A) IS REVERSED AND THE AO IS DIRECTED TO DELETE THE PENALTY RELATABLE TO RS.15.00 LAKHS. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 29 TH APRIL 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE : 29-4-2010. A COPY OF THIS ORDER IS FORWARDED TO : 01 SHRI NADENDLA RAVINDRA KUMAR 40-9-101 SAINAGAR NEAR BENZ CIRCLE VIJAYAWADA KRISHNA DISTRICT 02 THE ITO WARD-2(4) VIJAYAWADA 03 THE ITO WARD-2(2) VIJAYAWADA 04 THE CIT (A) VIJAYAWADA 05 THE CIT VIJAYAWADA 06 THE DR ITAT VISAKHAPAATNAM 07 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT VISAKHAPATNAM BENCH