Income Tax Appellate Tribunal - Chandigarh
Assistant Commissioner Of Income-Tax vs Guru Ram Dass Fruit & Vegetable Agency on 27 April, 1998
Equivalent citations: [1998]67ITD1(CHD)
ORDER
Bali
1. This is an appeal by the Revenue against the order dated 12-3-1991 passed by the ld. CIT(A) wherein he has deleted the penalty of Rs. 1,60,000 levied by the Assessing Officer under section 271(1)(c).
2. Briefly the facts are that the assessee-firm filed return of income under section 139(1) on 1-8-1988 for assessment year 1988-89 declaring income of Rs. 79,207 which was accepted under section 143(1) by passing an order dated 22-11-1988. Thereafter, in the course of verification of certain drafts, the ADI found that 5 drafts of Rs. 50,000 each totalling Rs. 2,50,000 were not entered by the assessee in the cash book on the dates when those drafts were purchased by the assessee-firm. The ADI took up for verification drafts purchased by various assessees from the State Bank of Patiala, Grain Market, Chandigarh and the assessee's case was one of severals whose verification was undertaken by the ADI, Chandigarh. On enquiry it appears that one of the partners of the firm admitted that these drafts were purchased by the firm and due to a mistake of the Accountant, these were not entered in the books on the dates when these were purchased but were entered in the books of account on subsequent dates. On receiving this information from the Investigating Unit, Chandigarh, the Assessing Officer issued a notice under section 148 of the Act to the assessee on 3-5-1989. However, much prior to the issue of notice by the Assessing Officer, the assessee filed a revised return on 9-3-1989 accompanied by a letter wherein the assessee surrendered a sum of Rs. 2,50,000 representing the total of the five drafts. The covering letter reads as under :
"It is submitted that during the course of verification of certain entries in the books of accounts pertaining to the assessment year 1988-89 certain discrepancies have been detected by us. In order to buy peace the return of income is re-submitted wherein discrepancies have been sorted out and income has been declared in the return. It is submitted that the return of income of firm and partners may kindly be accepted and no interest or penalty or any other action may kindly be taken against us as this is a voluntary declaration/disclosure in order to buy peace."
Subsequently on receipt of notice under section 148, the assessee filed reply stating that the revised return filed on 9-3-1989 should be treated as a return filed in compliance to notice under section 148. Thereafter the reassessment was framed under section 143(3) on the returned income of Rs. 3,29,270 (Rs. 79,270 originally assessed plus Rs. 2,50,000). While framing the re-assessment, the Assessing Officer issued notice under section 271(1)(c) in respect of unexplained investment by the assessee in the purchase of drafts totalling Rs. 2,50,000. Thereafter the Assessing Officer levied the penalty of Rs. 1,60,000 in relation to the concealed income of Rs. 2,50,000 after giving due opportunity to the assessee.
3. The assessee appealed and the ld. CIT(A) for the reasons given in the impugned order cancelled the penalty by observing as under :
"4. I have carefully considered all the facts and circumstances of the case. To my mind a very important and distinguishing fact of this case has not been considered in its proper perspective and given due weight. When the case was taken for examination by the ADI, the partner of the firm duly admitted that the impugned drafts were not entered in the books on the due dates in which these were purchased. But when he was called for examination on the second occasion, he informed that all the five drafts had been recorded in the books on dates subsequent to the dates on which these have been purchased and he co-related these Five drafts as entered in the books. He also admitted that this was done due to a mistake of the Accountant and stated that the firm had already revised its return on 9-3-1989 declaring an additional income of Rs. 2,50,000 on account of the impugned five drafts and additional tax amounting to Rs. 1,29,175 due on the surrendered amount has already been paid. The ADI went on with the enquiries and on 4-4-1989 submitted a report to the DDI holding that the appellant firm had concealed income to the tune of Rs. 2,50,000. It is, therefore, clear that before the Investigation Unit had given conclusion regarding concealment in this case, the appellant had voluntarily surrendered the entire amount for assessment and not only this it also paid the tax due on this surrendered amount. This fact alone will go a long way in substantiating the appellant's claim that the revised return was filed voluntarily. It is also evident that the voluntary return along with voluntary payment of additional tax was made wholly because the appellant wanted to buy peace and expected a lenient treatment from the department in view of the voluntary nature of its admission of mistake in accounts and prompt payment of additional tax. It is pertinent to note that notice under section 148 was issued long after the appellant had filed his revised return surrendering the amount of Rs. 2,50,000. Another important factor is that even while finalising reassessment on the second return, the Assessing Officer had accepted the account books in toto after thorough scrutiny. The purchases and sale have been accepted as shown without any interference. The gross profit shown and the expenses claimed have been accepted as declared. No other defects were found anywhere. Only five drafts were not accounted for on the dates of purchase but had only been entered subsequently. The appellant had surrendered for addition the total amount of all five drafts and had not taken the benefit by working out the peak for purpose of addition. This fact itself shows the appellant's intention of turning a new leaf and he voluntarily paid more than what could have been attributable to him. The initiation of penalty proceedings in this case, therefore, cannot be said to be in consonance with the spirit of surrender.
4.1 It can further be said that the Assessing Officer has levied the penalty merely on the basis of voluntary offer made by the appellant. No independent finding has been brought on record either at the time of completion of assessment or during the course of penalty proceedings to establish concealment of particulars of income or filing of inaccurate particulars of income. Admission of an addition to total income in itself would not be sufficient to justify the levy of penalty under section 271(1)(c) of the Income-tax Act. Considering all the facts and circumstances of the case and also detailed submissions made by the learned Counsel for the appellant, I am of the view that this was not a fit case for the levy of penalty under section 271(1)(c) of the Income-tax Act. Therefore, the penalty levied by the Assessing Officer is directed to be deleted and the appellant gets relief of Rs. 1,60,000."
4. The ld. D.R. submitted that the ld. CIT(A) was not justified in cancelling the penalty because the assessee had surrendered the amount of Rs. 2,50,000 as income only after detection of five drafts which were sent by the assessee firm to outside parties and as such there was a deliberate concealment on the part of the assessee in the return filed under section 139(1) on 1-8-1988. During the course of hearing, the Bench specifically asked the ld. D.R. to furnish a copy of the report submitted by the ADI to the Assessing Officer on the basis of which the notice under section 148 was issued and also a copy of the statement of the partner of the firm recorded by the ADI wherein the partner is stated to have admitted that the drafts totalling to Rs. 2,50,000 were purchased out of the concealed income of the assessee firm. However, despite four opportunities allowed and a time of more than 3 months, the Revenue has not been able to file either the copy of the statement of the partner or the copy of the report of the ADI on the basis of which the proceedings were claimed to have been initiated against the assessee under section 148. The ld. D.R., however, submitted that the factual background discussed by the Assessing Officer in the penalty order clearly showed that the so-called surrender was not voluntary and was made only after detection by the departmental authorities and as such the ld. CIT(A) was not justified in cancelling the penalty.
5. The ld. Counsel for the assessee strongly relied on the order of the ld. CIT(A) and further submitted that notice under section 148 reopening the assessment was issued by the Assessing Officer on 3-5-1989 whereas the revised return surrendering the amount of Rs. 2,50,000 was filed by the assessee much earlier, i.e., on 9-3-1989 and the assessee had deposited the tax due on the basis of the return in the case of the firm as well as the partners. It was submitted that the impugned drafts were all entered in the books of account though not on the dates when these were actually purchased and the mistake occurred because of old age of the Accountant who was not writing the books on daily basis. It was submitted that the surrender of Rs. 2,50,000 was made to avoid litigation and to buy peace of mind and on the oral assurance of the departmental authorities that no penalty would be levied. It was submitted that the bona fide of the assessee was clear as the surrender was made prior to the issue of notice under section 148 and that too of a sum of Rs. 2,50,000 whereas the assessee could have very well taken the benefit of working out the peak of the drafts for the purpose of surrendering the same as income. He accordingly submitted that the ld. CIT(A) was perfectly justified in deleting the impugned penalty.
6. We have considered the rival submissions. The facts are not in dispute. However, the departmental authorities have not been able to file a copy of the statement of the partner of the assessee firm recorded by the ADI or the report of the ADI which was sent to the Assessing Officer on the basis of which notice under section 148 was issued. Be that as it may, the fact remains that the return surrendering the amount of Rs. 2,50,000 was filed by the assessee on 9-3-1989 whereas the notice under section 148 was issued much later, i.e., on 3-5-1989. It is also undisputed that the drafts were entered in the books of account although not on the dates when these were actually purchased by the assessee firm from the bank and according to the assessee, it was a case of error committed by the Accountant who was not regularly writing the books of account. However, the fact remains that the assessee has accepted the amount of Rs. 2,50,000 as its income and has filed the return even without taking the benefit of working out the peak. However, this action of the assessee would not be sufficient to hold the assessee guilty of concealment of income as held by the Hon'ble Supreme Court in the case of Sir Shadilal Sugar & General Mills Ltd. v. CIT [1987] 168 ITR 705/33 Taxman 460A wherein it held at page 706 that from the assessee agreeing to additions to his income, it does not follow that the amount agreed to be added was concealed income. There may be a hundred and one reasons for such admission, i.e., when the assessee realises true position, it does not dispute certain disallowances but that does not absolve the Revenue from proving the mens rea of quasi-criminal offence. Keeping in view the totality of the facts and circumstances of the case, we are of the opinion that if the assessee has, in its endeavour to buy peace, offered for taxation a sum of Rs. 2,50,000 representing the total of five drafts as suggested by the ADI, even prior to the issue of notice under section 148, it has suffered taxation for the negligency of the act of omission/commission of its Accountant and the firm should not be further penalised by holding it to be guilty of conscious and deliberate concealment particularly when the revised return offering the amount of Rs. 2,50,000 was filed prior to the issue of notice under section 148. In this view of the matter, we uphold the order of the ld. CIT(A) in this regard and dismises the appeal filed by the Revenue.
Bedi
1. Despite great persuasion to myself, I have not been able to concur with the conclusions and findings given by my learned brother, the Accountant Member, in the proposed order and for such dissent, I base my reasons and conclusions as hereinafter given after having considered the facts, arguments of both the parties and case law cited by both the parties and as recorded in the proposed order, which I have avoided to reproduce for it would be just futile exercise to do so.
2. The point at issued boils down as to whether, revised return filed prior to receipt of any notice for escapement/reassessment, by including exact amount of drafts purchased by the assessee which were detected by the Department during the course of investigation and not incorporated in the books of accounts of the assessee on the relevant dates, could be taken as voluntary act on the part of the assessee and absolve him of the omission committed in the first return and obliterate him from the offence as committed. After due consideration of all the facts and circumstances of the case and going through the case law as cited by both the parties, I am of the considered opinion that offence of having committed concealment stands established which is found to be conscious and deliberate act on the part of the assessee. Had the ADI not investigated the matter, there would have been no voluntary attempt on the part of the assessee to come forward to include the income so added and thus this colourful device would have defrauded the Revenue of its legitimate taxes. Therefore, in view of these facts and circumstances, benefit as claimed by the assessee taking it as agreed addition to buy peace cannot be held to be valid, legitimate and proper because in this case, the assessee has not come forward voluntarily to agree for the addition but only when detected by the ADI that he included the amounts of drafts which were not accounted for in the books of account on the relevant dates, so the assessee added the amounts of these drafts and filed revised return. The penalty order is held to be valid and CIT(A)'s order deleting the penalty is quashed. The order of the Assessing Officer is restored. The appeal of the Revenue is allowed.
ORDER U/S 255(4) OF THE INCOME-TAX ACT, 1961 On a difference of opinion between the Members who heard this appeal, the following point of difference is referred to the Hon'ble President for the opinion of the Third Member :
"Whether, on the facts and in the circumstances of the case, the view of the Accountant Member that penalty of Rs. 1,60,000 levied by the Assessing Officer was rightly deleted by the CIT(A) particularly in view of the fact that the assessee had filed a revised return before the issue of notice under section 148 is correct or the view of the Judicial Member that the order of the CIT(A) deleting the penalty was required to be reversed as the assessee has not come forward voluntarily to agree for the addition but only when allegedly detected by the ADI that it included the amounts of drafts, which were not properly accounted for in the books and filed revised return, is justified ?"
THIRD MEMBER ORDER On a difference of opinion between the Members constituting the Division Bench, the following point of difference was referred to me as a Third Member by the Hon'ble President acting under section 255(4) of the Income-tax Act, 1961 :-
"Whether, on the facts and in the circumstances of the case, the view of the Accountant Member that penalty of Rs. 1,60,000 levied by the Assessing Officer was rightly deleted by the CIT(A) particularly in view of the fact that the assessee had filed a revised return before the issue of notice under section 148 is correct or the view of the Judicial Member that the order of the CIT(A) deleting the penalty was required to be reversed as the assessee has not come forward voluntarily to agree for the addition but only when allegedly detected by the ADI that it included the amounts of drafts, which were not properly accounted for in the books and filed revised return is justified ?"
2. The facts are not in dispute in the separate orders passed by the ld. Members and to recapitulate the assessee firm filed return of income on 1-8-1988 declaring income of Rs. 79,207 which was accepted under section 143(1) by passing an order dated 22-11-1988. Thereafter, in the course of some verification, the ADI found that five drafts of Rs. 50,000 each totalling Rs. 2,50,000 were not entered by the assessee in the cash book on the dates on which the drafts were purchased. On further enquiry, it transpired that one of the partners of the assessee firm admitted that these were purchased by the firm but not entered in the books of account on the relevant dates due to the mistake of the accountant. It was submitted that these were entered in the books of account on certain subsequent dates. On receiving the aforesaid information from the investigating unit, the Assessing Officer issued notice under section 148 of the Act to the assessee on 3rd May, 1989 but it is a matter of record that prior to the issue of said notice the assessee had already filed a "revised return" on 9-3-1989 accompanied by a letter wherein the assessee surrendered a sum of Rs. 2,50,000 representing the total of the five drafts. This letter has been reproduced by the ld. Accountant Member in his order at page 2 and this states that the amount has been offered in order to buy peace with a further clarification that it was a voluntary declaration/disclosure which may be accepted and no interest or penalty be charged or any other action taken. On receipt of the notice under section 148, the assessee filed a reply that the revised return filed on 9-3-1989 be treated as a return filed in compliance to notice under section 148. Thereafter, reassessment was framed under section 143(3) on the returned income of Rs. 3,29,270 which included the originally assessed figure of Rs. 79,270 plus Rs. 2,50,000. During the course of reassessment, the Assessing Officer issued a notice under section 271(1)(c) in respect of the amount of Rs. 2,50,000 and by means of a subsequent order levied penalty in a sum of Rs. 1,60,000.
3. Being aggrieved, the assessee filed an appeal to the CIT(A) who vide detailed reasons stated in the appellate order proceeded to cancel the penalty on the following main grounds :
(1) On the case being taken for examination by the ADI, the partner of the firm admitted that the impugned drafts were not entered in the books on the due dates on which these were purchased but when called for examination on the second occasion he stated that all the drafts had been recorded in the books on dates subsequent to the dates on which these had been purchased and he in fact correlated these five drafts as entered in the books. It was admitted that this was due to a mistake on the part of the Accountant.
(2) That the return had already been revised declaring an additional income of Rs. 2,50,000 on account of the impugned drafts and additional tax amounting to Rs. 1,29,175 due on the amount surrendered had been duly paid.
(3) The ADI submitted a report to the D.D.I. on 4-4-1989 holding that the firm had concealed income to the tune of Rs. 2,50,000 and it was quite clear that before the investigation unit had reached a conclusion regarding concealment, the assessee had voluntarily surrendered the entire amount for assessment and paid the tax due on the amount surrendered.
(4) That the return had been revised and payment of tax made voluntarily only with a view to buy peace and expecting a lenient treatment from the department.
(5) Notice under section 148 was issued long after the assessee had filed the revised return and even while finalising the reassessment on the basis of the second return the Assessing Officer had accepted the account books in toto after thorough scrutiny.
(6) On reassessment, the purchases and sales had been duly accepted as shown and so was the position regarding the GP and expenses claimed.
(7) No other defects were pointed out or found with the exception of five drafts in question which had admittedly been entered in the books of accounts on dates subsequent to the actual ones.
(8) The assessee had surrendered the total amount of the five drafts without taking the benefit of the peak amount.
On the basis of the aforesaid, the CIT(A) concluded that penalty under section 271(1)(c) was not exigible, more so when the Assessing Officer had not recorded any independent finding either at the assessment stage or during the course of penalty proceedings to establish concealment of particulars of income or filing of inaccurate particulars thereof. According to the CIT(A), admission of an addition to the total income by itself was not sufficient to justify the levy of penalty.
4. The case of the revenue before the Division Bench was that the CIT(A) was not justified in cancelling the penalty since the assessee had surrendered the amount of Rs. 2,50,000 only after it had been detected by the department that five drafts sent to outside parties had not been accounted for in the books of account. It was argued that there was a deliberate concealment in the return filed under section 139(1) on 1-8-1988. The other argument of the ld. D.R. was to the effect that the surrender was not voluntary and had been made only after detection by the department. As against the aforesaid submission of the ld. D.R., the assessee's counsel strongly supported the order of the CIT(A) and submitted that whereas notice under section 148 was issued on 3rd May, 1989, the assessee had already filed a revised return surrendering an amount of Rs. 2,50,000 on 9-3-1989 and had also deposited the tax due on the basis of the additional amount so surrendered in the case of the firm as also the partners. It was submitted that the impugned drafts were duly entered in the books of account though not on the dates when these were actually purchased and such a mistake had occurred because of the Accountant who was aged and not in a position to write the books on daily basis. It was canvassed that the surrender of Rs. 2,50,000 was made to avoid litigation and to buy peace of mind and on the oral assurance of the department that no penalty would be levied. The bona fides of the assessee were adverted to contending that these were clear and which was further proved by the fact that the assessee had not worked out the peak of the drafts for purposes of surrendering the same as income.
5. The ld. Accountant Member who wrote the initial order accepted the view point canvassed on behalf of the assessee taking note of the fact that the department had not furnished a copy of the statement of the partner of the assessee firm recorded by the ADI or for that matter the report of the ADI which was sent to the Assessing Officer on the basis of which notice under section 148 had been issued. The ld. Accountant Member also noted that whereas the notice under section 148 had been issued on 3rd May, 1989, the assessee filed revised return surrendering the amount of Rs. 2,50,000 earlier, i.e., on 9-3-1989. He also noted as a fact that the drafts in question were duly entered in the assessee's books of account on dates subsequent to those on which these had actually been purchased and the mistake was attributable to the assessee's Accountant. It was also noted that the assessee had accepted the entire sum of Rs. 2,50,000 as its income and had not taken any benefit of working out the peak only. According to the ld. Accountant Member, the aforesaid facts could not lead to the conclusion that the assessee was guilty of concealing income and the case was squarely covered by the decision of the Hon'ble Supreme Court in the case of Sir Shadilal Sugar & General Mills Ltd. (supra), which lay down a proposition that whenever an assessee agreed to an addition to his income, it did not necessarily follow that the amount so agreed to be added was his concealed income. In the final analysis, the ld. Accountant Member confirmed the view taken by the CIT(A) to cancel the penalty with the further observation that the negligence of the Accountant had resulted in burdening the assessee with the income-tax pertaining to the amount surrendered and there was no further necessity to once again levy penalty under section 271(1)(c).
6. The ld. Judicial Member, however, disagreed with the view arrived at by the ld. Accountant Member although he agreed with the facts recorded by the ld. Accountant Member as also the arguments advanced by both the parties during the course of hearing. A reading of para 2 of the dissenting order shows that the main fact which weighed with the ld. Judicial Member was that had not the ADI investigated the matter, there would have been no voluntary attempt on the part of the assessee to come forward to agree to the amount of Rs. 2,50,000 to be so added and in that view of the matter, act of filing a revised return could not be treated as a voluntary one. In the final analysis, he confirmed the levy of penalty and reversed the order of the CIT(A).
7. I have heard both the parties at length - the ld. D.R. supporting the view taken by the ld. Judicial Member and the ld. counsel for the respondent doing the same with respect to the order of the ld. Accountant Member. The ld. D.R. reiterated that the revised return was not a voluntary one and the same had been filed only after the department had come into possession of information that the assessee had purchased certain drafts which had not been accounted for in its books of account. It was, therefore, urged that the view taken by the ld. Judicial Member be confirmed. The ld. counsel for the respondent, on the other hand, placed reliance on the following decisions contending in the process that the view taken by the ld. Accountant Member was the correct view :-
(i) Sir Shadilal Sugar & General Mills Ltd.'s case (supra).
(ii) CIT v. Raja Corpn. [1994] 205 ITR 533 (Mad.).
(iii) CIT v. J. V. Appadurai Chettiar Co. [1996] 221 ITR 849 (Mad.).
(iv) Sohinder Singh & Bros. v. CIT [1980] 121 ITR 834 (Punj. and Har.).
(v) CIT v. Adamkhan [1997] 141 Taxation 112 (Mad.).
(vi) CIT v. C. J. Rathnaswamy [1997] 141 Taxation 118 (Mad.).
8. After considering rival submissions, I am of the opinion that the view expressed by the ld. Accountant Member is the correct one on the facts and circumstances of the case and in accordance with the provisions of law and the case law on the subject cited during the course of hearing before the Division Bench and now before me in the course of the present reference. The following facts and reasoning emerge from the order of the ld. Accountant Member and as noted by me :
(1) The Members constituting the Division Bench are agreed on the fact that the drafts although not accounted for on the dates of actual purchase were accounted for subsequently in the books of account.
(2) The Accountant of the assessee was an old person who did not write books of account on day-to-day basis and the non-accounting of the drafts on the correct dates was squarely attributable to him.
(3) The assessee had filed the revised return prior to the date of issue of notice under section 148 and in the said revised return the sum of Rs. 2,50,000 had been offered for taxation.
(4) The assessee had offered the entire amount for taxation without working out the peak and getting some consequential benefit.
(5) The proceedings under section 148 had been initiated pursuant to the statement of one of the partners of the firm recorded by the ADI but in spite of specific opportunities given by the Tribunal to the department, the ld. D.R. did not file the copy of the said statement. Further, the Tribunal also asked the ld. D.R. to file a copy of the report of the ADI who is supposed to have conducted relevant enquiries pertaining to the purchase of drafts but as in the case of the statement of the partner this was also not furnished.
9. In my opinion, the decision of the Hon'ble Supreme Court in the case of Sir Shadilal Sugar & General Mills Ltd. (supra) is squarely applicable. Their Lordships held in that case that there may be numerous reasons which may weigh with an assessee to agree to an addition or surrender an amount for taxation purposes but it necessarily does not follow that the amount agreed upon was the assessee's concealed income. The ld. Accountant Member has rightly taken the view that the revenue is not absolved from proving the mens rea of a quasi-criminal offence and in the present case, endeavour of the assessee was to purchase peace and it offered for taxation the sum of Rs. 2,50,000 representing the total of five drafts. The ld. Accountant Member has also rightly opined that it was enough for the assessee to suffer taxation on the impugned amount on account of the negligence of its Accountant and there was no basis to penalise it further by levying penalty under section 271(1)(c). The ld. Judicial Member has clearly overlooked the aforesaid facts which were so clearly noted by the ld. Accountant Member and has proceeded to confirm the penalty merely on the basis of general observations and without reference to the decisions cited.
10. The other decisions relied upon by the ld. counsel during the course of hearing of the present reference are also apt on the point and these do advance the view point canvassed by him in support of the order of the ld. Accountant Member. In the case of J. V. Appadurai Chettiar Co. (supra), the brief facts were to the effect that the assessee filed a return declaring income of Rs. 64,234 and during the course of assessment proceedings, the ITO found that there was a cash credit of Rs. 10,000 in the name of a person. A confirmatory letter from the said person was filed but on subsequent enquiries the said person denied having advanced any loan. Thereafter the assessee filed a revised return offering the cash credit of Rs. 10,000 as income for assessment purposes. The ITO levied penalty under section 271(1)(c) but the same was cancelled by the Tribunal. On a reference, their Lordships of the Hon'ble Madras High Court took the view that there was no material on record to establish that the assessee while filing the original return had deliberately filed a false return containing inaccurate particulars of its income and further the assessee did not agree at any stage that the cash credit belonged to it. Similarly, in the decision of Hon'ble Punjab and Haryana High Court in the case of Sohinder Singh & Bros. (supra), their Lordships took the view that penalty provisions are quasi-criminal in nature and these were required to be strictly construed and an assessee was required to be penalised only when there was a clear finding by a competent authority after enquiry that a definite amount had been concealed in the return of income. Their Lordships further observed that where an assessee in order to avoid litigation himself agreed to an addition of a certain amount for assessment purposes at the instance of the competent authority, resort could not be taken to penalty proceedings. In the aforesaid case, the assessee had been asked to explain an overdraft against security of stock when no such stock was reflected in the books of account. The explanation offered by the assessee did not find favour with the ITO but subsequently the assessee in order to avoid litigation agreed to an addition of Rs. 23,054 to his total income. The ITO made a note on the front page of the return filed by the assessee with regard to the aforesaid amount and got it signed from the assessee. The ITO also initiated penalty proceedings and the same was subsequently imposed by the IAC and confirmed by the Tribunal. On a reference, their Lordships took the view that penalty under section 271(1)(c) could not be levied on the basis of the impugned addition since there was no material on record to show that such amount was the income of the assessee and admittedly there was no independent finding by the Income-tax Department to the said effect.
11. In the light of the discussion in the preceding paragraphs, I in the final analysis confirm the view taken by the ld. Accountant Member. The matter would now be listed before the Division Bench for passing an order in conformity with the majority opinion.