RAMKRIT SINGH,OBRA vs. INCOME TAX OFFICER, WARD - 3(3), SONEBHDRA

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH (SMC), VARANASI BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.200/VNS/2024 Assessment Year: 2010-11 Ram Krit Singh v. Income Tax Officer 14-96, Sector 8 Range III(3) Ward No.01, Geeta Mandir, Obra Sonebhadra Sonebhadra (U.P) TAN/PAN:AZPPS4178M (Applicant) (Respondent) Applicant by: Shri O. P. Shukla, Advcoate Respondent by: Shri Deepak Yadav, D.R. O R D E R This appeal has been preferred by the Assessee against the order dated 30.09.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2010-11.

2.0 The brief facts of the case are that the assessee was a Civil Contractor. The assessee filed his return of income for the year under consideration on 25.09.2010 declaring a total income of Rs.3,95,260/-. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called 'the Act’) after issuing notice under section 148 of the Act. In response to notice under section 148 of the Act, the assessee submitted that the return originally filed under section 139(1) of the Act on 25.09.2010 may be treated as return filed in response to notice under section 148 of the Act. The assessment was completed under section 147/143(3) of the Act, vide order dated

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29.12.2017 assessing the total income of the assessee at Rs.20,70,060/- as against the returned income of Rs.3,95,260/- after making an addition of Rs.13,16,300/- (including surrendered amount of Rs.5,85,750/-) being unexplained cash deposit under section 69 of the Act. Aggrieved by the order of the AO, the Assessee preferred an appeal before the Ld. First Appellate Authority, who deleted the addition of Rs.7,30,550/- and confirmed the addition of Rs.5,85,750/-.

2.1 Subsequently, the AO initiated penalty proceedings under section 271(1)(c) of the Act and held that the assessee has concealed the particulars of cash deposit of Rs.5,85,750/- in assessee’s Saving Bank Account and Rs.4,897/- being interest on Bank Deposits, totaling to Rs.5,90,647/-. The AO calculated the amount of penalty at Rs.1,71,721/- under section 271(1)(c) of the Act as under:

A Amount of tax on the total income assessed at Rs. 2,05,765/- 9,85,907/-143(3)/251 of the I.T. Act, 1961.

B Amount of tax that would have been chargeable 34,044/- had the total income assessed as per general provisions been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished: Rs.3,95,260/- (Rs.9,85,907/- Rs. 5,90,647/-) Tax sought to be evaded is A-B 1,71,721/-

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2.2 The AO, accordingly, imposed a penalty of Rs.1,71,721/- being minimum penalty @ 100%.

2.3 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee and confirmed the order of the AO imposing penalty of Rs.1,71,721/- under section 271(1)(c) of the Act.

2.4 Now the assessee has approached this Tribunal challenging the order of the NFAC, by raising the following grounds of appeal:

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amount surrender in the return income no any penalty would be liable. The appellant has surrender the amount during the course of Assessment proceeding which has already taken in the turnover and bank account. 4. Because the appellant craves for a right to raise any additional ground during the course of hearing of the case. 5. Because the order passed by the Ld. Commissioner of Income tax (A) NFAC is erroneous, bad in law and on facts and is liable to be deleted. 3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the penalty proceedings are quasi-criminal and distinct from assessment proceedings. It was further submitted that an addition made or an amount surrendered in assessment proceedings cannot automatically justify the levy of penalty and that the burden rests squarely upon the Revenue to prove through positive, independent, and corroborative evidence that the surrendered sum represents concealed income or falsified particulars. The Ld. A.R. submitted that the amount of Rs.13,16,300.00 was deposited in the bank of Baroda account in the name of the proprietor which has duly been disclosed in the return of income and amount which has duly been deposited was taken in the receipts and was also the part of turnover. It was submitted that the source of cash has duly been disclosed, the amount which was surrendered for taxation during the course of assessment proceeding only to purchase peace and the balance

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amount of the said cash Rs.7,30,550.00 has already been deleted by the Ld. First Appellate Authority. The Ld. A.R. submitted that during the course of assessment proceedings, the assessee had surrendered an amount of Rs.5,85,750/- and had paid due tax. It was submitted that the assessee had surrendered the amount with the condition laid down that immunity for concealment of penalty will be applicable in the case of the assessee and, therefore, penalty for concealment would not be applicable in assessee’s case. The Ld. A.R. placed reliance on various case laws for the proposition that no penalty can be levied on the surrendered income.

4.0 Per contra, the Ld. Sr. D.R. submitted that the Judgment of the Hon'ble Apex Court in the case of Mak Data (P) Ltd. (2013) 38 Taxman 448 is squarely applicable on the facts of the assessee’s case. The Ld. Sr. D.R. submitted that in that case the Hon'ble Apex Court held "that the A.O. shall not be carried away by the plea of the assessee like 'Voluntary disclosure' 'by peace of mind', avoid litigation', 'amicable settlement' ....etc. to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to section 271(1)(c) raises a presumption of concealment, when a difference is noticed by the A.O. between reported and assessed income. The statute does not recognize those type of defenses

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under the explanation to section 271(1)(c). It is trite law that the voluntary disclosure does not release assessee from mischief of penal proceedings u/s 271(1)(c). The law does not provide that when an assessee makes voluntary disclosure of concealed income, he has to be absolved from penalty." He further submitted that in the instant case, income has been surrendered by the assessee only when he had no other option and it was clear to the assessee that the AO had found that he was having unaccounted and unexplained cash with him which has been deposited in the bank account. The Ld. Sr. D.R. submitted that when the Revenue had taken up assessee’s return of income for scrutiny, concealment came to light and otherwise, concealed income would not have been offered for taxation. He further submitted that no explanation was offered by the assessee for concealment. The Ld. Sr. D.R. prayed that in view of these facts, the AO was justified in imposing the penalty and the Ld. First Appellate Authority was justified in confirming the same and, hence, no interference is called for in their orders.

5.0 I have heard the rival submissions and have also perused the material on record. The short issue that arises for my consideration is whether the lower authorities were justified in levying/confirming the penalty under Section 271(1)(c) of the Act, solely on the ground that the assessee had surrendered an amount of Rs.5,85,750/- during the course of the proceedings. It

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is an undisputed fact that the addition in question was made on the basis of the voluntary surrender/offer made by the assessee to buy peace of mind, avoid prolonged litigation, and cooperate with the Department, subject to payment of due taxes and interest. The Revenue has not brought on record any independent, cogent, or incriminating material to demonstrate that the assessee had deliberately concealed particulars of income or furnished inaccurate particulars thereof. It is a well- settled principle of law that penalty proceedings are quasi- criminal in nature and distinct from assessment proceedings. An addition made in the quantum assessment, or an admission made by the assessee to settle the dispute, does not ipso facto justify the imposition of penalty under Section 271(1)(c) of the Act.

5.1 The Hon’ble Supreme Court in the case of CIT vs. Suresh Chandra Mittal [2001] 251 ITR 9 (SC), on which reliance has been placed by the Ld. A.R., affirmed that where an assessee surrendered additional income to buy peace and avoid litigation, and the Department accepted the same without establishing deliberate concealment through extraneous evidence, no penalty under Section 271(1)(c) of the Act is leviable.

5.2 It is seen that the assessee had disclosed all primary books of account and factual details before the Assessing Officer

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and the surrender was made under a bona fide intent to purchase peace and avoid litigation. The Assessing Officer failed to discharge the statutory onus of establishing conscious suppression, contumacious conduct, or inaccuracy in the particulars furnished by the assessee.

6.0 In view of the above factual matrix and the settled legal position, I hold that the surrender of income per se cannot be equated with concealment of income or furnishing inaccurate particulars within the meaning of Section 271(1)(c) of the Act. Consequently, the penalty of Rs.1,71,721/- levied by the Assessing Officer and sustained by the Ld. First Appellate Authority cannot be sustained in law. The same is hereby deleted.

7.0 In the final result, the appeal of the assessee stands allowed.

Order pronounced in the open Court on 20/08/2026.

Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:20/08/2026 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order Assistant Registrar/DDO