INDER SINGH SHANKLA vs INCOME TAX OFFICER

B.M. Kothari A.M.

This appeal by the assessee is directed against the order passed by the learned Deputy Commissioner (Appeals) confirming the penalty of Rs. 6,130 levied u/s 271(1)(c) of the Income Tax Act, 1961, for assessment year 1991-92.

I have considered the submissions made by the learned representatives of both the sides and have also perused the orders of the learned departmental authorities. The assessing officer levied penalty u/s 271(1)(c) in relation to an addition of Rs. 30,000 made in respect of credit in the account of Smt. Damayanti Devi. This amount was surrendered by the assessee in the course of assessment proceedings.

It was explained before the learned departmental authorities as well as before me that a confirmation of Smt. Damayanti Devi was filed during the course of assessment proceedings. The said deposit was made by her after making withdrawal from her account with SBI City Bank account No. 38/1499 by cheque No. 6106671. She also confirmed that the amount was received back through cheque No. 213352. The said deposit was given by her mainly out of a gift received from her father in the year 1986 amounting to Rs. 20,500. This gift amount was kept by the assessee in her bank account since 1986 to the period relevant to assessment year 1991-92. For some time this amount was earlier advanced to M/s P.S. Gehlot. The assessee also submitted copies of gift deed, gift-tax challan, bank entries to prove the fact of receiving the said gift from her father. The assessee received this deposit of Rs. 30,000 otherwise by way of an a/c payee cheque because of compelling circumstances. The bankers of the assessee required him to suddenly deposit Rs. 1,96,000 on the same day due to dishonour of cheque given by M/s Hindustan Petroleum Co. Ltd., as there was a mistake in the cheque issued by HPCL. This mistake was committed by the HPCL''s official which resulted in dishonour of cheque. In case of default, the bank could cancel the BP limit of the assessee. Hence it was not possible to resort to borrowing by a/c payee cheque, because that ordinarily takes 2/3 days time for its collection. The assessing officer indicated that provisions of sections 269SS and 269T may be attracted in relation to such deposit received otherwise than by a/c payee cheque and, therefore, the assessee vide its letter dated 30-7-1992, surrendered the said amount with a view to acquire peace on the specific condition that no penalty for breach of section 269SS, 269T on section 271(1)(c) will be levied. The department levied the penalty in breach of the aforesaid conditional surrender made by the assessee vide letter dated 30-7-1992. If the letter of surrender made in the aforesaid circumstances with the specific condition of no penalty is ignored, there is no material for holding that the cash credit of Rs. 30,000 received, by the assessee from Smt. Damayanti Devi is a bogus cash credit or unexplained cash credit. The Hon''ble Supreme Court in the case of Sir Shadi Lal Sugar and General Mills Ltd. and Another Vs. Commissioner of Income Tax, Delhi, has held that there may be hundred and one reasons for assessee''s agreeing to certain additions, but that does not absolve the revenue from proving the fact that it represents concealed income. The Hon''ble Rajasthan High Court in the case of Addl. Commissioner of Income Tax Vs. Aggarwal Misthan Bhandar, held that co-operation extended by the assessee in completing the assessment cannot be equated to confession of concealed income. Penalties levied under similar facts and circumstances, has been cancelled by the Tribunal, Jodhpur in case of Income Tax Officer v. Khemsingh Shankla vide order dated 8-2-2000 in ITA No. 1684/Jp/1993.

4, In view of the aforesaid facts and circumstances, I do not find any justification in sustaining the said penalty. The assessing officer is directed to cancel the said penalty.

The appeal is allowed.