ITAT quashed penalty as there was no concealment of income

1. A search was conducted at the office premises of Orris Group.

2. In the case of Crazy Developers P Ltd, assessee filed return of income declaring 'nil' income.

3. Notice u/s 153C (of Income Tax Act, 1961) was served upon the assessee and in response thereto, return was field declaring income of Rs 39 lakhs.

4. During search it was discovered that assessee had received cash of Rs 1.15 crores against sale of some land at Rewari, and it surrendered the cash as undisclosed income in the hands of three companies of Orris group.

5. Consequently, notice u/s 271(1)(c) (of Income Tax Act, 1961) was served on assessee for concealing the income/furnishing inaccurate particulars of income of Rs.40 lakhs.

6. AO imposed minimum penalty of Rs 13,46,400.

7. CIT(A) allowed assessee’s appeal.

The ITAT held as under:

8. CIT(A) has gone a step further by holding that surrender of income of Rs.40,00,000/- during the assessment year 2007-08 was in fact not generated during the year under assessment rather it being a forfeiture of sale amount as income for the assessment year 2006-07, assessee has bona fidely surrendered the same.

9. We are of the considered view that the A.O. has failed to make out the case of concealment of particulars of income or furnishing of inaccurate particulars of such income by the assessee, rather, it was a case of voluntary surrender of income of Rs.40,00,000/- for tax purpose in order to buy peace of mind and to avoid vexed litigation and Ld. CIT(A) has legally and rightly passed the impugned order.

Case Reference - ACIT Vs. M/s. Crazy Developers P. Ltd.

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ' B', NEW DELHI)

BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER

AND SHRI KULDIP SINGH, JUDICIAL MEMBER

I.T.A. No.4250 /Del/2011

(Assessment year : 2007-08)