INCOME TAX APPELLATE TRIBUNAL
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G.C. Gupta, Judicial Member -
(1.) THIS appeal by the assessee for the Assessment year 1992-93 is directed against the order of CIT(A). The only issue is regarding penalty levied Under Section 271(1)(c). The Ld. Counsel for the assessee submitted that all material facts relevant for the assessment in this case were filed before the Assessing Officer and therefore, no case of penalty Under Section 271(1)(c) of the Act is made out by the Department. Ld. DR has opposed the submission of the Learned Counsel for the assessee. He has relied on the order of the Assessing Officer and the CIT(A) and submitted that a search action was carried out and unaccounted jewellery and silver articles were seized and the assessee has offered additional income for the relevant year.
(2.) We have considered the rival submissions and have perused the order of the Assessing Officer and the CIT(A). We find that a search action was carried out at the residence of the assessee on 03.03.92 and certain items of jewellelry, silver articles were seized and investment in electronic items of Rs. 1.2 lakhs were also found. The assessee in his statement made Under Section 132(4) of the Act at the time of search itself, offered the total amount of jewellery, silver articles and electronic items amounting to Rs. 21,64,800/- as additional income for the year under consideration and stated that the above investment has been made by him from the income earned in the current accounting year from gambling. Regarding payment of tax due on this additional income, the assessee requested the concerned CIT to auction the ornaments seized from him and adjust the proceeds thereof against the tax due from him and despite such letters the Assessing Officer failed to make payment of tax. The assessee has filed a return of income Under Section 139(1) and has disclosed the manner in which the undisclosed income was earned, which could not be controverted by the Revenue. The assessee has requested the concerned CIT for auction of seized jewellery and this could legally be construed as payment of tax. The CIT(A) has rejected the claim of the assessee regarding the payment of tax by requesting the CIT to auction the seized ornaments by observing that the request letter was made by Chartered Accountant of the assessee, who was representing the assessee in the Income Tax Proceedings and such request letter can not be treated as valid request unless it is accompanied by an authorization specifically permitting the Chartered Accountant to take any action with regard to the assets of the appellant. In these facts of the case, the CIT(A) has confirmed the penalty by observing that such an invalid request can not be construed as a constructive payment of taxes. We find that this approach of the CIT(A) is not sustainable. In case, the Assessing Officer did not accept such request letter signed by the Chartered Accountant of the assessee, he should have called the assessee to file the request letter to auction the seized ornaments under the signature of the assessee himself. The fact that the assessee did not have liquid assets and therefore, he has requested for auction of the seized jewellery, is not disputed by the revenue. In these facts of the case, we hold that the conditions of Provision of Explanation 5 of Section 271(1)(c) of the Act are satisfied in this case. The very basis of imposition of penalty is the amount offered by the assessee as additional income for the year under consideration by the assessee itself. In these facts of the case, we hold that no case of imposition of penalty for concealment of income or filing inaccurate particulars of income Under Section 271(1)(c) of the Act is made out by the Department and accordingly the penalty imposed Under Section 271(1)(c) is cancelled and the grounds of appeal of the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court at the time of hearing the appeal on 05.03.08.;
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