Despite offer of income in s. 148 ROI, s. 271(1)(c) penalty leviable

CIT vs. M/s Sangameshwara Associates (Karnataka High Court)

The assessee filed a ROI offering Rs. 4.68 lakhs which was assessed. Subsequently, the AO issued a s. 148 notice claiming that cash credits of Rs. 4.50 lakhs had to be assessed. The assessed filed a ROI pursuant to the s. 148 notice in which it offered the said cash credits as income and the assessment was finalized on that basis. In the s. 271(1)(c) penalty proceedings, the assessee claimed that it was not liable for penalty on the ground that (i) the income offered in the ROI was accepted without any addition and so there was no concealment as per the ROI; (ii) the cash credits were offered as income to buy peace & (iii) that the AO had not recorded satisfaction that the assessee had concealed the income. The CIT (A) & Tribunal accepted the assessee’s claim. On appeal by the department to the High Court, HELD reversing the lower authorities: