INCOME TAX APPELLATE TRIBUNAL - CUTTACK BENCH

I. T. A. Nos. 629 and 633/CTK/2012 (assessment years 2005-06 and 2007-08).

K. K. GUPTA (Accountant Member) and
K. S. S. PRASAD RAO (Judicial Member)

S. N. Sahu, authorised representative, for the appellant.
N. K. Neb, Departmental representative, for the respondent.

The order of the Bench was delivered by

K. K. GUPTA (Accountant Member).-These appeals for the assessment years 2005-06 and 2007-08 are from the same assessee who has been subjected to levy of penalty under section 271(1)(c) of the Income-tax Act, 1961. Common grounds have been raised for both assessment years are being taken up together in this common order in so far as the claim of the assessee is that the quantum additions which have been brought to tax were the amounts agreed upon to be taxed in the hands of the assessee as income in so far as the infonnation was obtained from the portfolio management authOlities who are holding the funds of the assessee and were increasing the value of the assets held in the name of the assessee without parting with the income, if any, was agreed in the hands of the assessee, could not be considered for levy of penalty. 

2 For the assessment year 2005-06, learned counsel for the assessee submitted the brief facts along with his submissions as considered by the Assessing Officer for the levy of penalty under section 271(1)(c) are that the assessee is a~ransport contractor. The return was tlled showing income of Rs. 2,91,560. The assessment was completed on February 17, 2007 on a total income : Rs. 91,90,967. In the course of assessment proceeding the assessee disclosed investment of Rs. 90,21,303 voluntarily and offered for taxation to buy peace and avoid unnecessary litigation. The Assessing Officer accepted the same and after allowing relief on account of dividend accrued to the extent of Rs. 2,21,180 made addition of Rs. 88,00,123 as unexplained investment and assessed accordingly. Even though, the assessee himself Came forward voluntarily in good faith to buy peace and avoid litigation, and even though the entire investment was not earned during the relevant year, but in several years in the past, the several years still then the learned Assessing. Officer initiated penalty proceeding under section 271 (1) (c) of the Income-tax Act, 1961. The assessee paid the entire taxes even some excess immediately on receipt of assessment order and demand notice which would go to prove the genuineness and bona fides of the assessee and co-operative attitude of the assessee in discharging his legal obligation ,towards the, Government. The assessee has filed petition under section 273A of the Income-tax Act, 1961 vide letter dated March 25, 2008 for waiver of interest levied under section 234B and also for waiver of penalty initiated under section 271(1)(c) and the same is pending disposal. This fact was also brought to the notice of the Assessing Officer in course of penalty proceeding while requesting the Assessing Officer to wait till the disposal of the waiver of petition. A copy of the said petition was filed before the Assessing Officer which he has taken note of as compliance to notice under section 271(1)(c) while imposing penalty. In the said waiver petition the following submissions were made, which were discussed with the Assessing Officer in the course of penalty proceedings. In the case of the assessee accepting that he has made certain investment which was not disclosed in the return, there was no other materials to prove that the assessee had mala fide intention to hoodwink tax to the Government. In fact when he knew his obligation immediately he came forward offered the investment for taxation and also paid the huge tax amounting to Rs. 30,55,319 immediately which goes to prove the bona fides of the assessee. It may be noted there is no provision in the income-tax return to disclose investnlent in the absence of books of account. Hence, there was no question of concealment. This was voluntarily done. Even there was no initiation of any proceedings under section 147 of the Income-tax Act. The assessment has been completed under section 143(3) only. The submissions were made before the Assessing Officer the following decisions as under :

(i) In the case of CIT v. S. L. Paripushpam [2001] 249 ITR 550 (rvIad) it has been held that there was no evidence on the basis of which the Department could say that the assessee has fraudulently or willfully or negligently concealed the income. The assessee agreeing to the addition of the amount by itself did not establish fraud or willful neglect without bringing something more materials on record, hence the Assessing Officer was not justified in imposing the penalty under section 271(1)(c) of the Income-tax Act, 1961.

(ii) The honourable Supreme Court of India in the case of Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519 (SC) has held that the imposition of penalty is not automatic, it is a matter 0fdiscretion. The Asses'sing Officer has to be fair and objective.

The concealment of income and furnishing inaccurate particulars are different. Both concealment and furnishing of inaccurate particulars refers to deliberate Act on the part of the assessee. A mere omission or negli­gence would not constitute a deliberate act of '''suppressio veri" or "suggestio falsi". Mens rea is an important factor. The assessee 'stays in a rural area like]oda in Keonjhar District. He was assisted by accountant and tax practitioner who were locally 'available. They may not be very efficient to advise properly. But he had no other alternative than to depend on them.

The Explallation appended to section 271(1)(c) is an exception to the general rule. It raises a legal fiction by reason whereof the burden of proof shifts from the Department to the assessee. Legal fiction, however, as is well known must be given full effect when the conditions precedent thereof are satisfied and not otherwise.

Before the Assessing Officer, in course of penalty proceeding citing the decision of CIT v. Kimn and COl1lpany [1996] 217 ITR 326 (Bom) it was submitted that even an offer from the Assessing Officer for settlement to addition and acceptance of such offer does not amount to concealment.

Citing the decision of CIT v. Beta NeptllOl Ltd. [2005] 272 ITR 323 (MP) it was submitted that no penalty will be leviable when agreed to the addi­tion in order to buy peace of mind and avoid litigation. It was also brought to the notice of the Assessing Officer that there was understanding with the then Assessing Officer that no penalty proceeding be initiated if taxes are paid inunediately but the then learned Assessing Officer did not keep up his promise given orally and initiated penalty proceeding even though taxes were paid inunediateh' on receipt of the demand notice and assessment order.

The following decisions of the High Court and the Supreme Court of India were cited and submitted to the Assessing Officer that no penalty should have been initiated in view of several rulings of the court.

(1) CIT v. S. I. Paripushpam [2001] 249 ITR 550 (Mad) ;
(2) Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519 (SC) ; and
(3) Ashok Pai (T.) v. CIT [2007] 292 ITR 11 (SC).

Circular of the Central Board of Direct Taxes order No. 281/8/86 - IT (Inv.-III) dated February 14, 1986 ([1986] 158 ITR (St.) 162) was also cited to say that once the assessee furnished particulars of income and volun­tarily in good faith made full and true disclosure and co-operated with the assessment proceeding and paid tax, no penalty proceeding should have been initiated.

But the above case law and the circular of the Central Board of Direct Taxes were not favourably considered at all by the Assessing Officer and he imposed penalty under section 271(1)(c) of the Income-tax Act.

The decision of the honourable Supreme Court in Anwar Ali's case [1970] 76 ITR 696 (SC) applies to the facts of the case.

The honourable Supreme Court has decided that, agreeing to additions, it does not follow that the amount added is concealment. There may be several reasons for such admission. (Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC))

CIT v. M. George and Bros. [1986] 160 ITR 511 (Ker), CIT v. Mansa Ram and sons [1977] 106 ITR 307 (All), Giridharilal Goellka v. CIT [1989] 179 ITR 122 (Cal). Further, non recording of satisfaction by the Assessing Officer as to concealment of income, penalty is not justified. Case law are as under:

(a) CIT v. Munish Iron Store [2003] 263 ITR 484 (P & H) ;
(b) CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568 (Delhi) ;
(c) CIT v. Angidi Chettiar (S. V.) [1962] 44 ITR 739 (SC) ; and
(d) Diwall Enterprises v. CIT [2000] 246 ITR 571 (Delhi).

For the assessment year 2007-08, learned counsel of the assessee submitted the brief facts' along with his submissions as considered by the Assessing Officer for the levy of penalty under section 271 (l)(e) that the assessee is an individual carrying on business in transport contract has visited with penalty under section 271(1)(c) of the Income-tax Act, 1961 to a tune of Rs. 21,70,100 for concealment of income ot Rs. 72,33,660 (Rs. 47,71,090 as disclosed before the Assistant Director of Income-tax, Investigation, Bhubanes\"rar, Unit 1(1) + Rs. 24,62,570 disclosed before to the Assessing Officer).

The learned Assessing Officer (Joint Commissioner of Income-tax) accepting the above figures assessed the assessee at Rs. 1,00,3.1,627. The difference between of Rs. 99,730 was a repetition by the Assessing Officer with regard to the following income at 8 per cent. on gross receipt from labour contract on Rs. 23,61,601 (Rs. 1,88,928 - Rs. 89,200) already shown in earlier return. Thus, the Assessing Officer has almost accepted the amounts disclosed in the original return plus income disclosed before the Assistant Director of Income-tax and the income disclosed before the Assessing Officer in the course of assessment proceeding. Therefore the assessment has been made by the Assessing Officer on the basis of surrender of amounts by the assessee agreeing to additions to co-operate with the Department. The assessee also deposited the taxes payable on the dis­closed amount immediately after such disclosure. (Rs. 16,00,000 disclosed before the Assistant Director of Income-tax, Investigation, Bhubaneswar vide letter dated August 1, 2009 and disclosed vide reference dated Decem­ber 27,2(10). On a bare reading of the penalty order it would be apparent that there is no concealment of income as such. It has been held by the different High Courts in the following case law that no penalty is in-pos­able on amounts surrendered for tax on the suggestion of the Assessing Officer.

(a) CIT v. M. George and Bros. [1986] 160 ITR 511 (Ker) ;
(b) Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) ;
(c) CIT v. Mansa Ram and Sons [1977] 106 ITR 307 (All) ;
(d) Giridharilal Goenka v. CIT [1989] 179 ITR 122 (Cal) ; and
(e) CIT v. SAS Pharmaceuticals [2011] 335 ITR 259 (Delhi)

15 Under the abovementioned facts and circumstances of the case even though the assessment has been made on the basis of the assessee's surrender of amounts agreeing to additions, penalty under section 271(1)(c) has been made illegally and arbitrarily to a tune of Rs. 21,70,100.

16 Aggrieved, the assessee appealed before the first appellate authority, who by way of separate orders for the two assessment vears analysed the issue appealed before him by the assessee by distinguishing the "facts for the levy of penalty from the case law cited when he chose to rely on the case law which was in favour of the Revenue and not the case law which was in favour of the assessee when the Supreme Court dictum is that whenever there are contra decisions on any issue, the decision which is favourable to the assessee should be adopted. He further contended that the penalty levied even after the amount surrendered and agreed for assessment and tax paid to buy peace .and avoid future litigation is illegal and hence not justified. (CIT v. Suresh Chandra Mittal [2001] 251 ITR 9 (SC». That no satisfaction has been recorded regarding concealment in the assessment order by the learned Assessing Officer which is a condition precedent for initiation of penalty proceeding. Hence the order of penaltv is illegal. Though the assessee owned the unaccounted transactions only' after detection of investment, when an assessee admits his mistake and that he was committed. wrong and offers the additional income to tax, it cannot be said that his statement is false or not bona fide. Neither the Assessing Officer nor the Commissioner of Income-tax (Appeals) were completely, clear about the exact amount of concealment and there was no conclusive e\·idence. Therefore it gives discretion to the Assessing Officer to exonerate the assessee from levy of penalty even in the case where the assessee has concealed the income or furnished incorrect particulars of income. Penalty should not be imposed merely because it is lawful to do so. The Assessing Officer has to exercise his discretion judiciously. If an assessee files a revised return though at a later stage or discloses true income, penalty need not be levied. No doubt, merely offering additional income will not automatically protect the assessee from levy of penalty but in a given case where the assessee came forward with additional income though after detection because he was not in a position to explain the enhanced arnount properly and expresses remorse in his conduct unhesi­tantly, the Assessing Officer has to exercise the discretion in favour of such assessee as otherwise the expression "may" in section 271(1)(c) becDmes redundant. In a case of admitted income, concealment penalty is not auto­matic which word the Assessing Officer has never used. The discretion vested in the Assessing Officer should be used not to levy penalty. There was no conclusive proof that the assessee concealed income or furnished inaccurate particulars of income. The assessee's offer was to avoid litigation and buy peace. If the Assessing Officer had clinching evidence of conceal­ment, he should not have accepted the assessee's offer and should have proceeded on the basis of material on record (Asst. CIT v. VIP Industries [2009] 122 TTJ (mum) 289, CIT v. Sidhartha Enterprises [2010] 322 ITR 80 (P&H) and CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC) followed). It has been decided by the co-ordinate Bench, i.e,. P. V. Ramana Reddy v. ITO (ITAT Hyderabad). The judicial propriety demands that a Bench of the co-ordinate Bench must follow the judgment of a co-ordinate Bench for judicial discipline. He placed reliance on the decision of the honourable Supreme Court in the case of Union of India v. Raghubir Singh [1989] 178 ITR 548 (SC) followed by the Cochin Bench of the Income-tax Appellate Tribunal in the case of The Society of Presentation Sisters v. ITO reported in [2009] 318 ITR (AT) 287 (Co chin) at page 297 paragraphs 2 and 3. It is also settled law that if two views are possible then the one, which is in favour of the assessee must be adopted. (Union of India v. Onkar S. Kmrwar [2002] 258 ITR 761 (SC), CIT v. Vege­table Products Ltd. [1973] 88 ITR 192 (SC». In the absence of mens rea established by the Assessing Officer and surrendered the amount having been accepted, penalty is not livable as no criminal' intention is proved and brought on record. Learned counsel for the assessee contended that no penalty could have been imposed on the assessee because there was no tax· sought to evaded because the addition in respect of which penalty was imposed was made was disclosed before Computing total income under normal provision of the Act and ultimately the total income of the assessee was determined on the basis income returned plus income offered and surrendered for taxation. Further penalty is not imposable if there is no conscious breach of law. (Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC).

17 Learned counsel for the assessee submitted that the assessee derives income as a mining contractor. He has filed his income on October 25, 2008 shm\ing income of Rs. 27,50,590. The Assessing Officer received information from the Assistant Director of Income-tax (Investigation), Bhubaneswar vide letter dated August 11, 2009, that the assessee has not disclosed his bank account with HDFC Bank bearing Account No. 0081000233917. So the learned Assessing Officer issued notice under section 147. In response to the same the assessee declared shm\ing income of Rs. 74,69,330. He furthered declared a sum of Rs. 25,62,298 vide letter dated December 18, 2010 hence, on account of the deposit in HDFC Bank he surrendered amount of Rs. 47,71,090. Capital gain of Rs. 17,262 was also shown by the assessee. Thus the Assessing Officer assessed on total income of Rs. 1,00,48,889 and paid taxes thereon together with interest to buy peace and avoid litigation. So far as penalty proceeding is concerned. According to the Assistant Commissioner of Income-tax, Circle-1(1), Sambalpur, this is a case barred by limitation for imposing penalty. But still then without affording adequate opportunity to the assessee he has imposed penalty Rs. 21,70,100 under section 271(1)(c) of the Income-tax Act, 1961. The last date of imposition of penalty is June 30, 2011 but the learned Assessing Officer has hurriedly imposed penalty of Rs. 21, 70,100 on June 27, 2011 just three days before the last date to save the limitation. In the entire penalty order he has merely noted the facts and has not proved even the mens rea required for penalty on concealment. Because proceeding under section 271(1)(c) is quasi criminal in nature. He has imposed penalty because the notice under section 271(1)(c) was not complied with. According to the assessee, he had complied and asked for adjournment on account of his advocate's mother's illness. But the learned Assessing Officer has not considered in his penalty order, as the notice could not be complied for valid grounds. The Assessing Officer concluded that it is a clear case of concealment by the assessee. Further the entire case record was there before the Assessing Officer (Assistant Commissioner of Income-tax) and he could have seen that the entire assessment order is based on surrender of income. The assessee surrendered and agreed to be assessed to buy peace and end litigation. A vital letter of the assessee dated June 27, 2011 received on the same date, by the Assistant Commissioner of Income-tax office has neither been taken note of nor considered. In the said adjournment petition, it was clearly written that a petition for adjourn­ment was rued on June 7, 2011 as the advocate of the assessee was out of the station on that day. Further the assessee could not take steps on June 14, 2011 wrongly mentioned in the letter as July 14, 2011 due to the absence of his advocate. It was further stated that the addition of Rs. 47,71,090 was on account of disclosure before the Assistant Director of Income-tax (InvE;'stigation), Bhubaneswar, and for which tax to the tune of Rs. 16,00,000 has already been paid on February 15, 2009 by the assessee and the notice of concealment under section 271(1)(c) was made only for that amount. The date of disclosure before the Assistant Director of Income-tax (Investigation), Bhubaneswar was much before the date of initiation of proceeding under section 147 therefore the question of initiating penalty should not have been made at all. It has brought to the notice of the Assistant Commissioner of Income-tax that a petition under section 273A is pending disposal before the Commissioner of Income-tax, Sambalpur and therefore the matter should be kept pending till its disposal. Unfor­tunately ignoring a valid document (i.e., letter dated June 27, 2011) the learned Assistant Commissioner of Income-tax has imposed penalty of Rs. 21,70,100 which is against the principle of natural justice. Learned counsel for the assessee submitted that as regards dragging the matter till the fag end of limitation date, the hon'ble High Court of Andhra Pradesh in the case of Berniai Tiwari v. CIT [1988] 173 ITR 280 (AP) have observed as follows (headnote) :

"We must express our disapproval of the way in which Income-tax Officers drag on the assessment proceeding till almost the last minute and rush through the entire process of assessment when the limita­tion is about to set in without giving adequate opportunity to the assessee. The Commissioner of Income-tax exercising administrative jurisdiction over these officers should keep a close watch in the proceeding and should discourage any attempt on the part of the tax officers to drag on the assessment proceedings till the last minute causing difficulty both to the assessee and the Department."

In the instant case as admitted by the Assistant Commissioner of Income-tax the penalty matter was dragged on till the last moment without giving adequate opportunity to the assessee which would be apparent from the dates of hearing mentioned in the penalty order itself. It would be seen trttit the assessee was not given reasonable and adequate opportunity of being heard. All the three notices issued by the Assistant Commissioner of Income-tax for hearing were in the month of June, 2011 in short intervals only and even though such notices were complied with. Unfortunately the learned Assistant Commissioner of Income-tax observed that there was non-compliance by the assessee which is not correct and is illegal and not in conformity of law. It is settled principle of law that an order against the principle of natural justice is a nullity. (CIT v. Gangaram Chapolia and Co. [1991] 187 ITR 594 (Orissa». Therefore the order of imposition of penalty is liable to be quashed for lack of adequate opportunity of being heard. This is a case of voluntary disclosure and agreed assessment. The assessee has offered the entire amount invested in bank account to buy peace and avoid litigation. There are plethora of decisions on the subject enclosed along with the written submission before the Income-tax Appellate Tribunal against the penalty levied under section 271(1)(c) for the assessment year 2005-06 which may kindly be perused and the assessee relies on the same. Further learned counsel for the assessee submitted that the undisclosed investment by the assessee made on May 2, 2007, August 15, 2007, May 22, 2007 and August 30, 2007 for Rs. 12,00,000, Rs. 24,60,218, Rs. 2,25,557, Rs. 22,71,981 for which, penalty proceeding is made relate all to the assessment year 2008-09 and not to the relevant year under consideration therefore penalty levied for the assessment year 2007-08 being miscon­ceived is liable to be deleted.

19 The learned Departmental representative opposed the contentions of learned counsel for the assessee. He submitted that it was not the case of the learned Commissioner of Income-tax (Appeals) to distinguish the case law relied upon before him for the proposition that the amount was agreed upon to be taxed as quantum income. Nowhere learned counsel for the assessee has brought on record that he is agreeing to pay tax on the income so computed by the Assessing Officer provided the Assessing Officer does not initiate penalty proceedings under section 271(1)(c). There is no conditional agreement as submitted by learned counsel for the assessee as of now. It is the Assessing Officer who discovers the .concealment which is readily agreed to by the assessee is ripe for levy of penalty which the learned Commissioner of Income-tax (Appeals) justifiably distinguished in his order which may kindly be perused. No choice is given to the assessee to deny the income so concealed discovered by the Assessing Officer has been established by the case law cited by the learned Commissioner of Income-tax (Appeals) there­fore requires no distinction in the light of learned counsel's submissions that there is case law which leads to the case fact finding that the concealrneftt was not in the) hands of the assessee and being a controversial position the assessee was at liberty to adopt a decision ill its favour. He fully supported the orders of the authorities below in so far as the assessment proceedings are separate and distinct from the penalty proceedings.

We have heard the rival parties and perused the material available on record. On our careful consideration of the facts and circumstances of the case as brought on record by the authorities below, we are inclined to give a finding of fact leading to the finding that whether a concealment was dis­covered or whether computation of income so discovered by the Assessing Officer was to be concealed to invite the visit of secti2n 271(1)(c). As the name suggests and as per the assessment orders the 'incomes have been offered for taxation as agreed amount in so far as they have been rendered to tax as investments from tax paid incomes in the earlier years. It is nobody's case that the incomes which accrue or arise but remaining in the hands of the mutual funds or trust as investments whether could be computed on the basis of provisions of the Income-tax Act as earned for taxation or increase in capital. Unfortunately the assets that have been brought to tax as income in the hands of the assessee are increase in wealth were not to be disclosed in the form of financial assets in the balance-sheet. The computation was confronted to the assessee in so far as the holders of the funds on behalf of the assessee informed the assessee that the funds have accumulated to such an extent. It was therefore nobody's case that the assessee should have incorporated the enhance­ment of income on the assets held by it to be taxedes capital gains when no such decision could take place by the assessee. The crux of the issue therefore results in giving a finding that the amount was agreed upon by the assessee on the Assessing Officer giving a finding that the assessee's funds as held by the holders of the funds had informed the assessee that the funds have increased in value whether he agreed to encash the enhancement or n;': other words, the investment was noted by the Assessing Officer in the assessment year 2005-06 and again after a gap of one year, i.e., 2007-08 when the assessee cannot be said to be paying tax again on the so-called enhancement by the mutual fund company being the portfolio manager who keep changing the net asset value of the units in various other forms giving high or low rate of return. The assessee remained secured in so far as he had parted with the funds which funds belonged to him in the first place were reinvested in the hope that they will generate more income than the rate of interest available from a scheduled bank. Therefore it was a clear case of valuation of tax paid capital which the assessee had already paid tax on till such time when the enhancement was brought to the notice by the Assessing Officer on the· basis: 0'1 information made available to and by the, aS5essee was readily agreed upon by the assessee to be taxed in the impugned assessment year. In other words, on the submission of learned counsel for the assessee we are jammed to hold a view that having incorporated the income, the Assessing Officer sought to tax the same again in the assessment year 2007-08 when the assessee had not transferred the same but had shown the increase in the value by returning the income as short-term capital gains. The short-term capital gains never accrued to the assessee and in fact is a loss in the capital was not considered in so far as the Assessing Officer had brought more income to tax quantum-wise in 2005-06 leading to duplication of income taxed in the assessment year 2007-08.

21 Now coming to the legal propositions relied upon by the rival parties, we are inclined to find favour in the contention of learned counsel for the asses­see in so far as the decision which is favourable to the assessee is to be adopted. Moreover the Income-tax Appellate Tribunal, Hyderabad Bench in the case of P. V. Ramana Reddy v. ITO it has been held that computation of income for taxing the word /I concealment" has to be established when the concealment was not in the hands of the assessee. It was enhancement in the capital which stood tax paid was therefore to be taxed at the time of receipt or transfer and pot because the holder of the capital informs that the capital has increased.(The crux therefore that the assessee agreed to the proposition that the under of the asset is informing that his capital invest­ment was worth more was accepted by the Assessing Officer as concealment in the hands of the assessee is not at all justified. The surrendered investment therefore cannot be considered for levy of penalty in so far as penalty should not be made if there is no conscious breach of la~!,(Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC)). Learned counsel for the assessee therefore has rightly relied on the case law in so far as the decisions of the Cochin Bench of the Income-tax Appellate Tribunal in the case of The Soci­ety of Presentation Sisters v. ITa reported in [2009] 318 ITR (Al) 287 (Cochin) have to be followed on identical facts and circumstances and the decision of the hon'ble Supreme Court in the case of Union of India v. Onkar S. Kanwar [2002] 258 ITR 761 (SC) and CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) was of the view that in case of contra decisions of various authorities should be restricted to the one which is favourable to the assessee. In this view of the matter and on the basis of facts and circum­stances mentioned above, we are inclined to hold that the penalty so levied under the provisions of section 271(1)(c) for the both assessment years under consideration is fit for cancellation and as such, we cancel the same.