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 information was obtained from the portfolio management authorities 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 transport contractor. The return was filed showing income of Rs. 2,91,560. The assessment was completed on February 17, 2007 on a total income of 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 investment 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.I. Paripushpam [2001] 249 ITR 550/118 Taxman 844 (Mad) it has