This appeal, filed by assessee, is directed against order of CIT(A)-I, Agra dt. 7th Sept., 2006 in confirming penalty of Rs. 6,31,800 imposed under s. 271(1)(c) of IT Act, 1961 for asst. yr. 2000-01. Briefly stated, facts of case are that assessee is partner in M/s R.P. Fragrances, which is engaged in business of perfumes and derives income from partnership firm and other sources. For asst. yr. 2000-01, assessee filed return on 30th Nov., 2000 declaring income of Rs. 5,94,641. said return was processed under s. 143(1) of IT Act, 1961 on 17th Sept., 2001. assessee had some credits in his account amounting to Rs. 9,00,000 received through bank drafts. Para 2 of letter dt. 29th April, 2002 reads as under: "2. I had some credits in my accounts of Rs. 9,00,000 (rupees nine lakhs) i n asst. yr. 2000-01 received through bank drafts duly recorded. On seeking confirmations for my income-tax purposes from payers, they have not come up which in absence I may not be able to prove said credits and thus to buy peace, to avoid litigation and to co-operate with Department, I hereby surrender sum suo moto as income for asst. yr. 2000-01. I am surrendering aforesaid amount as suo motu as income in good faith as no penalty/prosecution proceedings be initiated against/humble request in true spirit." According to AO no revised return was filed by assessee till that date. AO initiated proceeding under s. 147/148 of IT Act considering fact that bogus gift racket was unearthed by Director of IT (Inv.), Kanpur after recording his reasons. During course of proceedings under s. 148, assessee further surrendered sum of Rs. 8,50,000 vide letter dt. 3rd Jan., 2003 stating as under: "I had some credits in my accounts of Rs. 8,50,000 (rupees eight lakhs fifty thousand) in asst. yr. 2000-01 received through bank drafts duly recorded. On seeking confirmations for my income-tax purposes from payers, these have not come up which in absence I may not be able to prove said credits and thus to buy peace, to avoid litigation and to co-operate with Department hereby surrender same suo moto as income for asst. yr. 2000-01. I am surrendering aforesaid amount suo moto as income in good faith as no penalty/prosecution proceedings be initiated against me for which and in circumstances I make earnest/humble request in true spirit." AO observed that on 24th Dec., 2003, in course of assessment proceedings, assessee filed return declaring income of Rs. 23,74,614 in which he surrendered Rs. 17,50,000 (Rs. 9,00,000 + Rs. 8,50,000) as unexplained cash credits. In addition, assessee surrendered Rs. 50,000 deposited in cash with Annapurna Preservation as unexplained deposit. In penalty order, AO mentioned that bogus gift racket has been detected by Director of IT (Inv.), Kanpur, involving amounting of over Rs. 40 crores. He further observed that scared by investigation, assessee chose to surrender amount of Rs. 9,00,000 on 29th April, 2002 and further amount of Rs. 8,50,000 on 3rd Oct., 2003. According to AO, none of above surrenders were voluntary. In fact, revised return filed on 24th Dec., 2003 was not revised return as contemplated under s. 139(5) of Act. According to AO, revised return filed by assessee on 24th Dec., 2003 was barred by limitation. He therefore held that assessee was liable for penalty under s. 271(1)(c) of IT Act inasmuch as he has concealed particulars of income and furnished wrong statement. amount of Rs. 17,50,000 surrendered by assessee was treated as his concealed income. Further, sum of Rs. 50,000 as unexplained deposit was also treated as concealed income of assessee. Taking into consideration entire facts of case, AO imposed minimum penalty @ 100 per cent amounting to Rs. 6,31,800 under s. 271(1)(c) of IT Act, 1961. On appeal, CIT(A) confirmed penalty concluding as under: "4.6 appellant alone knew true nature and source of deposits he had himself made his bank accounts which he had originally accounted for as gifts but subsequently in three stages surrendered as his income for tax. Either in penalty proceedings or in appellate proceedings appellant has not shown as to under what circumstances he has shown unexplained cash credits as gifts in original return of income which was accepted under s. 143(1) by Department and under what circumstances did he come to know that gifts were actually his income liable for tax. Further, even first surrender of Rs. 9 lakhs is false insomuch that appellant had subsequently admitted additional amounts of Rs. 8,50,000 and Rs. 50,000 as his unexplained cash credits and therefore his income which he has neither shown in original return nor in first statement of surrender. entire conduct of appellant shows that appellant had concealed particulars of income in original return which he subsequently disclosed to Department in various letters over period of 3 years, much after time prescribed under s. 139(5) to file revised return, had expired. appellant has not furnished any evidence in course of penalty proceedings or appellate proceedings to show that he had duly disclosed all facts relating to impugned unexplained credits and that disclosure of unexplained cash credits as gifts was inadvertent and bona fide. Therefore, I hold that AO was justified in levying penalty under s. 271(1)(c) of Act. penalty levied at Rs. 6,31,800 is accordingly confirmed." Before us, Shri Kanchan Kaushal, learned counsel for assessee submitted that revised income suo moto intimated vide letters dt. 29th April, 2002 and 3rd Oct., 2003 and revised returned income was of Rs. 23,74,641 and same income was assessed vide order under s. 143(3)/148 of IT Act, 1961 dt. 31st Dec., 2003 after further addition of Rs. 50,000 surrendered during assessment proceedings. He further submitted that due tax as per return were paid including interest before filing return of income. assessment under s . 143(3)/147/148 was also made on 31st Dec., 2003 on basis of revised return filed on 24th Dec., 2003 and in turn revised return was accepted. Shri Kanchan Kaushal, learned counsel for assessee vehemently argued that original as well as revised returns were filed suo moto without any notice whatsoever from Department and/or any prior detection by Department and not in fear when caught. Learned counsel for assessee further submitted that assessee had received some amounts aggregating to Rs. 17,50,000 through banking channels vide account payee cheques during year and surrendered same as income vide aforesaid two letters dt. 29th April, 2002 and 3rd Oct., 2003 addressed to AO and vide revised return to avoid litigation and to buy mental peace. He further submitted that receipts of such credits and particulars submitted were not controverted during assessment proceedings. It was also submitted that assessee had proved identity of depositors, genuineness of transactions and capacity of depositors. H e therefore submitted that penalty proceedings under s. 271(1)(c) have been initiated without assigning specific reasons/grounds. He further submitted that where assessee bona fide surrendered amounts as undisclosed income, it could not be considered as concealment and no penalty under s. 271(1)(c) of IT Act can be levied. Learned counsel for assessee also submitted that expression "has concealed particulars of his income" used word concealed. It means that there should be deliberate act on part of assessee. It was also submitted that concealment is direct attempt to hide item of income or portion thereof from knowledge of IT authorities. Learned counsel for assessee further submitted that all particulars were given correctly to authorities below and all facts were brought to notice of AO during assessment proceedings itself and nothing was detected by AO to show that assessee had deliberately filed any false claim or filed inaccurate particulars of income. From assessee s agreeing to addition to his income, it does not follow that amount was agreed to be treated as concealed income. Therefore, penalty was not leviable. It was also submitted by learned counsel for assessee that assessee has neither concealed particulars of income nor furnished incorrect particulars of such income. It w s also added that intention of assessee is quite clear that assessee with bona fide intention surrendered amount of Rs. 18,00,000 (Rs. 17,50,000 with revised return and Rs. 50,000 during assessment proceedings) and paid tax along with interest to avoid litigation and to buy peace and to co-operate with Department. Such surrender cannot be treated as concealment. Learned counsel for assessee relied on following decisions: (i) Smt. Sunita Tuli vs. ITO 2006 (8) MTC 1011 (Trib)(Lucknow) (ii) ITO vs. Rakesh Gupta (2007) 15 SOT (Asr)(SMC)(URO) (ii) ITO vs. Rakesh Gupta (2007) 15 SOT (Asr)(SMC)(URO) (iii) Asstt. CIT vs. Shiv Nadar (2007) 15 SOT 57 (Del) (iv) Dy. CIT vs. Ms. Aishwarya Rai (2007) 12 SOT 114 (Mumbai) (v) Smt. Brij Bala Chaudhary vs. ITO (2004) 82 TTJ (Lucknow) 355: (2003) 87 ITD 173 (Lucknow) Shri Debashish Chanda, learned senior Departmental Representative kly supported orders of authorities below. He further submitted that assessee has introduced undisclosed income and once surrendered income, onus of Department stood discharged. He further submitted that it was open for assessee, during course of assessment proceedings as well as in course of penalty proceedings, to establish that amount of Rs. 17,50,000 was received from genuine depositors. He further submitted that assessee h s also not submitted in his explanation that concealment of income or furnishing of inaccurate particulars was not deliberate on his part, but mistake was bona fide. Learned Departmental Representative further submitted that there is no material on record to show that assessee had surrendered amount in question voluntarily. He also submitted that amount of Rs. 17,50,000 was offered for taxation only when Investigation Wing of Kanpur unearthed fake gift racket and found that certain persons on payments by cheque to large number of persons and payments so made were shown as credits. It was also submitted by learned Departmental Representative that return filed by assessee on 24th Dec., 2003, declaring amounts offered as unexplained cash credits is obviously not revised return within meaning of s. 139(5) of IT Act, 1961. He further pointed out that even letter surrendering Rs. 9,00,000 dt. 29th April, 2002 was filed after expiry of time limit prescribed under s. 139(5) of Act. It was also stated that further surrender of Rs. 8,50,000 was made vide letter dt. 3rd Oct., 2003, i.e. after expiry of limitation specified under s. 139(5) and still further surrender of Rs. 50,000 was made much later in course of assessment proceedings. Accordingly, it was submitted that there is no merit in arguments of learned counsel for assessee that assessee suo moto and voluntarily filed revised statements and therefore he is not liable for penalty under s. 271 (1)(c) of Act. In view of above, learned Departmental Representative submitted that impugned penalty order confirmed by CIT(A) may be upheld. We have carefully considered rival submissions and have also perused orders of authorities below. In instant case, it is admitted fact that AO treated amount of Rs. 17,50,000 and Rs. 50,000 surrendered during course of assessment proceedings as undisclosed income on ground that fake gift racket was unearthed by Director of IT (Inv.), Kanpur and gifts were being purchased by payment of amount in cash. He further observed that this goes to show that assessee was fully aware of fact that investigation was being carried on by Investigation Wing of Department and he might be investigated in respect of bogus credits/gifts received by him as credited in his bank account. From this observation of AO, it can be safely inferred that there was no such investigation in case of assessee and there was no information with Department that gifts/credits were fake or bogus on dates when assessee surrendered amounts voluntarily. In our view, onus was on Department to prove that assessee had concealed his particulars of income and furnished wrong statement and burden shifts to assessee only if assessee fails to offer any explanation for undisclosed income or offers explanation which is found to be false by AO. At this stage we may mention facts of case of Smt. Sunita Tuli (supra). In that case, original return was filed by assessee beyond time allowed under s. 139(1) of Act. revised return was filed after expiry of one year from end of relevant assessment year surrendering gifts of Rs. 3,00,000 on apprehension of inability to prove gifts in strict legal sense. AO did not take cognizance of revised return and issued notice under s. 148 of Act. In penalty proceedings under s. 271(1)(c), AO did not accept contention of assessee that she had surrendered amount bona fide and voluntarily, observing that assessee had concealed particulars of her income by showing bogus gifts in original return and revised return was filed after Investigation Wing had unearthed fake gift racket, assessee being one of recipient of such gifts. Penalty imposed was confirmed by CIT(A) observing that assessee had surrendered gifts to avoid roaming enquiries. In second appeal, Tribunal cancelled penalty observing as under: appeal, Tribunal cancelled penalty observing as under: "8. There is no dispute to fact that assessee had offered sum of Rs. 3 lakhs as her income in revised return by offering gifts stated to be received from six persons of Rs. 50,000 each as her income. We observe that AO has considered said amount of Rs. 3 lakhs as undisclosed income of assessee on ground that Investigation Directorate, Kanpur, unearthed fake gift racket and it was found that certain persons of Kanpur had made payments by cheques to large number of other persons and payments so made were shown as gifts etc. There is no dispute to fact that there is no such investigation by Investigation Directorate against assessee on date assessee revised her return and surrendered said sum of Rs. 3 lakhs as her income by filing revised return of income. said revised return was filed b y assessee on 12th Aug., 2002, voluntarily, as on that date no investigation/survey/search had taken place against assessee to establish that said gifts of Rs. 3 lakhs stated to be received by assessee were fake or bogus gifts or it was her own money which was disclosed as gifts by assessee. Department has also not brought any material on record to prove that said gifts aggregating to Rs. 3 lakhs was concealed income of assessee. We observe that AO rested his conclusion on act of voluntary surrender by assessee to offer said gift as her income. Department has not established by any facts on record that it was concealed income of assessee or assessee had furnished inaccurate particulars of her income in original return. We are of considered view that onus is on Department to prove that assessee had concealed her income or had furnished inaccurate particulars of her income and burden shifts to assessee only if assessee fails to offer any explanation for undisclosed income or offers explanation which is found to be false by assessing authority. above view has been taken by Hon ble Madhya Pradesh High Court in case of CIT vs. Suresh Chandra Mittal (2000) 158 CTR (MP) 26: (2000) 241 ITR 124 (MP) and said decision of Hon ble Madhya Pradesh High Court has been confirmed by apex Court in CIT vs. Suresh Chandra Mittal (2001) 170 CTR (SC) 182: (2001) 251 ITR 9 (SC). We are of considered view that decision of Hon ble Karnataka High Court in case of CIT vs. K.P. Sampath Reddy (supra), as relied upon by authorities below is not applicable to facts of case, as in that case assessee agreed to assessment on higher income only after there was survey of his business and impounding of books that he recorded several erroneous entries. On date of assessment, assessee gave letter to ITO agreeing to total income of Rs. 6 lakhs, therefore in said case there was no voluntary revision of return by assessee but assessee offered to be assessed at higher amount only when erroneous entries were found to be recorded in impounded books of account of assessee. Hence, there was concealment of income by assessee in said case. On other hand, in case before us, we observe that assessee had revised her return on 12th Aug., 2002 to offer said gifts of Rs. 3 lakhs as her income and as on that date, i.e., 12th Aug., 2002, there was no material or information against assessee with AO that gifts stated to be received by assessee were fake or bogus. authorities below are obliged to establish, based on material or evidence, that gifts received by assessee were bogus or fake and assessee surrendered same only on being detected by Department. penalty proceedings are quasi criminal proceedings. Therefore, Department is obliged to establish with authentic evidence that assessee concealed her particulars of income or furnished inaccurate particulars of income to justify penalty under s. 271(1)(c) of Act. We observe that no such evidence or material is available on record to show that gifts were bogus and they were concealed income of assessee. Hence, above case of CIT vs. K. P. Sampath Reddy (supra) does not support case of Department and has not been correctly relied upon by authorities below." In above case, Tribunal, Lucknow Bench has categorically held that Department has also not brought any material on record to prove that said gifts aggregating to Rs. 3,00,000 was concealed income of assessee. Tribunal further held that Department has not established by any fact on record that it was concealed income of assessee or assessee had furnished inaccurate particular of income in original return. In instant case also, AO has not brought any material on record to prove that credits aggregating to Rs. 17,50,000 was concealed income of assessee. There is no material on record to establish that aforesaid credits represented concealed income of assessee or assessee had furnished inaccurate particulars of his income in original return. In our considered view, above decision of Tribunal is squarely applicable to facts of present case. In case of Brij Bala Chaudhary (supra), assessee could not explain part of capital introduced in her business, she surrendered Rs. 35,000 for addition under s. 68 due to unexplained cash credit in her capital account. AO imposed penalty for concealment of income. Tribunal held that since assessee had made surrender only to purchase peace with Department and after being compelled by AO, it was not fit case for imposition of penalty for concealment of income because concealment of income or particulars of income was not found to be established from material on record and Department had also failed to prove by independent material that assessee had concealed her income or particulars thereof. Tribunal cancelled penalty imposed under s. 271(1)(c) of Act. It is relevant to state that while deciding case of Brij Bala Chaudhary (supra), Tribunal relied on decision of Hon ble Supreme Court in case of CIT vs. Suresh Chandra Mittal (2001) 170 CTR (SC) 182: (2001) 251 ITR 9 (SC). In instant case, Department had not discharged its burden of proving concealment and it simply rested its conclusion on act of voluntary surrender done by assessee in good faith and therefore no penalty can be validly levied in this case. Hon ble Madras High Court in case of CIT vs. M.P. Narayanan (1998) 149 CTR (Mad) 1: (2000) 244 ITR 528 (Mad) held that in penalty proceedings under s. 271(1)(c) of Act, it is duty of ITO to establish by evidence that there was concealment of income and amount added represents assessee s income. Hon ble High Court further held that it is well settled that mere fact that assessee agreed to inclusion of cash credit and other amounts in total income on account of inability to prove source or to avoid protracted litigation would not justify Department in levying penalty. Hon ble Madras High Court categorically held that it is for Department to prove that there was conscious and deliberate concealment on part of assessee and amount added represented assessee s income. Recently Lucknow Bench of Tribunal, in case of Asstt. CIT vs. Shiva Poly Plast (P) Ltd. (ITA No. 710/Luck/2006 relating to asst. yr. 2001-02, dt. 31st Oct., 2007) held that there should be some discussion in assessment order that assessee is guilty of contumacious conduct or addition is based on some positive material reflecting that assessee had filed inaccurate particulars of income or has concealed particulars of income. Tribunal further held that though formal record of satisfaction as held in decision of Hon ble Allahabad High Court in Shyam Biri Works (P) Ltd. vs. CIT (2003) 185 CTR (All) 510: (2003) 259 ITR 625 (All) is not compulsory before assuming jurisdiction under s. 271(1)(c) but assessment order must show satisfaction of AO. Though it is not necessary to use statutory words of s. 271(1)(c) but satisfaction about contumacious conduct of assessee is necessary such as he is not filing correct particulars of income or hiding some part of income followed by initiation of penalty proceedings relating to such conduct or furnishing inaccurate particulars or hiding income. Tribunal observed that if assessment order is silent on these aspects except making addition on basis other than contumacious conduct filing inaccurate particulars or concealing some income, AO cannot assume jurisdiction for initiating penalty proceedings. In case of ITO vs. Rakesh Gupta (supra), Tribunal, Amritsar Bench, SMC has held that for purpose of levy of penalty under s. 271(1)(c), AO is required to establish that explanation furnished by assessee is false or same is not bona fide and that all material facts relating to computation of income have not been disclosed. Bench further observed that word concealment voluntary means hidden and implies mala fide intention on part of assessee to evade tax or contumacious conduct. In absence of same, penalty under s. 271(1)(c) could not be levied. In instant case, there is no discussion in assessment order or penalty order that assessee had concealed particulars of income and furnished wrong statement with mala fide intention to evade tax or explanation given by assessee was not bona fide or false. In view of above discussion, in our view, it is not fit case for imposition of penalty, because concealment of income and furnishing wrong statement are not found to be established from material on record and there is no material on record to prove that assessee had concealed his income and furnished wrong statement. We may also add here that surrender made by assessee was voluntary and Department failed to detect any concealment of income. Thus, penalty levied by AO and confirmed by CIT(A) is not sustainable in law and, therefore, we cancel same. In result, appeal is allowed. *** SANTOSH NARAIN KAPOOR v. DEPUTY COMMISSIONER OF INCOME TAX