Judgment Rakesh Kumar Garg, J. 1. The Revenue has filed the present appeal under Section 260A of the IT Act, 1961 (for short the Act) against the order of the Income-tax Appellate Tribunal, Chandigarh Bench B Chandigarh (for short the "Tribunal") passed in ITA No. 983/Chd/2005 dt. 28th Feb., 2007 for the asst. yr. 2001-02 raising the following substantial question of law: Whether on the facts and circumstances of the case, the Honble Tribunal was right in law in confirming the order of CIT(A) in deleting the penalty levied under Section 271(1)(c) at Rs. 4,25,720? 2. The respondent is drawing income from salary, business income, house property and income from other sources. The return in this case was filed on 22nd Oct., 2001 declaring income of Rs. 4,35,110. The return was processed under Section 143(1) of the Act. The assessment was framed by the AO on 29th March, 2004 at an income of Rs. 16,47,990 after making addition of Rs. 12,12,880 on account of uncorroborated freight charges. The AO noticed that respondent had furnished inaccurate particulars of his income and had also concealed the particulars of income as the assessee had surrendered an amount of Rs. 12,12,880, after inquiries were Initiated to check the genuineness of the expenses claimed in the return. While making the assessment, the AO rejected the request of the surrender made by the respondent and initiated penalty proceedings on this account. Penalty under Section 271(1)(c) was imposed at Rs. 4,25,720 vide order dt. 23rd Sept., 2004. 3. Feeling aggrieved against the aforesaid penalty order, the respondent preferred an appeal before the CIT(A)-II, Ludhiana, who vide his order dt. 14th July, 2005 deleted the penalty while allowing the appeal of the assessee. Not being satisfied with the order of the CIT(A)-II, the Revenue preferred an appeal before the Tribunal. The Tribunal vide its order dt. 28th Feb., 2007 upheld the order of the CIT(A)-II and resultantly dismissed the appeal of the Revenue. Hence this appeal by the Revenue. 4. Shri Sanjeev Bansal, advocate, learned Counsel for the Revenue has vehemently argued that the assessee could not prove genuineness of the transportation expenses debited to P&L a/c as undisputedly, the transporters to whom the payment of freight charges was made could not be traced and therefore, the expenses on account of freight charges made to these transporters could not be confirmed. It was further argued by the learned Counsel for the Revenue that the surrender made by the assessee was never mutually agreed upon, as the same was rejected by the AO, as the said surrender had been made only after investigation was carried out by the Department and it was not bonajide and voluntary disclosure as the revised return was made only when the assessee came to know that there was detection of concealment by the Department. Thus the penalty was rightly imposed by the AO and therefore, the order of the Tribunal is liable to be quashed. 5. After hearing learned Counsel for the Revenue, we find no force in the contentions raised by him. In response to show cause notice issued to the assessee, reply was submitted that during the assessment proceedings, the assessee made the surrender of Rs. 12,12,880 subject to no penal action and the assessee had made the surrender just to buy peace of mind to avoid further litigation. The Madras High Court in the case of CIT v. Jayaraj Talkies, held that mere agreement to addition of income or surrender of income did not imply concealment of income where the assessee surrendered certain amount to assessment because it was unable to substantiate its claims with necessary vouchers. The Kerala High Court in the case of CIT v. M. George & Brothers, held that where the assessee for one reason or the other agrees or surrenders certain amounts for assessment, the imposition of penalty solely on the basis of the assessees surrender will not be well founded. It was held by Honble Supreme Court of India in the case of Sir Shadi Lal Sugar & General Mills Ltd. v. CIT, that where the assessee had agreed to assessment of undisclosed income, it did not absolve the Revenue from proving mens rea in quasi criminal offence. From these judicial pronouncements, it is crystal clear that the Department has to prove mens rea before levying penalty under Section 271(1)(c) of the Act and it cannot be made out that the assessee has concealed income or furnished inaccurate particulars merely because he has surrendered certain amount to avoid litigation and to buy peace of mind. From these judicial pronouncements, it is crystal clear that the Department has to prove mens rea before levying penalty under Section 271(1)(c) of the Act and it cannot be made out that the assessee has concealed income or furnished inaccurate particulars merely because he has surrendered certain amount to avoid litigation and to buy peace of mind. This High Court in the case of CIT v. Suraj Bhan (2006) 203 CTR (P&H) 230 : (2007) 159 Taxman 26 (P&H) held that penalty cannot be imposed merely on account of higher income having been subsequently declared. It was a case wherein the assessee filed the revised return showing higher income and gave an explanation that he offered higher income to buy peace of mind and to avoid litigation. Similarly, the Honble apex Court in the case of CIT v. Suresh Chandra Mittal, observed that when an assessee flies a revised return showing higher income and gave explanation that he offered higher income to buy peace of mind and to avoid litigation, penalty cannot be imposed merely on account of higher income having been subsequently declared. 6. In view of the above judicial pronouncements, we are of the view that the case of the assessee is on much better footing because no return of income was revised in this case and the transportation charges were directly made by the suppliers and not by the assessee and therefore, there is no question of concealment of income or furnishing of inaccurate particulars of income. The penalty cannot be levied merely on account of inaccurate particulars by presuming that the payments were made by the assessee, whereas the facts are otherwise. Even otherwise, the Tribunal has given a finding of fact that neither there is concealment of income nor furnishing of inaccurate particulars. In view of the abovestated categoric finding of the Tribunal, we find no error in the order of the Tribunal. Thus, no substantial question of law arises in the present appeal for our determination and the same is hereby dismissed.