Penalty under section 271(1)(c)-Concealment-Addition to income based on estimate basis-Where in a case there is nothing on record to substantiate that there was failure on part of assessee to return correct income penalty under section 271(1)(c) cannot be sustained
CIT v. Iqbal Singh & Co. (2009) 28 (I) ITCL 468 (P&H-HC)
1. The revenue is before this court against the order dated 27-6-2005 of the Income Tax Apellate Tribunal, Chandigarh Bench allowing the appeal of the assessee against the orders dated 5-9-2002 passed by the Commissioner, and dated 16-5-2001 whereby a penalty under section 271(1)(c) of the Income Tax Act, 1961 was imposed upon the assessee.
(1) This appeal proposes the following substantial questions of penalty imposed by the assessing officer under section 271(1)(c) of the Act which was confirmed by the learned Commissioner (Appeals) also?
(2) On the facts and in the circumstances of the case whether Explanation to section 271(1)(c) needs to be specifically adverted to in an ex parte order levying penalty under section 271(1)(c), when the provisions of section 271(1)(c) are otherwise attracted?
2. For the assessment year 1990-91, a penalty of Rs. 1,38,454 was levied upon the assessee which was confirmed by the Commissioner. In appeal, the Tribunal found that the Commissioner (Appeals), while confirming the penalty, no where stated that the assessee had not disclosed all the facts to compute the income. It also found that the addition to income had been made on the basis of an estimate but without bringing any material on record which could substantiate that there was a failure on the part of the assessee to return correct income due to fraud or willful neglect or furnishing of inaccurate particulars of income.
3. This court in CIT v. M.M. Rice Mills (2002) 253 ITR 17 (P&H) held as follows:
"Merely because the addition had been made to income under the proviso to section 145(1) of Income Tax Act, 1961 by adopting the view that the gross profit shown in the books of account was too low as there were defects in the method of accounting employed, it would not automatically lead to the conclusion that there was failure to return the correct income by means of fraud or gross or willful neglect."
4. We find no error in the judgment of the Tribunal. The above quoted judgment applies squarely to the facts of this case. In this view of the matter, we hold that the questions proposed do not arise in this appeal and dismiss the same with, however, no order as to costs.