Appeal allowed against penalty under IT Act for AY 2005-06 due to lack of evidence for concealment.

The appeal against the penalty under section 271(1)(c) of the IT Act for the assessment year 2005-06 was allowed. The penalty was deemed not leviable as the addition was based on estimation without evidence of concealment. The orders of the lower authorities were set aside, and the penalty was cancelled.

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Issues Involved: Appeal against order of ld. CIT(A) challenging penalty u/s. 271(1)(c) of the IT Act for assessment year 2005-06.

Facts: Assessee filed return of income from contract business. Survey u/s. 133A conducted, but assessee did not produce books of accounts. AO applied 8% profit rate on total receipts, resulting in income addition. CIT(A) sustained part of the addition. Penalty u/s. 271(1)(c) levied and confirmed.

Issue 1 - Addition on Estimate Basis:
Assessee argued addition made on estimate basis, hence penalty not leviable. Cited judgments supporting this contention. ITAT Agra Bench in a similar case held that penalty not justified on mere estimate of income. Supported by decisions from Chattisgarh High Court and Allahabad High Court. Penalty set aside, appeal allowed.

Issue 2 - Rejection of Accounts:
Tribunal noted AO did not reject accounts as they were in possession post-survey. Addition made to cover inadmissible expenditures, not for concealing income. CIT(A) confirmed addition, which was upheld by Tribunal. Mere addition not sufficient to prove concealment. Penalty not justified. Penalty cancelled, appeal allowed.

Conclusion:
Penalty u/s. 271(1)(c) not leviable as addition based on estimate and no evidence of concealment. Orders of authorities below set aside, penalty cancelled. Appeal of the assessee allowed.

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