2013 (3) TMI 718 - AT - Income Tax

Tribunal rules penalties cannot be imposed solely on estimated additions

The Tribunal dismissed the Revenue's appeal against a penalty order under section 271(1)(c) of the IT Act, 1961 for the assessment year 2000-01. The ... - Issues Involved: Appeal against penalty order u/s 271(1)(c) of the IT Act, 1961 for asst. yr. 2000-01.Summary:The appeal by the Revenue was against a penalty order u/s 271(1)(c) of the IT Act, 1961 for the assessment year 2000-01. The penalty was imposed based on estimated additions made during the assessment. The assessee, an authorized dealer of Indian Oil Corporation, had filed its return of income declaring a lower total income than assessed. The additions made by the Assessing Officer included amounts related to sales of mobile oil and spare parts, stock shortages, and disallowed expenses. The penalty proceedings were initiated in 2003, resulting in a penalty of Rs. 5,50,000 being imposed. In the first appeal, the entire penalty was deleted, leading to the Revenue's current appeal.Upon review, the Tribunal found that the penalty was primarily based on estimated additions, most of which had been deleted except for a minor amount. The Tribunal cited legal precedents to establish that penalties under s. 271(1)(c) cannot be imposed solely on estimated additions, as they do not necessarily indicate concealment or inaccurate particulars of income. The Tribunal referenced specific judgments to support its decision, emphasizing that estimated additions do not warrant penalty imposition. Consequently, the Tribunal upheld the decision of the CIT(A) to delete the penalty based on similar reasoning.Therefore, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the penalty by the CIT(A) due to the nature of the estimated additions and the legal principles governing penalty imposition in such cases.