Appeal dismissed for penalty under Income-tax Act due to lack of evidence of fraud or wilful neglect.

The Court dismissed the appeal against the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1990-91. The Tribunal found that the penalty was based on an estimate without concrete evidence of fraud or wilful neglect in income disclosure. Referring to a previous judgment, the Court emphasized that mere adjustments to income do not imply fraudulent intent. As the Tribunal's decision aligned with the cited judgment, the appeal was dismissed without costs.

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Issues involved: Appeal against penalty imposed under section 271(1)(c) of the Income-tax Act, 1961.

Issue 1:
The appeal raised substantial questions regarding the penalty imposed under section 271(1)(c) of the Act, confirmed by the ld. CIT(A).

For the assessment year 1990-91, a penalty of Rs. 1,38,454 was levied on the assessee, which was upheld by the Commissioner. However, the Tribunal noted that the Commissioner did not establish that the assessee failed to disclose all facts for income computation. The addition to income was based on an estimate without concrete evidence of fraud or wilful neglect in disclosing accurate income particulars.

Issue 2:
The Court referred to a previous judgment in CIT v. M.M. Rice Mills [2002] 253 ITR 17, emphasizing that mere adjustments to income do not automatically imply fraudulent intent or wilful neglect. The judgment highlighted that discrepancies in accounting methods do not necessarily indicate a failure to report correct income through fraudulent means.

The Court found no fault in the Tribunal's decision, stating that the cited judgment directly applied to the current case. Consequently, the proposed questions were deemed irrelevant, leading to the dismissal of the appeal without costs.

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