1991 (8) TMI 46 - HC - Income Tax

Tribunal cancels penalty under Income-tax Act due to lack of evidence

Commissioner Of Income-Tax Versus Dr. Sidheshwar Pd. Singh

Commissioner Of Income-Tax Versus Dr. Sidheshwar Pd. Singh - [1992] 196 ITR 740 Issues:1. Justification of canceling penalty order under section 271(1)(c) of the Income-tax Act, 1961 by the Income-tax Appellate Tribunal.Detailed Analysis:The case involved an assessee who was a doctor, with the relevant assessment year being 1973-74. The Income-tax Officer assessed the professional income of the assessee at Rs. 19,779, which was later reduced to Rs. 15,779 on appeal to the Appellate Assistant Commissioner. The enhancement in income was based on an estimate. Subsequently, penalty proceedings were initiated under section 271(1)(c) of the Income-tax Act, 1961, resulting in a penalty of Rs. 11,280 imposed on the assessee. The Tribunal, after considering all facts and materials, accepted the explanation provided by the assessee and canceled the penalty order, emphasizing that no penalty could be imposed based on estimated additions unless there was actual income concealment.The Tribunal's decision was supported by the Supreme Court's ruling in CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14, which established that if the returned income is less than 80% of the assessed income, a presumption of income concealment arises against the assessee. However, this presumption can be rebutted with relevant and cogent evidence. In the present case, the Tribunal correctly applied the legal principles and assessed the facts on record, leading to the conclusion that the assessee had discharged the burden of proof, thus justifying the cancellation of the penalty order.The High Court concurred with the Tribunal's findings, stating that no grounds were presented by the Department to challenge the sustainability of the Tribunal's factual findings. It was emphasized that the Tribunal's decision was based on relevant materials, and there was no evidence to suggest that the findings were perverse or unreasonable. Consequently, the High Court deemed the reference for a question of law under section 256 of the Income-tax Act as incompetent and rejected it. The judgment was transmitted to the Assistant Registrar, Income-tax Appellate Tribunal, Patna Bench, in accordance with the provisions of the Act.Overall, the judgment upheld the Tribunal's decision to cancel the penalty order under section 271(1)(c) of the Income-tax Act, 1961, based on the assessee's explanation and the absence of evidence indicating income concealment. The legal principles established by the Supreme Court were applied, and the High Court found no grounds to challenge the Tribunal's factual findings, leading to the rejection of the reference for a question of law.