2010 (10) TMI 1231 - AT - Income Tax

Tribunal directs deletion of penalty under section 271(1)(c) for lack of evidence

M/s Boparai Metals (P) Ltd., Versus  The ITO,  Ward 2 (1), Chandigarh

The Tribunal allowed the appeal, directing the Assessing Officer to delete the penalty u/s 271(1)(c) of the Act due to lack of concrete evidence ... - Issues involved: Appeal against penalty u/s 271(1)(c) of the Act for assessment year 2006-07 based on fall in GP rate and disallowance of expenses.Summary:The appeal challenged the penalty u/s 271(1)(c) of the Act amounting to Rs. 1,34,843 imposed based on a decline in GP rate and disallowance of expenses. The Assessing Officer made additions on an estimate basis due to discrepancies in the GP rate and expenses claimed by the assessee. The CIT(A) upheld the penalty, citing lack of explanation for the fall in GP rate and agreement for disallowance of expenses. However, the High Court rulings emphasized that penalty is not applicable when additions are made on an estimate basis without concrete evidence of concealment.The assessee argued that penalty was unjustified as additions were made on an estimate basis. The High Court rulings in similar cases were cited to support the argument that penalty u/s 271(1)(c) is not applicable when income is assessed on an estimate basis without evidence of concealment. The Tribunal found that the additions were made without concrete evidence against the assessee, leading to the reversal of the penalty imposed by the CIT(A).In conclusion, the Tribunal allowed the appeal, directing the Assessing Officer to delete the penalty levied u/s 271(1)(c) of the Act based on the lack of concrete evidence supporting the additions made. The decision was in line with the legal precedent set by the High Court rulings mentioned in the case.Judges: Shri G.S.PANNU, Accountant Member and Ms. Sushma Chowla, Judicial Member.