2004 (1) TMI 336 - AT - Income Tax

Tribunal Upholds Penalty Cancellation: No Concealment of Income Justified Under IT Act, Section 271(1)(c.

The Tribunal dismissed the Department's appeal, affirming the cancellation of the penalty under section 271(1)(c) of the IT Act. It concluded that the ... Penalty - For concealment of income - difference of income - HELD THAT:-In view of the ratio laid down by the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Metal Products of India [1984 (1) TMI 36 - PUNJAB AND HARYANA HIGH COURT], it cannot be said that in the case of assessee there was any fraud or gross or wilful neglect to return the correct income. In that view of the matter also the penalty was not leviable u/s 271(1)(c) of the IT Act. Similarly the Hon’ble Punjab & Haryana High Court in the case of Harigopal Singh vs. CIT [2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT], held that 'there was a difference of opinion as regards the estimate of income of the assessee. Since the AO and the Tribunal adopted different estimates in assessing the income of the assessee, it could not be said that the assessee had concealed the particulars of income so as to attract cl. (c) of s. 271(1)'. The ratio of above decision laid down by the Punjab & Haryana High Court is squarely applicable to the facts of the present case, therefore, the learned CIT(A) was justified in deleting the penalty. A similar view has been taken by the Madras High Court in the case of CIT vs. Smt. K. Meenakshi Kutty[2002 (8) TMI 86 - MADRAS HIGH COURT] by holding that the Tribunal had clearly held that the estimate given by the assessee was not the result of any gross or wilful negligence and that penalty was not called for. The cancellation of penalty was valid. Thus, we are of the confirmed view that no penalty u/s 271(1)(c) of the IT Act was leviable in the facts of the present case because, in this case the income had been estimated and there was no concrete evidence that the assessee furnished inaccurate particulars of income or concealed particulars of its income. We, therefore, do not see any merit in the Departmental appeal. In the result, the appeal is dismissed. Issues Involved:The appeal concerns the cancellation of a penalty imposed under section 271(1)(c) of the Income Tax Act.Summary:The Department appealed against the cancellation of a penalty of Rs. 86,401 imposed under section 271(1)(c) of the IT Act. The assessee's income was revised, leading to a discrepancy with the AO's assessment. The AO imposed the penalty based on the difference in income computation. The CIT(A) confirmed the penalty, but the Tribunal directed a different approach. The Tribunal held that the penalty was unjustified as there was no concealment of income by the assessee.The Department contended that the penalty was rightly levied due to the confirmed addition in the assessee's income. The assessee argued that the addition was based on estimates and did not indicate concealment of income. The Tribunal analyzed the case, noting the discrepancies in income estimation. It referenced legal precedents to support the conclusion that the penalty was not applicable in this scenario.The Tribunal observed that the estimation of income did not imply concealment by the assessee. Legal precedents were cited to emphasize that discrepancies in income estimation did not warrant a penalty under section 271(1)(c). The Tribunal dismissed the Department's appeal, affirming that no penalty was justified in this case due to the nature of income estimation without concrete evidence of concealment.In conclusion, the Tribunal dismissed the appeal, upholding the decision to cancel the penalty under section 271(1)(c) as there was no evidence of inaccurate particulars or deliberate concealment of income by the assessee.