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2006 (7) TMI 148

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....sition of penalty by the Assistant Commissioner of Income-tax under section 271(1)(c) of the Income-tax Act in the light of the decision of the apex court in Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705?" The assessee filed his return of income on November 13, 1991, showing loss of Rs. 2,43,440 after adjusting depreciation of Rs. 3,30,538. A search was conducted in the residential and business premises of the assessee on August 21, 1999 under section 132 of the Act. During the course of search, certain books of account were seized. The assessee was maintaining accounts in respect of the business of liquor of which the income declared was only Rs. 40,000 on estimate basis. The assessee's main source of income was from....

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.... 223 ITR 264 and also the decision of the Supreme Court in Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705, the Tribunal took the view that there was no reason to initiate penalty proceedings and interfered with the penalty proceedings holding that in the absence of any reasonable ground penalty proceedings could not be initiated. Aggrieved by the same this appeal has been preferred by the Revenue. Sri P. K. Ravindranatha Menon, senior standing counsel for the Income-tax Department submitted that the Tribunal has not properly appreciated the scope and ambit of section 271(1)(c) of the Act. Counsel submitted that the reasoning of the Tribunal is against the well-settled legal position. Counsel referred to the decision of....

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....ttled legal position and decide as to whether the Tribunal was justified in interfering with the order of penalty. This is a case where the proceeding was initiated against the assessee after conducting a search in his residential and business premises under section 132 of the Income-tax Act and also verifying the books of account. After verifying the seized documents, a pre-assessment proposal was sent on November 20, 1992, requiring the assessee to furnish his objection, if any, in determining the business income of Kesuram Wines at Rs. 3,45,643. The assessee was also requested to produce evidence in support of the various receipts shown therein. The assessee submitted a reply on February 24, 1993. It is stated therein that the additional....

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....timate the income from liquor business at Rs. 3,45,643 and to treat the loan of Rs. 1,20,000 from his wife as unexplained income. It was also requested that the additional income estimated from the liquor business be utilised for meeting the difference in the cost of construction of the new building as found by the Valuation Officer and that no penalty be imposed. The Assessing Officer however completed the assessment determining the income at Rs. 1,34,220 after adjusting the depreciation of Rs. 3,78,522 and penalty proceedings under section 271(1)(c) were initiated and in response to the notice issued under section 274 read with section 271(1)(c) and the minimum penalty was fixed at Rs. 1,38,675 was imposed under section 271(1)(c) of the A....