1994 (3) TMI 31

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....ding to the above reference may now be noted. For the assessment year 1971-72, the assessee filed a return disclosing an income of Rs. 11,251 on March 6, 1972. During the year in question, the assessee had constructed four shops and he has shown the cost of construction as per books in a sum of Rs. 15,337. The Income-tax Officer, however, was of the view that the cost of construction he has shown in the books of account was on the low side. On that view, the Income-tax Officer directed the assessee to submit an estimate of the cost of construction supported by a report of the approved valuer. Later on, the assessee submitted a report from the approved valuer, who has estimated the cost of construction in a sum of Rs. 35,900. It may also be ....

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....on report given by the assessee in a sum of Rs. 21,000 and the actual cost of construction shown in the books of account, namely, Rs. 15,337. Not satisfied with the relief got from the Tribunal, the assessee was able to get the above two questions referred to this court. Mr. Janarthana Raja, learned counsel appearing for the assessee, submitted that penalty under section 271(1)(c) of the Income-tax Act normally cannot be levied when the concealment is arrived at on the basis of the estimated value of the building and in support of that he placed heavy reliance on a Division Bench decision of this court in CIT v. Apsara Talkies [1985] 155 ITR 303. In that judgment, Balasubrahmanyan J., speaking for the Bench, agreeing with the view taken ....

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....ome-tax Officer. The learned judges held that even if the assessee's explanation was not acceptable, it would still require some further material to support the finding that the assessee had concealed its taxable income. We respectfully agree with this view." Contending contra, Mr. Rajan, learned counsel appearing for the Revenue, submitted that if there was a deliberate underestimate of income, an inference of concealment of income can be drawn. In support of this contention, he placed reliance on another judgment of this court in CIT v. Balakrishna Textiles [1992] 193 ITR 361. On the proposition as such, there cannot be any quarrel. But, it must be seen in the context in which that observation or proposition came to be made. The latter....