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Penalty under section 271(1)(c) for deliberate underestimate of income based on estimate basis. Analysis: Issue 1: Penalty under section 271(1)(c) for deliberate underestimate of income based on estimate basis The appeal was against the cancellation of a penalty of Rs. 58,000 under section 271(1)(c) of the Income Tax Act for the assessment year 1986-87. The assessee had initially declared an income of Rs. 42,780, but the assessment by the Assessing Officer resulted in an income of Rs. 2,66,230 mainly due to disallowance of Khep Kharach expenses. The CIT(A) partially granted relief, and the Tribunal further reduced the addition. The penalty was levied by the Assessing Officer based on the difference between the declared and assessed income. The CIT(A) observed that there was no concrete evidence to prove deliberate concealment or furnishing inaccurate particulars of income. The Revenue relied on precedents to argue that penalties can be imposed for estimated additions, but the CIT(A) disagreed, citing judgments supporting the assessee's position. The Tribunal emphasized that penalties cannot be levied solely on estimates without concrete evidence. In this case, the disallowance was made on an estimate basis without substantial proof of deliberate underestimation. The Tribunal referred to a similar case where penalties for estimated additions were canceled, further supporting the cancellation of the penalty in this instance. The Tribunal concluded that the CIT(A) rightfully canceled the penalty, dismissing the Revenue's appeal. In conclusion, the Tribunal upheld the cancellation of the penalty under section 271(1)(c) as there was insufficient evidence to prove deliberate concealment or furnishing inaccurate particulars of income, especially when the additions were based on estimates without concrete material to support deliberate underestimation. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the penalty under section 271(1)(c) for deliberate underestimate of income based on estimate basis.
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