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Levy of penalty under section 18A(9) read with section 28(1)(c) of the Income-tax Act. Detailed Analysis: The case involves the assessment year 1954-55, where the assessee, engaged in a bus business, submitted an estimated income of Rs. 25,000 under section 18A(2) of the Income-tax Act. However, the final assessed income was Rs. 90,759, leading the Income-tax Officer to apply section 18A(9) and impose a penalty of Rs. 9,323. The penalty was based on the belief that the assessee knowingly provided an inaccurate income estimate, triggering the application of section 28(1)(c) of the Act. The assessee's explanation, attributing the income disparity to disallowed depreciation and investments made post-accounting year, was rejected as the basis for the estimate was not substantiated (Para. 2). The Appellate Assistant Commissioner and the Tribunal upheld the penalty imposition, emphasizing the lack of justification for the initial income estimate. The Tribunal noted that the assessee did not contest the additions made to the returned income, further supporting the penalty decision (Para. 3). In the subsequent appeal to the High Court, the assessee reiterated arguments regarding the computation of income by the Income-tax Officer, emphasizing the strict interpretation of penal provisions and the requirement for fair application. Citing a previous case, the court highlighted the need for the assessee to have a reasonable belief in the income estimate provided. However, in the present case, the investments made post-accounting year, not supported by income sources, led to the conclusion that the added income was rightfully included in the assessment (Para. 4). The court emphasized that the assessee failed to demonstrate a reasonable basis for the initial income estimate, crucial for assessing the penalty under section 18A(9) and section 28. Despite a statement filed before the Tribunal, the lack of credible justification for the estimate led to the affirmation of the penalty by the authorities. The court concluded that the penalty imposition was justified based on the available evidence, and ruled in favor of the department, directing the assessee to bear the costs (Para. 5).
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