2010 (12) TMI 117 - HC - Income Tax

Penalty - Concealment of Income - Learned counsel for the assessee submitted that mere fact that addition was sustained by rejecting the plea of the assessee about loss of bardana, was not enough to uphold the penalty based on the judgment of this Court in CIT v. Ajaib Singh & co. 2001 -TMI - 13145 - PUNJAB AND HARYANA High Court - Levy of penalty is not based on mere addition but on satisfaction that there was concealment of particulars of income - The appeal is dismissed.

Summary

Issues:
1. Justification of sustaining penalty under Section 271(1)(c) without satisfaction of concealment of income.
2. Justification of sustaining penalty based on suppressed sales of bardana.

Analysis:
1. The first issue raised in the appeal questioned the justification of sustaining a penalty under Section 271(1)(c) without the assessing officer recording any satisfaction about the concealment of income. The court referred to a judgment in a similar case and decided against the appellant, stating that the question was covered by a previous judgment.

2. Moving on to the second issue, the court examined the claim of the appellant for a deduction on account of the loss of bardana. The assessing officer disallowed the claim, suspecting that the appellant had sold the bags and suppressed the income. The CIT(A) affirmed this finding, stating that there was no justification for the claimed shortage of bardana. The Tribunal also upheld this decision, considering the cost price and sale price of bardana bags, concluding that the addition made for suppressed sales was fair and reasonable.

3. Subsequently, the assessing officer levied a penalty equal to the alleged tax evasion amount, which was upheld by the CIT(A) and the Tribunal based on the finding of suppressed sales of bardana. The appellant argued that the mere rejection of the plea about the loss of bardana was insufficient to justify the penalty, citing a relevant judgment. However, the court emphasized that penalty under Section 271(1)(c) can be levied if there is concealment or inaccuracy in income particulars, even if the additions are made without doubting the assessee's bonafides. The court concluded that since there was a concurrent finding of concealment of income by the CIT(A) and the Tribunal, the levy of penalty was justified, distinguishing the case relied upon by the appellant.

4. Ultimately, the court dismissed the appeal, upholding the penalty imposed on the appellant for suppressed sales of bardana, as there was a valid finding of concealment of income.