2011 (5) TMI 1130 - AT - Income Tax

Summary

Issues involved: Appeal against penalty imposed u/s 271(1)(c) for Assessment Year 1992-93.

Confirmation of penalty: The appellant contested the penalty imposed by the Assessing Officer under section 271(1)(c) amounting to Rs. 11,85,229. The assessment u/s.143(3) of the I.T. Act was finalized on 24-3-1995, determining the total income at Rs. 79,79,050. The Ld. CIT (A) deleted certain additions made by the Assessing Officer, but the Revenue appealed to the Tribunal. The Tribunal set aside the issues regarding disallowance of consultancy fees and low G.P., leading to a final assessment on 28-2-2006 with a total income of Rs. 38,74,650. The penalty proceedings u/s. 271(1)(c) were initiated, resulting in a penalty of Rs. 20,61,269 imposed by the Assessing Officer. The appellant's appeal before the Ld. C.I.T.(A) was unsuccessful, leading to the current appeal before the Tribunal.

Contentions: The appellant argued that the penalty was not justified even on the confirmed part addition, as it was based on estimates. The Tribunal had directed the Assessing Officer to apply a G.P. rate of 2.5% instead of the 6% applied initially. Citing various Tribunal/High Court decisions, the appellant contended that penalty cannot be levied in cases of estimated profits where there is no concrete finding of concealment of income.

Decision: After considering the submissions and perusing the material, the Tribunal noted that the G.P. rate of 2.5% should be applied, as per the Tribunal's order in the quantum proceedings. The Tribunal found that there was no concrete finding of concealment of income by the Assessing Officer or CIT (A). Relying on previous judgments, the Tribunal held that the Revenue failed to establish concealment of income, and therefore, the penalty u/s. 271(1)(c) was not justified. Consequently, the penalty was deleted.

Conclusion: The Tribunal ruled in favor of the appellant, deleting the penalty imposed u/s 271(1)(c) for the Assessment Year 1992-93.