2020 (10) TMI 1198 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Reopening of assessment - estimation of income by the Assessing Officer - HELD THAT - Where there is no positive evidence or material beyond doubt of assessee having concealed the particulars of income or furnishing inaccurate particulars of income, mere addition in the quantum proceedings is not sufficient to hold assessee liable for levy of penalty. Additions made by the AO were based on estimation only. A fact or allegation based on estimation cannot be said to be correct only, it can be incorrect also. Therefore, in the facts and circumstances of the case, penalty was wrongly levied by the Assessing Officer. The basis for levying penalty in the present case is only estimation, which is purely a question of fact and there is a concurrent finding of fact recorded - Decided in favour of assessee.

Summary

Issues:
Levy of penalty u/s 271(1)(c) for concealment of income.

Analysis:
The appeal was filed against the order confirming the penalty of ?68,000 for A.Y 2009-10. The assessee argued that there was no concealment of income, as the estimation by the AO and its sustenance by the CIT(A) were based on bonafide belief. The assessee maintained complete records, and the addition was made based on past history and Tribunal directions for A.Y 2010-11. The AO was required to prove conscious concealment of income before levying penalty u/s 271(1)(c). The Tribunal had previously deleted penalties in similar cases for A.Y 2011-12, 2012-13, and 2014-15.

The Revenue contended that the assessment was reopened based on findings from A.Y 2010-11, revealing unreported income from event places. The AO estimated rental income due to lack of details provided by the assessee. The AO issued a show cause notice, but no compliance was made. The DR argued that the assessee had a history of not disclosing income correctly and failed to provide necessary details, justifying the penalty u/s 271(1)(c).

The Tribunal noted that the AO estimated income without direct evidence, and the CIT(A) reduced the quantum of estimation. It was emphasized that mere addition in the assessment order was insufficient for penalty levy. Citing legal precedents, it was established that penalty cannot be based solely on estimation. The Tribunal upheld the deletion of penalties in similar cases, emphasizing the absence of positive evidence of concealment. Consequently, the penalty on estimated rental income was directed to be deleted, and the appeal was allowed.

In conclusion, the Tribunal found that the penalty u/s 271(1)(c) was unjustified as it was solely based on estimation without concrete evidence of concealment. The Tribunal's decision was in line with legal precedents emphasizing the need for positive evidence to levy penalties for concealment of income.