2021 (8) TMI 1421 - AT - Income Tax

Penalty u/s 271(1)(c) - suppression of income - difference in lodging receipts was treated as suppression in lodging receipts and the same was treated as concealment of income - HELD THAT - In this case, the AO has levied the penalty by taking into consideration only five months of the lodging receipts and estimating for the remaining seven months and the addition is made. In our opinion, penalty u/s. 271(1)(c) cannot be levied on the basis of estimation. AO has failed to prove that the Assessee had either concealed the income or filed inaccurate particulars. Therefore, Section 271(1)(c) has no application in this case. Accordingly, we reverse the order passed by CIT(A) and we cancel the penalty levied by the AO. Appeal of assessee allowed.

Summary

The appeal was against the order of the Commissioner of Income Tax for the Assessment Year 2010-2011. The Assessing Officer had levied a penalty under section 271(1)(c) for alleged suppression of income. The Appellate Tribunal ruled that penalty cannot be based on estimation and canceled the penalty. The appeal was allowed.