1995 (10) TMI 60 - AT - Income Tax

Summary

Issues involved:
The issue in this case revolves around whether the assessee is liable for penalties under sections 271(1)(c) and 273(2)(aa) due to an addition made under section 69 of the I.T. Act, 1961, leading to a difference of opinion among the Members of the Tribunal.

Comprehensive Details:

1. Background and Assessment:
The appeal pertains to the assessment year 1983-84, where the assessee, a partnership engaged in wholesale business, filed a return showing total income of Rs. 54,915. An addition of Rs. 1,28,100 was made towards alleged purchase of oil outside the books of account, along with other disallowances. The Assessing Officer initiated penalty proceedings under section 273(a) for short payment of advance tax.

2. Assessee's Response and Penalty Imposition:
The assessee contended that the addition led to a shortfall in advance tax payment, thus no default was committed. However, the Assessing Officer disagreed, levying a penalty of Rs. 2,000 under section 273(2)(aa), citing the addition as justified based on evidence from a search operation.

3. Appeals and Tribunal Decision:
The CIT(A) upheld the penalty, stating the addition reflected untrue income. The Judicial Member of the Tribunal disagreed, noting the deletion of the addition in the quantum appeal and canceled the penalty. The Accountant Member, however, supported the penalty imposition, emphasizing the assessee's awareness of the purchase.

4. Third Member Decision:
Upon review, the Third Member analyzed the penalty provisions under section 273(a) and (2)(aa), concluding that no penalty was leviable due to the deletion of the addition. Citing a High Court ruling, the Third Member found the penalty unjustified given the disparity between the estimated and assessed income. The appeal was allowed based on the majority view.

5. Final Order:
The matter was referred to the Regular Bench for disposal in line with the majority opinion, ultimately allowing the appeal based on the Third Member's decision.

This summary encapsulates the key aspects and decisions of the legal judgment, focusing on the penalty imposition under different sections of the I.T. Act, 1961, and the subsequent Tribunal rulings.