1990 (2) TMI 112 - AT - Income Tax

Summary

Issues:
1. Levy of penalty under section 271(1)(c) of Rs. 52,741.
2. Reconciliation of difference in sundry creditors and debtors.
3. Impounding of books of accounts by the assessing officer.
4. Justification for upholding the penalty under section 271(1)(c).

Detailed Analysis:
1. The appeal was against the order of the CIT (A) regarding the penalty under section 271(1)(c) amounting to Rs. 52,741. The appellant, a registered firm engaged in wholesale and retail business, faced assessment under section 144 due to non-production of necessary documents. The assessing officer found a difference in sundry creditors and debtors, leading to an addition of Rs. 1,03,658 as income from undisclosed sources. The CIT (A) reduced this addition to Rs. 52,741, which was upheld by the ITAT.

2. The assessing officer initiated penalty proceedings for concealment of income based on two specific additions. The CIT (A) deleted the penalty related to one item but sustained it for the addition of Rs. 52,741. The appellant contended that the difference in figures was unrelated to the trading account and could be reconciled if impounded books of accounts were provided. However, the impounded cash book and journal were not released for reconciliation, impacting the defense against the penalty.

3. The appellant's counsel argued that there was no attempt to conceal income, emphasizing the unavailability of impounded books for reconciliation. Referring to a past case, the counsel highlighted the possibility of genuine mistakes in postings or totals, supporting the claim that no fraud or wilful neglect existed. The absence of positive evidence indicating income concealment and the reconciliation efforts made in previous assessments were key arguments against the penalty.

4. After considering the contentions, the Tribunal noted that the impounded cash book was not provided to the appellant despite directions. Given the past reconciliation success and the absence of concrete evidence of concealment, the Tribunal concluded that the penalty under section 271(1)(c) was unsustainable. The decision favored the appellant, emphasizing the lack of fraud or wilful neglect in income reporting, leading to the cancellation of the penalty.

In conclusion, the Tribunal allowed the appeal, canceling the penalty imposed under section 271(1)(c) of Rs. 52,741 due to the lack of evidence supporting income concealment and the unavailability of impounded books for reconciliation.