1988 (3) TMI 125 - AT - Income Tax

Summary

Issues:
1. Penalty under section 271(1)(C) for alleged concealment of income based on agreed addition in assessment.

Detailed Analysis:
The judgment involves an appeal by the assessee against the order of the learned AAC for the assessment year 1978-79. The assessee, an individual running a business, declared income but did not maintain complete books of account, leading to the assessment being made on an agreed income figure higher than declared. The Income Tax Officer (ITO) initiated penalty proceedings under section 271(1)(C) based on this agreed addition. The assessee contended that the higher assessment was accepted to avoid further disputes and not due to concealment. The ITO, however, levied a penalty of Rs. 1,100, which was confirmed by the AAC.

The main argument raised by the assessee before the Appellate Tribunal was that penalty could not be imposed solely based on an agreed addition without meeting the requirements of section 271(1)(C). The assessee cited precedents to support this argument. The Departmental Representative, on the other hand, relied on the orders of the Income-tax authorities.

The Tribunal considered the submissions and legal precedents cited. It noted that the assessment year in question was the first year of assessment for the assessee and that the agreed addition was made to avoid further disputes rather than as a confession of concealment. The Tribunal found that the explanation provided by the assessee was bona fide and that there was no evidence of concealment detected by the ITO. The Tribunal referred to a precedent from the Rajasthan High Court to support its decision. Consequently, the Tribunal held that no penalty was justified under section 271(1)(C) in this case and canceled the penalty levied.

In conclusion, the appeal by the assessee was allowed, and the penalty under section 271(1)(C) was canceled based on the finding that the agreed addition was not indicative of concealment and was made to avoid further disputes.