1995 (6) TMI 69 - AT - Income Tax

Summary

Issues:
Penalty under section 271(1)(c) of the IT Act for concealment of income for the assessment year 1983-84.

Detailed Analysis:

Issue 1: Penalty Imposed by Assessing Officer
The assessee's appeal was against the penalty imposed by the Assessing Officer at Rs. 25,000 under section 271(1)(c) of the IT Act for concealing income for the assessment year 1983-84. The CIT(A) sustained a penalty of Rs. 21,976. The Assessing Officer made an addition of Rs. 34,070 on account of low yield of Dal, leading to the initiation of penalty proceedings.

Issue 2: Assessment Proceedings and Penalty Proceedings
The assessee, a registered firm running a Dal Mill, filed a return declaring income of Rs. 83,049 for the relevant accounting period. The Assessing Officer made an addition to the income returned due to low yield of Dal. The AAC set aside the assessment for proper scrutiny. The fresh assessment resulted in an addition of Rs. 34,070, leading to penalty proceedings. The Assessing Officer imposed a penalty of Rs. 25,000, alleging concealment of income.

Issue 3: Arguments Before CIT(A) and Tribunal
Before the CIT(A), the assessee contended that the books of account were maintained with quantitative details and the declared yield of Dal was proper. The CIT(A) sustained a penalty of Rs. 21,976. The assessee, dissatisfied, appealed further. During the penalty proceedings, the assessee explained the reasons for the low yield and argued that the penalty was unjustified.

Issue 4: Tribunal's Decision
The Tribunal considered the rival submissions and found that the assessee had maintained proper books of account with quantitative details. The explanation provided for the low yield was deemed reasonable, as the assessee had produced high-quality Dal by sprinkling lesser water, resulting in higher market prices. The Tribunal held that the addition on account of low yield did not prove concealment of income. Therefore, the penalty for concealment was canceled.

Conclusion
The Tribunal allowed the appeal, canceling the penalty imposed by the Assessing Officer for alleged concealment of income. The Tribunal found that the assessee's explanation for the low yield was reasonable and that there was no evidence of fraud or wilful neglect. The decision was supported by the assessee's maintained records and relevant legal precedents.