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1. Penalty under section 273(2)(c) of the Income Tax Act, 1961 for failure to furnish correct estimate of income. Detailed Analysis: The Appellate Tribunal ITAT Jaipur considered a case where a penalty of Rs. 6,500 was imposed under section 273(2)(c) of the Income Tax Act, 1961 by the Income Tax Officer (ITO) and upheld by the Commissioner of Income Tax (Appeals) (CIT(A)). The penalty was imposed because the assessee firm failed to provide a correct estimate of its income, which was deemed a default under the Act. The assessee's counsel argued that the firm's income solely came from a commission for the supply of tobacco, which had increased from 7% to 9% during the relevant year. The counsel contended that the firm had acted in good faith, citing previous decisions and the firm's past record of bona fide conduct. On the other hand, the Departmental Representative asserted that the firm knowingly did not file a correct income estimate despite being aware of the increased commission rate, indicating a mala fide intention. After considering the arguments and evidence, the Tribunal decided to cancel the penalty. The Tribunal referred to previous cases to emphasize that if it appears that the assessee did not knowingly provide the correct income estimate, no penalty should be levied. The Tribunal analyzed the income estimates provided by the assessee in previous years to demonstrate that the firm's conduct was not mala fide. The Tribunal noted that the assessed income for the relevant year was Rs. 84,630, which could have led the assessee to estimate income at Rs. 1,00,000. The Tribunal concluded that the failure to anticipate the income increase due to the commission rate change was negligent but not deliberate. Considering the overall facts of the case, the Tribunal held that the assessee had a reasonable and bona fide cause for not providing the correct income estimate, leading to the cancellation of the penalty. In conclusion, the Tribunal allowed the appeal and canceled the penalty that was imposed under section 273(2)(c) of the Income Tax Act, 1961.
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