1982 (3) TMI 156 - AT - Income Tax

Summary

Issues:
1. Validity of penalty under section 271(1)(c) of the IT Act for the assessment year 1973-74.
2. Whether the assessee consciously concealed particulars of income or furnished inaccurate particulars thereof.
3. Impact of estimated income and circumstances of book seizure on penalty imposition.

Issue 1: Validity of Penalty under Section 271(1)(c)
The appeal was against the AAC's order upholding a penalty of Rs. 6,080 levied by the ITO under section 271(1)(c) of the IT Act. The ITO initiated penalty proceedings due to defaults in the assessment for the assessment year 1973-74, including a sale omission and disallowed speculation loss. The ITO passed the penalty order holding that the assessee concealed income particulars, leading to the minimum penalty imposition.

Issue 2: Conscious Concealment of Income
The AAC upheld the penalty regarding the sale omission of Rs. 6,080, stating that the assessee failed to explain the omission adequately. However, the AAC accepted the assessee's plea regarding the disallowed speculation loss, finding no proof of concealment. The assessee argued that the estimation of income was due to book seizure by the department, leading to discrepancies, and the return was filed based on an estimate without objection to a correct assessment.

Issue 3: Impact of Estimated Income and Circumstances on Penalty
The ITAT, after considering the submissions, held that the penalty imposition was not justified. Referring to the Supreme Court's ruling in Amwar Ali's case, the ITAT stated that penalty under section 271(1)(c) requires conscious concealment or furnishing inaccurate particulars. In this case, where the assessee resorted to estimation due to book seizure, putting the ITO on notice, the ITAT concluded that penalty was not warranted. The ITAT canceled the penalty, allowing the assessee's appeal.

In conclusion, the ITAT ruled in favor of the assessee, canceling the penalty under section 271(1)(c) for the assessment year 1973-74, considering the circumstances of estimation due to book seizure and lack of conscious concealment of income particulars.