2012 (3) TMI 568 - HC - Income Tax

Penalty levied under Section 271(1)(c) - Held that - Additions made by the Assessing Officer were based on estimation only. A fact or allegation based on estimation cannot be said to be correct only it can be incorrect also. Therefore in the facts and circumstances of the case penalty was wrongly levied by the Assessing Officer. The basis for levying penalty in the present case is only estimation which is purely a question of fact and there is a concurrent finding of fact recorded by first appellate authority as well as the appellate Tribunal both.

Summary

Issues:
1. Appeal against penalty under Section 271(1)(c) of the Income Tax Act.
2. Alleged concealment of income and furnishing inaccurate particulars.
3. Decision of the Appellate Authority and the Appellate Tribunal.
4. Basis for the penalty - estimation by the Assessing Officer.
5. Substantial question of law for admitting the income tax appeal.

Issue 1: Appeal against penalty under Section 271(1)(c) of the Income Tax Act

The Revenue filed an Income Tax Appeal challenging the order of the Income Tax Appellate Authority, Jaipur Bench 'B', which dismissed the appeal against the penalty of Rs. 10,87,752 imposed under Section 271(1)(c) of the Act.

Issue 2: Alleged concealment of income and furnishing inaccurate particulars

The Assessing Officer levied the penalty based on alleged concealed income and furnishing inaccurate particulars, including trading addition, unexplained cash credit, and disallowed interest. The Commissioner of Income Tax (Appeals) and the Tribunal set aside the penalty, citing lack of positive evidence of concealment.

Issue 3: Decision of the Appellate Authority and the Appellate Tribunal

Both the Appellate Authority and the Tribunal examined the case in detail. The Tribunal's order highlighted that the Assessing Officer's additions were based on estimation, and there was no concrete evidence of deliberate concealment or furnishing inaccurate particulars by the assessee.

Issue 4: Basis for the penalty - estimation by the Assessing Officer

The Tribunal emphasized that the Assessing Officer's estimation did not conclusively prove deliberate concealment or furnishing inaccurate particulars. The Tribunal upheld the first appellate order, stating that the penalty was wrongly imposed solely on estimation without clear evidence of intentional wrongdoing.

Issue 5: Substantial question of law for admitting the income tax appeal

The High Court dismissed the income tax appeal, noting that no substantial question of law was present. Both the Appellate Authority and the Tribunal had unanimously determined that the additions were based on estimation, without substantial evidence of intentional concealment or inaccuracies.

This judgment underscores the importance of concrete evidence in imposing penalties under the Income Tax Act, emphasizing that penalties should not be solely based on estimations without clear proof of deliberate concealment or furnishing inaccurate particulars. The decision highlights the significance of factual findings and the absence of substantial legal questions in dismissing appeals challenging penalty assessments.