2009 (11) TMI 639 - HC - Income Tax

Penalty - penalty for concealment is leviable under section 271(1)(c) if the assessment is based on estimate basis - Held that - invocation of penal provision, which requires concealment and inaccurate particulars is unwarranted in the facts of the present case. Even in Union of India v. Dharamendra Textile Processors(2008 (9) TMI 52 - SUPREME COURT), Supreme Court has observed that the finding as to suppression or inaccurate particulars in the return are necessary for attracting the penal provision under section 271(1)(c) of the Income-tax Act, 1961. no illegality or irregularity in the order of the Tribunal, so as to warrant interference by entertaining these appeals. tax case appeals are dismissed.

Summary

Issues:
1. Whether penalty for concealment is leviable under section 271(1)(c) if the assessment is based on estimate basis?

Analysis:
The judgment involves multiple appeals related to different assessment years against the common order of the Income-tax Appellate Tribunal. The primary issue revolves around the levy of penalty for concealment under section 271(1)(c) of the Income-tax Act, 1961, specifically in cases where the assessment is based on an estimate basis. The Tribunal's decision in this regard was challenged, leading to these appeals.

The facts of the cases highlight instances where assessments were redone multiple times due to remands by higher authorities. In one case, the assessment year 1990-91 saw the income being determined at different amounts through various proceedings and appeals. The Assessing Officer initiated penalty proceedings under section 271(1)(c) against the assessee, which was later canceled by the Commissioner of Income-tax (Appeals). The Tribunal upheld this decision based on previous judgments indicating that no penalty for concealment can be levied if the assessment is based on an estimate and there is no gross or willful negligence by the assessee.

Another aspect of the judgment involves an assessment year where the Department assumed the assessee sold rectified spirit in the black market, leading to income determinations based on different profit margins. The Tribunal set aside the assessments for redone after examining Central excise records. The Commissioner of Income-tax (Appeals) directed the Assessing Officer to adopt a specific profit margin, considering past observations and lack of specific evidence for additions made by the Assessing Officer. The Tribunal's decision was supported by legal precedents emphasizing the need for evidence of suppression or inaccurate particulars to invoke the penal provisions under section 271(1)(c).

The judgment references the decision in the case of CIT v. Smt. K. Meenakshi Kutty, highlighting that penal provisions cannot be invoked without evidence of suppression or inaccurate particulars. It also cites the Supreme Court's stance in Union of India v. Dharamendra Textile Processors, emphasizing the necessity of findings on suppression or inaccuracies for penal provisions. Ultimately, the High Court upheld the Tribunal's decision, dismissing the tax case appeals and connected miscellaneous petitions, as there was no illegality or irregularity warranting interference.

In conclusion, the judgment delves into the complexities of penalty provisions under section 271(1)(c) concerning assessments based on estimates, emphasizing the importance of evidence and findings related to suppression or inaccuracies to justify the imposition of penalties. The legal analysis provided by the court showcases a thorough examination of the facts and legal precedents to arrive at a reasoned decision in each case.