2013 (9) TMI 449 - AT - Income Tax

Penalty u/s 271(1)(c) - Held that - AO had levied penalty due to the additions made on estimate basis not relying on the Xerox copies of the vouchers and registers produced. Further it is evident from the submissions of the assessee that the assessee had produced substantial document to prove the genuineness of the transactions. The learned assessing officer was also convinced that the assessee had incurred expenditure considering the nature of business. The only dispute was with respect of quantum of allowable expenditure since the assessee had not produced all the relevant vouchers. Moreover the learned AO did not bring any materials on record that the assessee has claimed excess expenditure. In such circumstances the estimated addition does not necessarily indicate that there is concealment of income or furnishing of inaccurate particulars of income on the part of the assessee - Decided against Revenue.

Summary

Issues:
Levy of penalty u/s. 271(1)(c) of the Income Tax Act for concealment of income or furnishing inaccurate particulars of income.

Analysis:
The case involved a partnership firm engaged in diamond cutting and polishing on a job work basis. The Assessing Officer (AO) disallowed 20% of claimed expenses and made an addition of Rs. 27,49,273, levying a penalty of Rs. 8,24,787 under section 271(1)(c) for not producing original registers and vouchers. The AO rejected the books of account under section 145(3) but allowed 80% of the claimed expenses, acknowledging the necessity of labor expenses for job work completion.

Before the CIT(A), the firm argued that no notice under section 271(1)(c) was received, preventing them from explaining before the AO. The CIT(A) confirmed the addition, noting the absence of day-to-day production registers and incomplete documentation. However, the firm provided detailed submissions, including wage registers, production details, and explanations for missing documents, arguing that the disallowance was excessive and based on presumptions.

The CIT(A) deleted the penalty, stating that it is not warranted when additions are made on an estimated basis. The Tribunal upheld this decision, noting that the AO did not establish excess claims or deliberate concealment. The Tribunal found that the firm had provided substantial evidence of transactions' genuineness, and the penalty was unjustified in the absence of concrete evidence of concealment or inaccurate reporting.

In conclusion, the Tribunal dismissed the revenue's appeal, emphasizing that the estimated additions did not indicate intentional concealment or inaccurate reporting, leading to the deletion of the penalty under section 271(1)(c) of the Income Tax Act.