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TMI Blog2006 (11) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... ts were found. Statements of assessee were also recorded under s. 132(4) of the IT Act. The AO in the second round after setting aside orders by the Tribunal computed the claimed agricultural income from other sources. The assessee in its return of income had declared net agricultural income of Rs. 41,670. The AO noted that unexplained capital expenses of Rs. 1,32,366 and revenue expenditure of Rs. 38,608 totalling to Rs. 1,61,574 were incurred by the assessee. Relying on the statement of one Shri Kalyanmal Sharma, the AO alleged that the assessee could not prove earning of agricultural income in absence of evidence. The assessee, however, had explained that from the very seized document, it is evident that the assessee had incurred substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted further that it is a pure case of estimation of agricultural income which has been reduced by the learned CIT(A) at Rs. 30,000 against the declared agricultural income by the assessee at Rs. 2,12,000 as gross receipts. The AO had estimated the same at Rs. 41,000. Thus, penalty under s. 271(1)(c) cannot be levied on estimate basis. He placed reliance on the following decisions: (i) CIT vs. S. Rahamat Khan Birbalkhan Badruddin Party (1999) 155 CTR (Ra)) 269 : (1999) 240 ITR 778 (Raj); (ii) Shiv Lal Tak vs. CIT (2001) 166 CTR (Raj) 534 : 251 ITR 373 (Raj); (iii) Harigopal Singh vs. CIT (2002) 177 CTR (P H) 580 : (2002) 258 ITR 85 (P H); (iv) Suresh Kumar, Prop., Khuteta Krishi Yantralaya vs. ITO 30 Tax World 287 (Jp). 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book will make it clear that the AO has done nothing over and above the appellate order, though the Tribunal had already restored the entire assessment to the file of the AO to make a fresh assessment. The learned Authorised Representative submitted further that in any case it was a pure case of estimation of income inasmuch as the receipt has been enhanced and by estimating from Rs. 35,79,705 to Rs. 36,00,000 and the net profit of Rs. 13,979 has been replaced by estimated ad hoc net profit rate of 20 per cent on such receipts and thus addition of Rs. 7,06,020 has been reduced to Rs. 13,979. He referred page No. 88 of the paper book, i.e., reassessment order with the submission that the AO has estimated the net profit. The learned Authorise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that no penalty on mere disallowance of expenses being debatable in nature can be levied and placed reliance on the decision of Hon'ble Punjab Haryana High Court in the case of CIT vs. Ajaib Singh Co. (2001) 170 CTR (P H) 489 : (2002) 253 ITR 630 (P H). He further submitted that telescoping of earlier years intangible additions were not considered. The learned CIT(A) though mentioned this contention at p. 3, yet rejected the same alleging that such contention was never under consideration before learned CIT(A) or Tribunal. 6. The learned Departmental Representative, on the other hand, submitted that first appellate order was not in existence after setting aside the same by Tribunal, hence learned Authorised Representative is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l prevail upon. He placed reliance on the decision of Hon'ble Supreme Court in this regard in the case of CIT vs. Vegetable Products Ltd. 1973 CTR (SC) 177 : (1973) 88 ITR 192 (SC). 8. Considering the arguments advanced by the parties, in view of the orders of the lower authorities, material available on record as well as the decisions relied upon by them, we find substance in the contention of the assessee that in a case of estimation of income, penalty under s. 271(1)(c) cannot be levied. Admittedly, in the present case, the additions made on different accounts by the AO have been reduced at appellate stage. As submitted by the learned Authorised Representative, it is now an established proposition of law that penalty under s. 271(1)(c) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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