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TMI Blog2009 (12) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... enses by considering the same to be non-genuine. (iv) Disallowance of Rs. 23,37,548 out of interest paid on the ground that the assessee was not charging interest on deposits and loans given. (v) Disallowance of Rs. 15,000 out of miscellaneous income. (vi) Addition of Rs. 4,681 on account of interest income from bank not disclosed. The additions made by the Assessing Officer were confirmed by Commissioner of Income-tax (Appeals) and no further dispute had been raised by the assessee. The Assessing Officer had also initiated penalty proceedings for concealment of income. In response to show-cause notice, the assessee submitted that no penalty could be imposed as the Assessing Officer had not recorded satisfaction of concealment in the penalty proceedings. It was also submitted that disallowances had been made by the Assessing Officer purely based on difference of opinion and on estimate and there was no case made out for concealment of income or furnishing of inaccurate particulars of income. In such cases it was pointed out no penalty for concealment could be imposed. The assessee placed reliance on several decisions of courts. The Assessing Officer was however not satisfied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r user of property at Dahisar 5. Royal Enterprises 5,00,000 Deposit given for user of property at Dahisar The Commissioner of Income-tax (Appeals) was satisfied by the explanation given by the assessee. It was observed by him that there was no material to show that there was deliberate act on the part of the assessee to conceal any income. The ommissioner of Income-tax (Appeals) further agreed that mere disallowance of certain expenses would not automatically lead to penalty. Reliance was placed on the judgment of the hon'ble High Court of Punjab Haryana in case of CIT v. Ajaib Singh and Co. [2002] 253 ITR 630 (P H) and several other judgments. The Commissioner of Income-tax (Appeals) accordingly accepted the explanation of the assessee in relation to various disallowance as bona fide and deleted the penalty imposed by the Assessing Officer. Aggrieved by the said decision the Revenue is in appeal. Before us the learned Departmental representative appearing for the Revenue assailed the order of the Commissioner of Income-tax (Appeals). It was argued that the Department was no longer required to prove willful concealment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In relation to the judgment of the hon'ble Supreme Court in the case of Union of India v. Dharamendra Textile and Processors [2008] 306 ITR 277 (SC), it was submitted that the said judgment had been considered by the Supreme Court subsequently in the case of Rajasthan Spinning [2010] 1 GSTR 66 (SC) and it was held that penalty was not authentic in respect of any addition made in assessment. The learned authorised representative further submitted that penalty could not be imposed in respect of estimated additions. We have perused the records and considered the rival contentions carefully. The dispute raised is regarding levy of penalty for concealment of income on account of various additions made in the assessment as mentioned in paragraph 2 earlier. Penalty under section 271(1)(c) is a civil liability and the Revenue is not required to prove wilful concealment as held by the hon'ble Supreme Court in the case of Union of India v. Dharamendra Textile and Processors [2008] 306 ITR 277 (SC). However each and every additions made in the assessment cannot automatically lead to levy of penalty for concealment of income. A case for imposition of penalty has to be examined in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly on the basis of guess work. The assessee did not dispute the addition may be because the expenditure was allowable fully in the form of depreciation in the subsequent years. There being no material brought on record showing that the expenditure was really of capital in nature in our view no penalty for concealment of income can be imposed. Similar is the position in relation to disallowance of 20 per cent. of petty cash expenses on the ground that there were no proper vouchers. The disallowance has been made purely on ad hoc basis without giving any basis. It is a settled legal position that even if no proper accounts are made and income is estimated, the estimate has to be on some reasonable basis. In this case the Assessing Officer has given no basis at all. He had not even made comparative analysis of expenses in the earlier year so as to show that expenses claimed were excessive. We are therefore not in a position to arrive at any definite inference regarding any excessive and bogus claim. Therefore adhoc disallowance of expenses cannot be the basis for imposing penalty for concealment. In the absence of any finding that the assessee had claimed any excessive expenditure whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal for considering Explanation 1 to section 271(1)(c). Obviously this case is not applicable to the present case. The case of Dr. A. K. Sharma [1993] 204 ITR 62 (Raj) related to assessment year 1966-67 and is not applicable to the present case to which Explanation 1 inserted from April 1, 1976 is applicable. In the case of V. P. Samtani [1983] 140 ITR 693 (Cal) the assessee had declared the cash credit as undisclosed income. The assessee had also declared income from horse races which on examination was found to be false. It was under these circumstances that the penalty had been upheld by the hon'ble High Court of Calcutta. In the present case claim of the assessee have not been found to be false nor the assessee had filed any disclosure petition accepting any undisclosed income. Similarly judgment of the hon'ble High Court of Kerala in the case of Premier Breweries Ltd. [2000] 244 ITR 598 (Ker), is also distinguishable. In that case the assessee had claimed expenses as repair of existing equipment and on an examination it was found that expenditure was for purchase of new equipment. Thus the claim of the assessee was found to be false which is not so in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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