1990 (2) TMI 92

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... the accounting year relevant to the asst. yr. 1978-79, which is now under consideration. The ITO, in order to find out whether the assessee had disclosed proper cost of construction asked the departmental valuation officer to make an assessment of the cost of construction. The cost of the construction of the building as estimated by the departmental valuation officer was more or less the same as had been shown by the assessee. However, there was divergence with regard to the cost of Auditorium fittings and beauty and decor. The assessee had shown the aggregate cost of auditorium fittings, beauty and decor, furniture and seats at Rs. 13,83,555. The departmental valuer had estimated the cost of the Auditorium fittings and beauty and decor at .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... (Appeals)) in the course of any proceedings under this Act, is satisfied that any person— (a) xv xx xx (b) xx xx xx (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty,— xx xx xx xx xx xx (Explanation 1.—Where in respect of any facts material to the computation of the toal income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the ITO or the AAC (or the Commissioner (Appeals)) to be false, or (B) such person offers an explanation which he is not abl .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... on account of cost of certain items as shown by the assessee having not been accepted and on account of estimation of higher cost instead. Under the main provisions of s. 271(1)(c), this would not suffice for the imposition of penalty. The question now remaining to be examined is whether under Explanation 1 to s. 271(1)(c) imposition of penalty could be justified. This aspect of the matter was also examined by the CIT(A) and his conclusion was that even under Explanation 1 the imposition of penalty could not be justified. We are inclined to agree with the findings given by the CIT(A) on this behalf. The assessee had given an explanation about the adequacy of the expenditure shown to have been incurred by it. This explanation was not accept .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X