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TMI Blog2006 (1) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty of Rs. 13,80,000 in respect of assessment year 1995-96, Rs. 4,14,000 in respect of assessment year 1996-97 and Rs. 6,88,000 in respect of assessment year 1997-98. 3. In this case the assessee is an owner of a Tea Estate and the return for three years were filed showing total income of Rs. 5,27,58,110 for assessment year 1995-96, total business loss of Rs. 1,32,42,483 for assessment year 1996-97 and business income of Rs. 28,32,68,930 in respect of assessment year 1997-98. The assessment was completed by the Assessing Officer on 31-3-1998, 31-3-1999 and 31-3-2000 respectively determining business income of Rs. 13,73,58,106, Rs. 10,44,81,540 and Rs. 56,25,80,100. The Assessing Officer while completing assessment made various add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer has observed in his order that the assessee has intentionally debited bogus expenses which has not been proved, hence, it is a fit case for imposing penalty under section 271(1)(c). Accordingly, the Assessing Officer has imposed penalty in all the three years. 4. Aggrieved by the order the assessee filed appeal before the Ld. CIT(A), the Ld. CIT(A) after hearing the assessee deleted the penalty. The basic thrust of the Ld. CIT(A) in his order is that no penalty can be imposed where income is estimated. For this purpose, the Ld. CIT(A) has placed reliance on some of the decisions where it has been held that penalty under section 271(1)(c) cannot be imposed where the addition is made on estimate basis. These decisions are quoted in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the Assessing Officer has given ample opportunity to the assessee to prove the genuineness of the expenditure but there is a clear failure on the part of the assessee to justify the genuineness of this huge expenditure claimed in three years as 'security service charges' under the head 'Labour and staff welfare'. The Assessing Officer has clearly recorded the situation which necessitated initiation of penalty proceedings under section 271(1)(c). Even the ITAT while restricting the disallowance at Rs. 15 lakhs, Rs. 6 lakhs and Rs. 8 lakhs to meet the end of justice, has observed in its order: "...We find that full vouchers and records could not be produced in support of the expenses on security services claimed by the assessee-comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions wherein it has been held that in the case of estimation of income penalty under section 271(1)(c) cannot be imposed. He has referred to the following decisions:- (i) CIT v. Ram Singhani Dal Mills [2002] 254 ITR 264(MP) (ii) CIT v. Dhillon Rice Mills [2002] 256 ITR 447 (Punj. Har.) (iii) CIT v. Metal Products of India [1984] 150 ITR 714 (Punj. Har.) He has also referred to the decision of Hon'ble Gujarat High Court in the case of CIT v. Subhash Trading Co. [1996] 221 ITR 110 and the decision of Hon'ble Madras High Court in the case of CIT v. Inden Bislers [1999] 240 ITR 943. 9. At the outset, we must state that decided cases can provide illustrations and afford indications of the kind of considerations which may relevantl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Addl. CIT v. Smt. Chandrakanta [1994] 205 ITR 607, has held that where the assessment is based on estimate, penalty can be imposed under section 271(1)(c). Almost similar view was taken by the Hon'ble Bombay High Court in the case of R.B. Shreeram Durgaprasad and Fatechand Narsinghdas v. CIT [1987] 168 ITR 619. Hon'ble Madras High Court in the case of A.K. Bashu Sahib v. CIT [1977] 108 ITR 736 has also taken similar view that where the assessee had deliberately under-estimated the income, penalty can be imposed under section 271(1)(c). 11. In fact, in this case the total income has been determined by the Assessing Officer on the basis of the order of Hon'ble ITAT who has estimated the bogus expenditure to the tune of Rs. 13,80,000 for a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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