Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1992-93 and 1993-94 - Whether when addition had been made on basis of estimate and not on account of any concrete evidence of concealment, then penalty under section 271(1)(c) was not leviable - Held, yes FACTS The assessee-company filed its return of income along with the copies of audited books of account. During the assessment proceeding, the Assessing Officer found from the documents seized by the Excise and Taxation Department during survey that in the invoice book containing five sale vouchers, original copies of four bills were found torn and only duplicate copies were available. The Assessing Officer held that the books of account of the assessee were not reliable and did not reflect its true income. He, therefore, rejected the accounts and made addition by estimating the unaccounted sales. The said addition was confirmed by the Commissioner (Appeals) as also by the Tribunal. Thereafter, the Assessing Officer initiated penalty proceedings and levied penalty under section 271(1)(c) which was confirmed by the Commissioner (Appeals) but on second appeal, the Tribunal deleted the penalty holding that addition was confirmed by taking into consideration the yield of preceding year vis-a-vis the yield of the year under consideration and there was no conclusive evidence that the assessee had, in fact, concealed the income to the extent of the addition sustained by the Tribunal. On revenue's appeal : HELD The order passed by the Tribunal was based upon two decisions in CIT v. Ravail Singh & Co.[2002] 254 ITR 191 / 122 Taxman 831 and Hari Gopal Singh v. CIT [2002] 258 ITR 85 /125 Taxman 242 . In both these decisions, the Court had held that in order to attract clause (c) of section 271(1), it is necessary that there must be concealment by the assessee of the particulars of his income or furnishing of inaccurate particulars of such income. The provisions of section 271(1)(c) are not attracted to cases where the income of an assessee is assessed on an estimate basis and additions are made therein. It was held that when the addition had been made on the basis…

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