Law:

Section:

Section 271(1)(c) of the income-tax act, 1961-Penalty-For concealment of income-Whether even where an assessment is made on the basis of an estimate or where an addition to the income disclosed is made on the basis of an estimate, penalty provisions under section 271(1)(c) are applicable-Held, on, facts, yes Facts For the assessment year 1966-67, additions were made by the ITO to the assessee's returned income in view of the fact that there were discrepancies between account entries in a note book seized from the assessee's premises during a search prior to completion of the assessment and the entries shown in the assessee's regular account books and the claim for expenses were held to have been inflated. The Tribunal sustained the addition to the extent of Rs. 25,000 only on estimate basis. However, when penalty under section 271(1)(c) was imposed on the assessee, the Tribunal deleted the same holding that as the addition sustained by it was only on an estimate, the penalty provision under section 271(1)(c ) would not be attracted. On reference: Held If the return submitted by the assessee had been accepted without reference to the entries found in the seized account books (anamath) , it would have resulted in an underestimate or non-disclosure of the assessee's income. As a matter of fact, in this case, the ITO had made the addition only on the basis of the entries found in the account book and not on the basis of an estimate. It was only when the matter came before the Tribunal, the Tribunal, based on its estimate, reduced the addition to Rs. 25,000. Merely because the addition sustained was on the basis of an estimate, it could not be said that section 271(1)(c) will not be attracted. If the account book formed the basis of an addition to the income returned, whether addition was by way of an estimate or actuals, the assessee should be taken to have furnished inaccurate particulars of his income, for he had submitted a return disclosing only an income of Rs. 13,522. It was not, therefore, possible to hold that the assessee had not furnished inaccurate particulars of his income, The penalty provisions under section 271(1)(c) would be applicable even where an…

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