Law: Income Tax Act, 1961

Section: 256,271,271(1)(c),145,145(1)

Income-tax--Reference---Penalty---Concealment of income---Addition of income on basis of estimate---Addition reduced considerably by Tribunal---Finding b) Tribunal in penalty proceedings that there was no concealment of income--­Tribunal was justified in cancelling penalty---No question of law arose--­Indian Income Tax Act, 1961, Ss. 256 & 271(1)(c). The assessee was a firm dealing in liquor. For the assessment year 1985-86, the assessee had filed a return of income on September 12, 1985 declaring income of Rs.4,62,"70 on the total sales of Rs.3,17,12,712 which gave a gross profit at about 3.9 per cent. T`he Income-tax Officer: found that certain expenses incurred were not supported by vouchers. He concluded under section 145(1) of the Income `Fax Act, 1961, that the sale pure of liquor in respect of the shops other than the shop at 1. was much less than the sale price of liquor at the L shop. He estimated the sales at Rs. 20 lakhs and the same was added to the trading account. This addition raised the gross profit rate to I l per cent. After disallowing some expenses the Income-toy; Officer completed the assessment on Mareli 27, 1986 on an income of Rs.24.96,770. The assessee went in appeal before the Commissioner of Income-tax. The Commissioner of Income-tax (Appeals) confirmed the suppression of sales to the tune of Rs. 20 lakhs. The assessee took the matte: further in appeal before the tribunal. The Tribunal sustained an addition of one lakh of rupees only. 1n the meanwhile penalty had been imposed. The Commissioner of Income-tax (Appeals) reduced the quantum of penalty. The Tribunal cancelled the penalty on the ground that the addition of Rs.l lakh was made on an estimate basis and the assessee's explanation was bona fide. On an application to direct reference: Held, dismissing the application, that having regard to the admitted facts and the finding of fact as recorded by the Tribunal, there was nothing to show that there was concealment of income so as to attract penalty and the Tribunal in its discretion had only added Rs. 1 lakh on the basis of estimation and exercised its discretion. Under the circumstances. the finding recorded was purely a…

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