INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Addition made in quantum proceedings due to unaccounted sale - No deliberate act, on assessee's part for not disclosing business receipts in income tax return -

Assessee was a partnership firm and its assessment was framed under section 143(3) read with section 147 after making addition on account of unaccounted sale. AO imposed penalty under section 271(1)(c). Assessee contended that there was no concealment of income warranting imposition of penalty. Held: There was no information available with revenue for unaccounted sale made by assessee. Thus, it transpired that there was no deliberate act, on part of assessee not to disclose business receipts in income tax return. Revenue also did not bring any material suggesting that assessee deliberately furnished inaccurate particulars of income. Addition/disallowances made during quantum proceedings does not automatically justify levy of the penalty under section 271(1)(c). Besides element of income added in quantum proceedings, there must be some material/circumstantial evidences leading to reasonable conclusion that there was conscious concealment or act of furnishing of inaccurate particulars on part of assessee. Penalty was set aside.

Followed:CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 189 taxman 322 (SC) : 2010 TaxPub(DT) 1683 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2010-11

INCOME TAX ACT, 1961

Section 254 Rule 34(5)

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