Income Tax Officer v. Smt. Purnima Devi Gupta

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The Tax Publishers2004 TaxPub(DT) 1343 (Jod-Trib) : (2004) 083 TTJ 0586 : (2004) 003 SOT 0753 ITO v. Smt. Purnima Devi Gupta INCOME TAX ACT, 1961 Penalty under section 271(1)(c)- Concealment-Ad hoc estimation of income by applying net profit rate Assessee had shown gross receipts from bus plying business. AO estimated impugned income at higher rate by applying net profit rate of 33 per cent, which was higer than the income shown in the revised return. CIT (A) upheld the action of AO, while Tribunal directed AO to compute the income from bus plying by applying net profit rate of 20 per cent on estimated gross receipts, subject to depreciation and interest paid to third parties. AO imposed penalty under section 271(1)(c) on the holding that the difference of income as computed on the basis of the decision of Tribunal in the case of assessee and the income as shown by assessee as concealed income. CIT(A) was of view that AO was not justified in imposing penalty simply because books of account were rejected and provisions of section 145(2) were applied and thereby a particular net profit rate was applied for computing the income, it did not become a case of concealment of income. *Held:There was an estimate at the level of AO as well as at the level of Tribunal in respect of receipts as well as net profit rate. Thus, the income of assessee was estimated and nothing had been brought on record by AO that assessee concealed any particulars of income or furnished inaccurate particulars of income. By following Shiv Lal Tak v. CIT [2001] 251 ITR 373/[2002] 121 Taxman 99 (Raj.), it could not be said that the addition made in the hands of assessee was on account of any concealment by assessee. Therefore, the provisions of section 271(1)(c) were not applicable. Income Tax Act, 1961* Section 271(1)(c) Case Law Analysis:Followed:Shiv Lal Tak v. CIT [2001] 251 ITR 373/[2002] 121 Taxman 99 (Raj.) [para 5], Referred:Asstt. CIT v. Milap Textile Mills [1994] 48 TTJ (Jp.) 55 [para 3], CIT v. K.L. Mangal Sain [1977] 107ITR 598 (All.) [para 3], CIT v. Metal Products of India [1984] 150 ITR 714/ 18 Taxman 412 (Punj. & Har.) [para 7], Harigopal Singh v. CIT [2002] 258 ITR 85/ 125 Taxman 242 (Punj. & Har.) [para 8] and CIT v. Smt. K. Meenakshikutty [2002] 258 ITR 494 (Mad.) [para 8] Decision: In favour of Assessee. A.Y. 1993-94 ITO v. Smt. Purnima Devi Gupta SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2004 TaxPub(DT) 1343 (Jod-Trib) : (2004) 083 TTJ 0586 : (2004) 003 SOT 0753

ITO v. Smt. Purnima Devi Gupta

INCOME TAX ACT, 1961

Penalty under section 271(1)(c)- Concealment-Ad hoc estimation of income by applying net profit rate

Assessee had shown gross receipts from bus plying business. AO estimated impugned income at higher rate by applying net profit rate of 33 per cent, which was higer than the income shown in the revised return. CIT (A) upheld the action of AO, while Tribunal directed AO to compute the income from bus plying by applying net profit rate of 20 per cent on estimated gross receipts, subject to depreciation and interest paid to third parties. AO imposed penalty under section 271(1)(c) on the holding that the difference of income as computed on the basis of the decision of Tribunal in the case of assessee and the income as shown by assessee as concealed income. CIT(A) was of view that AO was not justified in imposing penalty simply because books of account were rejected and provisions of section 145(2) were applied and thereby a particular net profit rate was applied for computing the income, it did not become a case of concealment of income. Held:There was an estimate at the level of AO as well as at the level of Tribunal in respect of receipts as well as net profit rate. Thus, the income of assessee was estimated and nothing had been brought on record by AO that assessee concealed any particulars of income or furnished inaccurate particulars of income. By following Shiv Lal Tak v. CIT [2001] 251 ITR 373/[2002] 121 Taxman 99 (Raj.), it could not be said that the addition made in the hands of assessee was on account of any concealment by assessee. Therefore, the provisions of section 271(1)(c) were not applicable.

Income Tax Act, 1961 Section 271(1)(c)

Case Law Analysis:Followed:Shiv Lal Tak v. CIT [2001] 251 ITR 373/[2002] 121 Taxman 99 (Raj.) [para 5], Referred:Asstt. CIT v. Milap Textile Mills [1994] 48 TTJ (Jp.) 55 [para 3], CIT v. K.L. Mangal Sain [1977] 107ITR 598 (All.) [para 3], CIT v. Metal Products of India [1984] 150 ITR 714/ 18 Taxman 412 (Punj. & Har.) [para 7], Harigopal Singh v. CIT [2002] 258 ITR 85/ 125 Taxman 242 (Punj. & Har.) [para 8] and CIT v. Smt. K. Meenakshikutty [2002] 258 ITR 494 (Mad.) [para 8]

Decision: In favour of Assessee.

A.Y. 1993-94

ITO v. Smt. Purnima Devi Gupta