The Tax Publishers2020 TaxPub(DT) 4614 (Jp-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Since there was no positive evidence or material beyond a doubt that the assessee concealed particulars of his income or furnished inaccurate particulars of such income; mere addition in the quantum proceedings was not sufficient to hold the assessee liable for levy of penalty. Accordingly, the penalty levied under section 271(1)(c) on the basis of estimated rental income was liable to be deleted.

Penalty under section 271(1)(c) - Leviability - Estimation of rental income -

Assessee in original return of income filed under section 139(1), disclosed gross receipts from a event place at Rs. 1,46,500 and claimed expenditure of Rs. 1,46,900 against the said receipts. Thereafter, the matter was reopened and income from the said event place was estimated at Rs. 3,50,000 by AO. CIT(A) sustained such estimation to the extent of Rs. 2,00,000. Further, on the income so sustained by the CIT(A), the AO levied penalty under section 271(1)(c). Held: Penalty under section 271(1)(c) was levied in respect of addition on account of estimation of rental income. Further, against said estimation of income by AO, CIT(A) reduced the quantum of estimation of rental income. Thus, it was clear that the addition made by the AO was based on estimation only. A fact or allegation based on estimation cannot be said to be correct only, it can be incorrect also. Therefore, the basis for levying penalty in the instant case was only estimation, which was purely a question of fact. As there was no positive evidence or material beyond a doubt that the assessee concealed particulars of his income or furnished inaccurate particulars of such income; mere addition in the quantum proceedings was not sufficient to hold the assessee liable for levy of penalty. Accordingly, the penalty levied under section 271(1)(c) on the basis of estimated rental income was deleted.

REFERRED : CIT v. Mahendra Singh Khedla (DB Appeal No. 174/2010 dated 19-3-2012) : 2012 TaxPub(DT) 2850 (Raj-HC) Harigopal Singh v. CIT 2002 TaxPub(DT) 1625 (P&H-HC) Siddharth Goel v. ACIT 2020 TaxPub(DT) 0502 (Jp-Trib)

FAVOUR : In assessee's favour

A.Y. : 2009-10



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