C I T JAIPUR III vs. DR GIRIRAJ AGARWAL GIRI

ITA/215/2008HC RajasthanRJHC02031351200716 March 2012Author: ARUN MISHRA,NARENDRA KUMAR JAIN6 pages
AI SummaryDismissed

What were the facts?

The Revenue (Commissioner of Income Tax, Jaipur) has appealed against an order of the Income Tax Appellate Tribunal (ITAT) that dismissed its appeal. The ITAT had affirmed the order of the Commissioner of Income-Tax(Appeals) which deleted a penalty of Rs. 2,89,217 imposed by the Assessing Officer (AO) under Section 158BFA(2) of the Income Tax Act, 1961. The penalty was levied for alleged concealment of income amounting to Rs. 4,82,028, comprising 'IUI test' (Rs. 44,000), 'Plying of car' (Rs. 15,000), and 'Household expenses' (Rs. 4,23,028). The assessee contended that these additions were purely based on estimation and no supporting documents were found during the search. The AO was not satisfied and imposed the penalty. The CIT(A) deleted the penalty, holding it unjustified, and the ITAT upheld this deletion.

What did the High Court hold?

The High Court held that no substantial question of law was involved in the appeal, warranting its dismissal in limine. The Court found that both the Commissioner of Income-Tax(Appeals) and the Income Tax Appellate Tribunal had concurrently held that the additions made to the assessee's income were based solely on estimation. The Court reasoned that a fact or allegation based on estimation cannot be considered definitively correct and could be incorrect. Therefore, the penalty imposed by the Assessing Officer was not justified. The Court distinguished the Supreme Court's decision in Union of India Vs. Dharmendra Textile Processors, noting it dealt with the Central Excise Act and that the provisions of Section 11AC of the Central Excise Act and Section 158BFA(2) of the Income Tax Act were not paramateria. The Court emphasized that penalty imposition depends on the facts and circumstances of each case, and in this instance, the concurrent findings of fact by the appellate authorities were binding.

What were the issues?

1. Whether penalty under Section 158BFA(2) of the Income Tax Act, 1961, is leviable when the additions to income are based solely on estimation, and not on any seized material or false explanation. Assessee's Contention: The assessee argued that the alleged undisclosed income was purely an estimation, and no documents or evidence were found during the search to substantiate these additions. Therefore, the penalty was not justified. Revenue's Contention: The Revenue contended that the case involved a search and seizure, making Section 158BFA(2) applicable. The penalty was rightly imposed by the AO and wrongly set aside by the lower appellate authorities. The Revenue relied on the Supreme Court judgment in Union of India Vs. Dharmendra Textile Processors.

Which sections of the Income-tax Act were involved?

Section 158BFA(2),Section 260A

AI-generated summary — verify with the full judgment below

(1) DB INCOME TAX APPEAL NO.215/2008 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR JUDGMENT D.B. INCOME TAX APPEAL NO.215/2008 DATE: 16.03.2012 HON'BLE THE CHIEF JUSTICE MR. ARUN MISHRA HON'BLE MR. JUSTICE NARENDRA KUMAR JAIN-I Mr. Sameer Jain, for the appellant. **** BY THE COURT:(PER HON'BLE JAIN, J.) Heard the learned counsel for appellant.

2.

Revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short 'the Act') against the order dated 27.07.2007 passed by the Income Tax Appellate Tribunal, Jaipur Bench 'B', Jaipur, dismissing the appeal of Revenue and affirming the order of Commissioner of Income-Tax(Appeals)-III, Jaipur dated 22.03.2006, deleting imposition of penalty of Rs. 2,89,217/-, by the Assessing Officer under Section 158BFA(2) of the Act.

3.

Facts of the appeal, in brief, are that a notice was issued to assessee/respondent by the Assessing Officer on 12.09.2005 to show cause as to why penalty under Section 158BFA(2) of the Act may not be imposed for conceal

The order continues below.

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