M/S SHIV KUMAR BAIGARA AND COMPANY,UDHAMPUR vs. INCOME TAX OFFICER UDHAMPUR, UDHAMPUR

ITA 357/ASR/2017Status: DisposedITAT Amritsar25 March 2019AY 2001-024 pages
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What did the Tribunal hold?

The Tribunal held that an estimation of income, by itself, cannot lead to a penalty for furnishing inaccurate particulars unless there is evidence of concealment or fabrication. The assessee's reliance on audited accounts and the possibility of variations in profit margins were considered.

What were the facts?

The assessee, a wine shop, had its accounts rejected by the AO due to a lower profit rate compared to a competitor. An addition was made for low profit, and penalty proceedings under Section 271(1)(c) were initiated. The penalty was confirmed by the CIT(A).

What were the issues?

Whether the imposition of penalty under Section 271(1)(c) is justified solely on the basis of an estimated addition due to a lower profit rate compared to a competitor, without evidence of concealment or inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 145(3)

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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR (SMC

Before: SH. SANJAY ARORA

Hearing: 11.03.2019Pronounced: 29.03.2019

Per Sanjay Arora, AM: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals), Jammu ('CIT(A)' for short) dated 10.01.2017, dismissing the assessee’s appeal contesting the levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 ('the Act' hereinafter) by the Assessing Officer vide order dated 26.03.2015 for Assessment Year (AY) 2001-02. 2. The brief facts of the case are that the assessee-firm, in wine business, returned its’ income for the year on 30.10.2001 at an income of Rs.77,760/- as business income thereof. The same was subject to the verification to procedure under the Act, whereat it’s accounts, as maintained, were not found reliable and, accordingly, not accepted by the Assess

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