Punjab & Haryana H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in cancelling the penalty imposed under s. 271(1)(c) of the IT Act, 1961, at Rs. 42,250 which was confirmed by the CIT(A) ?

High Court Of Punjab & Haryana

CIT vs. Prem Das

Section 256(2)

Asst. year 1982-83

Jawahar Lal Gupta & N.K. Agrawal, JJ.

IT Case No. 14 of 1998

11th May, 1999

Counsel Appeared

R.P. Sawhney & Rajesh Bindal, for the Revenue : Hemant Kumar & Lokesh Sinhal, for the Assessee



This is a petition filed by the CIT, Rohtak, under s. 256(2) of the IT Act, 1961 (for short “the Act”), seeking a direction to the Income-tax Appellate Tribunal, New Delhi (for short, “the Tribunal”), to refer the following question of law in respect of the asst. yr.1982-83 for the opinion of this Court :

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in cancelling the penalty imposed under s. 271(1)(c) of the IT Act, 1961, at Rs. 42,250 which was confirmed by the CIT(A) ?”

2. The assessee carried on, as an individual, transport business and also derived income from rent and interest. A return of income for the asst. yr. 1982-83 was filed declaring income of Rs. 30,200. Assessment was completed on the declared income under s. 143(1) of the Act. A search was later on carried out at the business premises of the assessee and some books of account and incriminating documents were seized. A notice under s. 148 of the Act was issued to the assessee. The assessee, in response to the notice, filed a return showing income at Rs. 30,180. The assessee also showed the gross amount of commission earned by him from the plying of trucks belonging to others at Rs. 26,177. Receipts of freight from his own trucks were declared at Rs. 5,23,785. The AO made an assessment on the income of Rs. 1,21,205. It included income from commission also. Income from commission was computed at 10 per cent on the gross freight receipts determined at Rs. 4,14,000. These receipts of freights related to the trucks owned by others but plied by the assessee. The gross freight receipts received by the assessee from the trucks owned by him were determined at Rs. 5,47,380 and expenditures were allowed at 80 per cent. Determination of both the gross receipts was accepted by the assessee and was not challenged in an appeal. The assessee, however, went, in appeal before the CIT(A) against the lower estimate made by the AO in respect of the expenditures and higher estimate for income from commission. The CIT(A) reduced the income from commission from 10 per cent to 8 per cent of the gross freight receipts. Expenditures were allowed at 84 per cent as against 80 per cent allowed by the AO.

The AO levied penalty on the assessee for concealment of income under s. 271(1)(c) of the Act. The assessee again went in appeal before the CIT(A) against the levy of penalty but did not succeed. He went in further appeal before the Tribunal, which cancelled the penalty. We have heard learned counsel for the Revenue and the assessee. It appears that the assessee had claimed deduction of expenses from the gross freight receipts in respect of his own trucks on estimate basis and had shown income from commission at 7 per cent of the gross receipts in respect of the trucks owned by others. The AO had allowed expenditure at 80 per cent. The CIT(A) allowed expenditure at 84 per cent. Similarly, whereas the AO had estimated income from commission at 10 per cent, the CIT allowed it at 8 per cent. The Tribunal found that the difference between the returned and the assessed income was due to the difference of opinion about the estimated rates of income and expenditure. Income had been enhanced by the AO by adopting a lower estimate in respect of the expenditure and higher estimate with regard to the income from commission. The AO determined the income of the assessee on estimate basis. The Tribunal noticed that since the difference in estimates was based on a difference of opinion, there was no positive proof regarding concealment of income by the assessee. The assessee had shown expenditure as also the income from commission on estimate basis. The rates of estimate were varied by the AO. These were further varied by the CIT(A). The Tribunal, therefore, cancelled the penalty on the ground that there was no positive evidence to prove suppression of income. On a consideration of the matter, it is noticed that the assessee had returned income on estimate basis. The AO and the CIT adopted different estimates. It was, thus, a case of difference of opinion. No referable question of law arises from the order of the Tribunal. The application is, therefore, dismissed. No costs.

[Citation : 248 ITR 234]

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