CIT vs. Sankarsons and Company [85 ITR 627] (HC) (Kerela) Held that Penalty –For concealment of income – Assessment year 1964-65 – Gross profit shown by assessee in return was according to ITO too low on admitted turnover – ITO rejected accounts on account of certain defects in it and estimated gross profit which resulted in addition – Penalty on that basis was levied under section 271(1)(c) – On appeal, assessee contended that addition was merely for deficiency of gross profit and that it was based on estimate – Tribunal found that finding regarding defective nature of account and suppression of stock was based on mere suspicision and conjectures and thus deleted penalty – Whether explanation given by assessee read in light of facts and circumstances of case was sufficient to warrant conclusion that assessee was not guilty of fraud or gross or wilful negligence in furnishing return – Held, yes – Whether, therefore, Tribunal was justified in deleting penalty – Held, yes

CIT V/s Vijay Kumar Jain [325 ITR 378] (HC) (Chattisgarh) Held that particulars of receipts furnished by the assessee not having been found inaccurate and there being no allegation by the revenue that the assessee has concealed any income in his return, penalty under section 271(1)(c) could not be imposed simply on account of addition made by the AO on application of higher rate of net profit.

Harigopal Singh vs. CIT [258 ITR 85] (HC) (P&H) Held that since the AO and the Tribunal adopted different estimates in assessing the income of the assessee, it cannot be said that the assessee had concealed the particulars of his income so as to attract cl. (c) of s. 271(1). There is not even an iota of evidence on the record to show that the income of the assessee during the year under appeal was more than the income returned by him. Additions in his income were made, on estimate basis and that by itself does not lead to the conclusion that the assessee either concealed the particulars of his income or furnished inaccurate particulars of such income. There has to be a positive act of concealment on his part and the onus to prove this is on the Department. The Tribunal grossly erred in law in relying on Expln. 1(B) to s. 271(1)(c) to raise a presumption against the assessee. The assessee had justified his estimate of income on the basis of household expenditure and other investments made during the relevant period. It is not the case of the Revenue that he had, in fact, incurred expenditure in excess of what he had stated. In this view of the matter, it cannot be said that the explanation furnished by the assessee had not been substantiated or that he had failed to prove that such explanation was not bona fide. The provisions of s. 271(1)(c) are not attracted to cases where income of an assessee is assessed on estimate basis and additions are made therein on that basis.

CIT vs. Valimkbhai H. Patel [280 ITR 487] (HC) (Guj) Held that penalty under s. 271(1)(c)—Concealment—Claim of loss of goods on estimate basis—Assessee carrying on business of manufacturing salt which is stored in the open in heaps, loss returned by assessee on account of cyclone and rain on estimate basis would not constitute concealment under s. 271(1)(c) on the same being reduced by AO—This is a case of substitution of one estimate by another estimate—Penalty not leviable.

CIT vs. Sangrur Vanaspati Mills Ltd. [303 ITR 53] (HC) (P&H) Held that Penalty – For concalment of income – Assessment years 1992-93 and 1993-94 – Whether when addition had been made on basis of estimate and not on account of any concrete evidence of concealment, then penalty under section 271(1)(c) was not leviable – Held, yes

DCIT vs. Madad Ali Ansari & Co. [69 TTJ 0279](2000)(Trib.)(Jodhpur) Held that simply because assessee’s assessed income was worked out at a figure higher than the declared income on the basis of application of higher profit rate it could not be said that there has been concealment of income and penalty for concealment could not be levied under s. 271(1)(c).

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