The Commissioner Of Income-Tax, Panchkula v. M/S Iqbal Singh & Company

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A No. 86 of 2006 Date of decision : September 25, 2008 The Commissioner of Income-tax, Panchkula ...... Appellant. through Mr.Yogesh Putney, Sr. Standing counsel. v. M/S Iqbal Singh & company ...... Respondent through Mr.Sunish Bindlesh, Advocate CORAM : HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY TEWARI HON'BLE MR.JUSTICE AJAY TEWARI *** 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ?****** AJAY TEWARI, J The revenue is before this Court against the order dated27.6.2005 of the Income Tax Appellate Tribunal, Chandigarh Benchallowing the appeal of the assessee against the orders dated 5.9.2002 passedby the Commissioner of Income-tax, and dated 16.5.2001 whereby apenalty under Section 271(1)(c) of the Income Tax Act, 1961 was imposedupon the assessee. This appeal proposes the following substantial questions oflaw:- “1. On the facts and in the circumstances of the case,whether the learned ITAT was right in law in deleting the penalty imposed by the AO under section 271(1)(c) ofthe Act which was confirmed by the ld CIT (A) also ?the Act which was confirmed by the ld CIT (A) also ? 2)On the facts and in the circumstances of the casewhether Explanation to section 271(1)(c) needs to bespecifically adverted to in an exparte order levyingpenalty under section 271(1)(c), when the provisions ofsection 271(1)(c) are otherwise attracted ? For the assessment year 1990-91, a penalty of Rs.1,38,454/-was levied upon the assessee which was confirmed by the Commissioner.In appeal, the Tribunal found that the Commissioner of Income Tax (A),while confirming the penalty, no where stated that the assessee had notdisclosed all the facts to compute the income. It also found that the additionto income had been made on the basis of an estimate but without bringingany material on record which could substantiate that there was a failure onthe part of the assessee to return correct income due to fraud or willfulneglect or furnishing of inaccurate particulars of income. This Court in CITvs M.M.Rice Mills, 253 ITR 17 held asfollows :- “.... Merely because the additions have been made toincome under the proviso to section 145(1) of I.T.Act,1961 by adopting the view that the gross profit shown inthe books of account was too low as there were defects inthe method of accounting employed it would notautomatically lead to the conclusion that there was failureto return the correct income by means of fraud or gross orwillful neglect. I.T.A No. 86 of 2006 We find no error in the judgment of the Tribunal. The abovequoted judgment applies squarely to the facts of this case. In this view ofthe matter, we hold that the questions proposed do not arise in this appealand dismiss the same with, however, no order as to costs. ( AJAY TEWARI ) JUDGE September 25, 2008'kk' ( ADARSH KUMAR GOEL ) JUDGE