- (1.) Revenue is in appeal under s. 260A of the IT Act against the order of the Tribunal dt. 6th Oct., 2006 raising the following questions for our consideration : (i) Whether under the facts and circumstances of the case and in law, the Tribunal was justified in deleting the penalty levied under s. 271(1)(c)? (ii) Whether under the facts and circumstances of the case and in law the order of the Tribunal can be sustained when the additions made by the AO were upheld by the Tribunal and therefore, the assessee was falling under the four corners of s. 271(1)(c)? (iii) Whether the penalty is imposable or not when the additions are made on estimation and the same are sustained at appellate stage? The issue pertains to the penalty imposed by the AO on the amount of Rs. 1,00,000 which was sustained as addition, which was confirmed by the CIT(A) under s. 271(1)(c) of the IT Act, 1961 (for short 'the Act of 1961') for the asst. yr. 1996-97. The said penalty was, however, deleted by the Tribunal.
(2.) Brief facts may be observed that the respondent is a registered firm and is engaged in retreading of old (worn out) tyres of all vehicles. Besides the job work, the respondent-assessee was also selling such raw material to local parties. A survey operation came to be carried out at the business premises of the respondent on 16th Nov., 1995, where some documents were found, which according to the AO, were not satisfactorily explained and, accordingly, on account of the said discrepancies, an estimated addition was made of Rs. 1,44,000. The respondent preferred an appeal against the said addition of Rs. 1,44,000, which came to be sustained by the CIT(A) and on further challenge before the Tribunal, the Tribunal modified the order passed by the lower authorities and restricted the addition to Rs. 1,00,000 by inter alia, referring to the fact that addition was made on estimate basis by lower authorities and looking to the facts on record and the explanation of the assessee, part relief of Rs. 44,000 was granted, thereby sustaining an addition of Rs. 1,00,000 on estimate basis.
(3.) In the penalty proceedings, the assessee submitted that it has not concealed the particulars of income, nor has it deliberately furnished inaccurate particulars of such income. It was further submitted by the assessee that addition has been made on estimate basis and only because of estimated addition, penalty in law under s. 271(1)(c) of the Act cannot be levied but AO was not satisfied and accordingly, penalty came to be imposed by the AO. In first appeal the penalty was sustained, as aforesaid. However the Tribunal, as aforesaid, has deleted the said penalty.;