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January 2011

S. 271(1)(c) — A mere addition made by the Assessing Officer cannot be a ground to levy penalty.

By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi
Chartered Accountants
Reading Time 1 mins
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22. (2010) 126 ITD 416
(Ahd.)

Gruh Finance Ltd. v. ACIT

A.Y. : 1998-99. Dated :
16-5-2008

 

S. 271(1)(c) — A mere
addition made by the Assessing Officer cannot be a ground to levy penalty.

Facts :

For the year under
consideration, the assessee had claimed deduction u/s.36(1)(viii) to the tune of
Rs.1,55,75,000. The Assessing Officer recomputed the deduction to the extent of
Rs.84,24,228 and levied penalty u/s.271(1)(c).

Held :

Assessment proceedings and
penalty proceedings are both different. Explanation 1 to S. 271(1)(c) states
that amount added or disallowed in computing the total income shall be deemed to
be income in respect of which particulars have concealed. This deeming provision
is not an absolute one. The presumption is rebuttable and not conclusive. The
assessee in this case has duly submitted required explanation and other
documents. No material has been brought on record to show that the assessee has
concealed the income or has not provided sufficient explanation. A mere addition
made by the Assessing Officer cannot be a ground to levy penalty.

 

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