2010 (5) TMI 665 - ITAT AHMEDABAD

Penalty u/s 271 - disallowance for bad and doubtful debts - According to the AO, the assessee committed the default of concealment of its income due to furnishing inaccurate - CIT(A) confirmed penalty levy

HELD THAT:- The assessee is a Government company having professional assistance in computation of its income, and its accounts are compulsorily subjected to audit. In the absence of any details/evidence from the assessee, we fail to appreciate how such deductions could have been left out while computing the income of the assessee company and how these escaped the attention of the auditors of the company. Since the onus placed upon the assessee to explain the difference in the returned income and finally assessed income has not been discharged, in terms of Explanation 1(B) to section 271(1)(c), the amount added in computing the total income is deemed to represent income in respect of which particulars have bean concealed. The ld. AR on behalf of the assessee has not referred us to any material so as to enable us to take a different view in the matter.

We, therefore, have no alternative but to uphold the order of the ld. CIT (A) insofar as levy of penalty on the amount in relation to claim for deduction of provision for bad and doubtful debts and provision for diminution in value of investments, is concerned.

Disallowance of 1 per cent of administrative expenses - We are of the opinion that levy of penalty of the aforesaid disallowance made by the AO at the rate of 10 per cent of the total expenses and reduced to 1 per cent by the ld. CIT(A) is not justified.

The provisions of section 271(1)(c) are not attracted in cases where the income of an assessee is assessed on estimate basis and additions are made therein. CIT v. Sangrur Vanaspati Ltd. [2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT]. The decisions in the case of Sahyog Sahakari Shram Samvida Samiti Ltd.[2007 (5) TMI 281 - ITAT LUCKNOW-A] and Raj Bans Singh’s case[2004 (8) TMI 73 - ALLAHABAD HIGH COURT] support this view.