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2008 (9) TMI 402 - ITAT BOMBAY-ILevy of penalty u/s 271(1)(c) - Concealment of income - excessive payment made to the sister concern, with a view to reduce its own tax liability - disallowed u/s 40A(2)(b) - HELD THAT:- In the case CIT vs. Smt. P.K. Kochammu Amma Peroke [1980 (9) TMI 1 - SUPREME COURT], the principle laid down in the case of V.D.M.RM.M.RM. Muthiah Chettiar [1969 (2) TMI 16 - SUPREME COURT] has been only reiterated but distinguished on the ground that the note in the form of return of income had been overlooked. Since no specific form of disclosure is contemplated by the Act as well as the Rules and the form of return prescribed, an assessee can never be held to be guilty of non-disclosure of income which is determined by applying the provisions of s. 40A(2)(b). We therefore hold that in the absence of any provision of particular disclosure of the transaction in question, the disclosure of the same in its books of account as done by the assessee was sufficient in law. The provisions of s. 271(1)(c) of the Act were not attracted to the cases where income of an assessee is assessed on estimate basis and additions are made therein. It was held that when the additions has been made on the basis of estimate and not on account of any concrete evidence of concealment, penalty was not leviable. In the case of Dilip N. Shroff vs. Jt. CIT [2007 (5) TMI 198 - SUPREME COURT] the apex Court considered the scope of levying penalty u/s. 271 (1)(c). In the present case the disallowance u/s. 40A(2)(b) cannot be considered as concealment of income or furnishing inaccurate particulars. Consequently we are of the opinion that the facts of the case does not warrant penalty u/s. 271(1)(c). Therefore, the order of the CIT(A) is set aside. Penalty cancelled. In the result, appeal of the assessee is allowed.
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