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2012 (6) TMI 628 - AT - Income TaxPenalty under section 271(1)(c) - unaccounted sale of raw-material - addition was made on estimate basis - Held that:- It is well settled that the addition made purely by way of estimate should not be made the basis for levy of penalty for concealment of income. It is not the case of the revenue that the assessee has not disclosed the material facts relevant to the assessment. The issue of burning loss and consequential consumption of raw-material was worked out on estimation only to determine the unaccounted sale of raw material and the estimation differed at different levels of the revenue authorities. Assessing Officer has not pin-pointed any discrepancy or irregularity in the records. The possibility of sale of raw material outside the books was not based upon any material evidence but on suspicion which was created on account of non-availability of certain specific record. Mere possibility or suspicion or difference of opinion on some issue is not sufficient to impose penalty for concealment of income or filing of inaccurate particulars of income. No penalty under section 271(1)(c) was leviable on addition made on account of unaccounted sale of raw-material. Regarding penalty levied for diversion of income by sale to sister concern - addition was made due to the reason that the assessee-firm had disclosed lower profit on sale made to sister concern - Held that:- There is no definite finding that the transaction of sale made to 'ME' was a sham transaction. The figures of sale made to 'ME' (sister concern) were disclosed in the accounts statement and those figures had not been disputed by the department. The conduct of the assessee was bona fide. Material particulars with regard to the sale made to 'ME' were disclosed by the assessee, at the time of filing of its return of income with the department. Facts of the case may justify the addition made on account of low rate of profit on sale made to the sister concern but were not sufficient to sustain the penalty imposed under section 271(1)(c).
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