TMI Blog2006 (1) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... an individual, derived income from Gadai of gold and silver ornaments along with interest income. The return for asst. yr. 1985-86 was not filed. It was only pursuant to action under s. 132 that notice under s. 148 was issued and accordingly return was filed on 7th June, 1993. The AO observed that there was a delay of 93 months in filing the return. On being called upon to explain the reasons for not filing the return, it was explained that his income was far below the taxable income and, as such, no return was required to be filed under s. 139(1). Explaining further, it was stated that the assessee had furnished his return declaring income of Rs. 11.500, which was much below the taxable limit of Rs. 15,000 at the relevant time. Not convinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome has been estimated by the AO on a higher side cannot form basis for imposition of penalty under s. 271(1)(a). The Hon'ble jurisdictional High Court in the case of CIT vs. R.K. Golecha (1988) 173 ITR 423 (Raj) has held that the impression of the assessee about his income being below taxable limit constitutes a reasonable cause for non-furnishing of the return of income. Similar view has been expressed by the Hon'ble Allahabad High Court in the case of CIT vs. Chander Prakash (1992) 106 CTR (All) 355 : (1991) 188 ITR 654 (All) holding that "the bona fide belief of the assessee that his income was below taxable limit was a reasonable cause for delay in furnishing the returns and the mere fact that he agreed to a settlement with the IT au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the Tribunal in quantum proceedings, which was confirmed in the first appeal. 9. Having heard the rival submissions and perused the relevant material on record, it is observed that the income from Gadai and interest was enhanced by the AO on his estimate. There is no dearth of the judicial precedents holding that penalty is not sustainable where income is estimated. The Hon'ble Punjab and Haryana High Court in the case of Hari Gapal Singh vs. CIT (2002) 258 ITR 85 (P H) has held that when income is determined on estimate, no penalty under s. 271(1)(c) can be imposed. Similar view has been expressed in the case of CIT vs. Subhash Trading Company (1996) 131 CTR (Guj) 121 : (1996) 221 ITR 110 (Guj) and CIT vs. Dhillon Rice Mills (2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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