TMI Blog1985 (8) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... ed three sheds namely, (i) Cone winding and Reeling Shed, (ii) Generator Shed, and (iii) Cattle Shed, at Bhavani. According to the assessee, the cost of construction amounted to Rs. 81,394. In support of its case, the assessee produced the report of a valuer who estimated the cost of the construction at Rs. 91,000. The ITO did not accept the same. He referred the matter to the departmental valuer who estimated the cost of construction at Rs. 1,55,800. The ITO, therefore, made an addition of about Rs. 74,000 to the income of the assessee as income from undisclosed sources. On appeal, the Commissioner (Appeals) observed that the departmental valuer had not considered the objections of the assessee before submitting his report. He, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, no penalty was leviable simply because there was difference of opinion as to the cost of construction. The ITO rejected the objections of the assessee and observed that the assessee had not produced any vouchers or any other documentary evidence in support of the cost of construction declared by it. He, therefore, levied a penalty of Rs. 50,000 on the assessee under Explanation to section 271(1)(c). 4. On appeal, the Commissioner (Appeals) cancelled the penalty. While doing so, he observed as under: "8. I have carefully considered the arguments of the appellant. From the details given in para 5 above, it is clear that the difference in the cost of construction ultimately upheld by the appellant's valuer is only an estimate. The depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to anticipate the additions in miscellaneous accounts. 9. For these reasons I hold that no penalty can be levied for concealment. The penalty levied is therefore cancelled. 10. The appellant is also correct in pointing out that the following decision of the Madras High Court in Continental Commercial Corporation, it is beyond the jurisdiction of the Income-tax Officer to levy the penalty. However, as I am cancelling the penalty, on facts, I am not going into this ground." 5. Dissatisfied with the order of the Commissioner (Appeals) the department has filed the present appeal. 6. Before us, the learned representative of the department reiterated the reasons advanced by the ITO. He submitted that the assessee had not furnished any vou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income, if any, was committed on that date and as such the law prevailing as on 19-1-1976 was applicable to the present case. On this premises, he urged that the amount of concealed income being more than Rs. 25,000, the IAC and not the ITO had the jurisdiction to impose penalty under section 274(2) as in force on 19-1-1976. According to him, therefore, the Commissioner (Appeals) was justified in cancelling the penalty order. 8. In our opinion, the department has no case. It would appear from the facts stated above that this is a case of mere estimate. No doubt, the assessee-firm did not produce any vouchers, etc., in the course of assessment proceedings to prove the exact cost of construction, but the fact remains that the assessee di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that certain amount of income had been concealed for which stricter proof is always insisted upon. There must also be cogent evidence on the basis of which the officer will be able to say that certain amount of income had been concealed and this is also necessary before any question of penalty can be determined." 9. The authority cited by the learned departmental representative, i.e., B.A. Balasubramaniam Bros.' case, is distinguishable. In that case, the assessee had sold the import licences far below their market quotations in the financial journals and then did not furnish the details regarding the commodities covered by the licences, the parties to whom they were sold and the profit earned with reference to each of the import licenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, no penalty is exigible on the assessee under the Explanation to section 271(1)(c). 11. We may add that the assessee-firm declared its income at Rs. 5,79,273 and that 80 per cent of the finally assessed income works out to Rs. 5,79,544. Thus, there is a marginal difference of Rs. 271 in these two figures. Since this difference is negligible, we feel that it is not a fit case for levy of penalty under the Explanation to section 271(1)(c). It has been held by the Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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