Case Law Details
Sushila Goyal Vs ITO (ITAT Delhi)
In the case of Sushila Goyal Vs Income Tax Officer (ITO), the Income Tax Appellate Tribunal (ITAT) Delhi had to decide on the contentious issue of levying penalties under Section 271(1)(c) of the Income Tax Act, 1961, when additions to income are made on an estimated basis. The outcome of this case gives much-needed clarity on the application of penalties related to tax evasion and incorrect income disclosures.
Analysis : Sushila Goyal, the appellant, filed an appeal against the penalty imposed under Section 271(1)(c) of the Income Tax Act, amounting to Rs.1,71,411/-. This penalty resulted from an addition of Rs.5,54,725/- to the total income as interest on interest-free loans and advances, which was calculated on an estimated basis by the Assessing Officer (AO).
The central issue in this case was whether penalties under Section 271(1)(c) are applicable when the income addition is estimated, rather than actual. The ITAT noted that for a penalty under Section 271(1)(c) to be applicable, the AO must prove that the assessee has either concealed income or provided inaccurate income details.
Considering that the addition to Sushila Goyal’s income was made on an estimated basis and not proven to be concealed or inaccurately reported, the ITAT held that the AO was not justified in levying the penalty under Section 271(1)(c). The tribunal ruled in favour of the appellant and ordered the deletion of the penalty.
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