Penalty under Section 271(1)(c) of the Income-tax Act, 1961 is not attracted when income is assessed on an estimate basis and additions are made on that basis.

N.K.Sodhi, J.

1. The question of law that arises in this appeal filed by the assessee under Section 260A of the Income-tax Act, 1961 (for short "the Act"), is whether penalty is attracted under Section 271(1)(c) of the Act where income is assessed purely on estimate basis and additions are made in the declared income on that basis. The facts giving rise to this appeal lie in a narrow compass and these may first be noticed.

2. The appellant is a Halwai (sweets seller) and he was not maintaining any accounts. He filed his income-tax return on estimate basis and declared his income at Rs. 52,000. The income was, however, assessed by the Assessing Officer at Rs. 2,07,500 by estimating the appellants sales and gross profit. The appeal filed against the order of assessment was dismissed by the Commissioner of Income-tax (Appeals) with the following observations :

"In the light of the above discussion, I hold that the estimate of income by the learned Income-tax Officer is fair and no interference is called for."

3. On further appeal, the Tribunal reduced the addition to Rs. 1,50,000. Hence, the income was finally assessed at Rs. 1,50,000 against the declared income of Rs. 52,000. The Assessing Officer initiated penalty proceedings against the assessee by invoking Section 271(1)(c) along with the Explanation 1(B) of the Act on the plea that he had concealed the particulars of his income. A show-cause notice was issued to him under Section 274 read with Section 271(1)(c) of the Act. In reply thereto, the assessee pleaded that since no positive concealment had been detected by the Department and the addition was made in his income only on estimate basis, no penalty under Section 271(1)(c) of the Act could be imposed because the assessees income on estimate basis keeping in view his household expenses as well as the statement of accretion to his assets during the year under consideration, was bona fide. The Assessing Officer did not accept the reply and found that since the assessee had not filed any fresh evidence in penalty proceedings to prove that there was no attempt on his part to conceal his income, he, by his order dated March 10, 1992, imposed a penalty of Rs. 50,000. Feeling aggrieved by this order, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), Patiala, who allowed the same holding that there was indeed no positive evidence whatever to show that the appellants income during the year in question was, in fact, more than the income returned by him and that estimated additions in the returned income do not attract penalty under Section 271(1)(c) of the Act. The Revenue went up in appeal before the Income-tax Appellate Tribunal which was allowed by order dated May 30, 2001. It is against this order that the present appeal has been filed which raises the aforesaid question of law.

4. In order to attract Clause (c) of Section 271(1) of the Act, it is necessary that there must be concealment by the assessee of the particulars of his income or if he furnishes inaccurate particulars of such income. What is to be seen is whether the assessee in the present case had concealed his income as held by the Assessing Officer and the Tribunal. He had not maintained any accounts and he filed his return of income on estimate basis. The Assessing Officer did not agree with the estimate of the assessee and brought his income to tax by increasing it to Rs. 2,07,500. This, too, was on estimate basis. The Tribunal agreed that the income of the assessee had to be assessed on an estimate of the turnover but was of the view that the estimate as made by the Assessing Officer was highly excessive and it fixed the total income of the assessee at Rs. 1,50,000 for the year under appeal. It is, thus, clear that there was a difference of opinion as regards the estimate of the income of the assessee. Since the Assessing Officer and the Tribunal adopted different estimates in assessing the income of the assessee, it cannot b