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2013 (6) TMI 68 - ALLAHABAD HIGH COURTPenalty u/s 271(1)(c) - whether penalty order had been passed within the limitation period? - interest on the FDR calculated for a separate source of income and addition also made by computing the net profit rate @ 8% u/s 44 AD - Held that:- As nothing was concealed by the assessee. It was the A.O. who has rejected the books of account in the second round and applied the 8% net profit rate prescribed u/s 44 AD. As the turnover is more than 40 lacs, so Section 44 AD is not applicable, nonetheless the A.O. has inspired with the provision of Section 44 AD and made the addition by estimating the net profit rate @ 8%. Rejection of the books of account allowed the A.O. to make the addition on estimate basis. When the addition is made on estimate basis, no penalty under Section 271 (1)(c) can be imposed as per the ratio laid down in C.I.T. vs. Arjun Prasad Ajit Kumar, (2008 (1) TMI 821 - ALLAHABAD HIGH COURT) As no finding of deliberate concealment of income was brought in the instant case as the assessee has never suppressed the interest income from FDRs. Interest income from FDR was duly shown. It was for the A.O. to treat this income as business income or income from other sources. But the fact remains that there is no concealment on the part of assessee. So, no penalty leviable - in favour of the assessee.
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