TMI Blog2017 (11) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of the alleged concealment/inaccurate particulars is only an estimate and it is settled law that penalty is not attracted on estimated additions. The Hon'ble Delhi High Court in CIT vs. Aero Traders Pvt. Ltd., (2010 (1) TMI 32 - DELHI HIGH COURT ), has held that no penalty u/s 271(1)(c) can be imposed when income is determined on estimate basis. Thus it is apparent that when the bedrock of instant penalty is the estimate of net profit, the same cannot be sustained. Accordingly, we set aside the order of the Ld. CIT (Appeals) and direct the AO to delete the penalty. - Decided in favour of assessee. - ITA No. 5268/Del /2015 - - - Dated:- 31-10-2017 - SHRI G.D. AGRAWAL, HON BLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossly erred both in law and on facts in sustaining imposition of penalty under section 271(1)(c) of the Income Tax Act amounting to ₹ 4, 21,040/-. 2. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the fact that, there was neither furnishing of any inaccurate particulars of income nor could it be validly held that there was any concealment of income on the facts of the case, neither there was any specific satisfaction/finding by learned assessing officer regarding furnishing of inaccurate particulars or concealment of income and as such, the penalty so levied is unsustainable in law and is liable to be deleted as such. 2.1 That further the learned Commissioner of Income Tax (Appeals) has igno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her hand, vehemently argued that the books of accounts of the assessee were rejected as there were inherent defects in the same and, therefore, the AO had no option but to apply the net profit rate so as to determine the correct income of the assessee. It was submitted that the assessee was unable to provide various details related with the determination of income during the course of assessment proceedings and, therefore, the penalty was correctly imposed. It was submitted that the penalty imposed should be upheld. 5. We have heard the rival submissions and perused the material on record. The Hon ble Supreme Court, in the case of Hindustan Steel Ltd. v. State of Orissa 83 ITR 26, had laid down the position of law by holding that the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered from a different angle. It is important to keep in mind the fundamental legal proposition that Assessment proceedings are not conclusive. Assessment proceedings and penalty proceedings are separate and distinct. Findings in the assessment proceedings do not operate as res judicata in penalty proceedings and it was so held by the Hon ble Bombay High Court in the case of CIT vs. Dharamchand L. Shah reported in 204 ITR 462 (Bom). Further, in Vijay Power Generators Ltd vs. ITO reported in DTR 64 (Del) it was held that It is well settled that though they constitute good evidence, they do not constitute conclusive evidence in penalty proceedings. Thus, it is well settled that during penalty proceedings, there has to be reappraisal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts (P.) Ltd. reported in 322 ITR 158 wherein the Hon ble Apex Court, while interpreting the provisions of section 271(1)(c) of the Act, held that a glance at the said provision would suggest that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. In the facts of that case, the court found that it was not a case of concealment of the particulars of the income, nor was it the case of the revenue either. However, the counsel for the revenue suggested that by making an incorrect claim for the expenditure on interest, the assessee had furnished inaccurate particulars of income. The Hon ble Apex Court observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch income . The Hon ble Apex Court held that in order to expose the assessee to the penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. It was the Hon ble Apex Court s observation that by any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars and that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. The Hon ble Apex Court further observed that there can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. 5.4 Reverting to the facts of the present case, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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