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Issues involved: Confirmation of penalty u/s 271(1)(c) of the IT Act based on estimation of sales and income without production of supporting documents.
Summary: The appeal was filed against the order confirming the penalty u/s 271(1)(c) of the IT Act due to estimation of sales and income without proper documentation. The AO estimated sales at Rs. 30 crores due to lack of verifiable sales bills and stock register, adding Rs. 68,76,860 for sales suppression and disallowing expenses. The CIT(A) upheld the sales estimation but adjusted the income calculation method. The ITAT reduced the net profit rate to 1.2% and confirmed an addition of Rs. 9,38,907. The assessee argued that penalty shouldn't apply for estimated income without material evidence, citing relevant court decisions. The Tribunal agreed, canceling the penalty as the assessee had disclosed all income particulars despite lacking supporting documents. The Tribunal referenced various court decisions supporting the stance that penalty cannot be imposed solely on income estimation without concrete evidence. Consequently, the penalty was canceled, and the appeal was allowed.
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