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2015 (2) TMI 582 - AT - Income TaxPenalty u/s 271(1)(c) - deduction under section 80-IC denied - Held that - As ultimately part of the deduction has been denied on some estimated profits on certain sales. It is almost settled now that penal action cannot be taken on the basis of estimated additions. A reference may be made to the decision cases of CIT v. Ravail Singh and Co. 2002 (1) TMI 52 - PUNJAB AND HARYANA High Court and CIT v. Sangrur Vanaspati Mills Ltd. 2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT . Therefore, this is not a fit case for levy of penalty because the part of the deduction was denied on the basis of some estimated addition. Accordingly set aside the order of CIT(Appeals) and delete the penalty. - Decided in favour of assessee
Issues:
- Confirmation of penalty under section 271(1)(c) by the Commissioner of Income-tax (Appeals) - Consideration of deduction under section 80-IC - Failure to admit additional evidence by the Commissioner of Income-tax (Appeals) Confirmation of Penalty under Section 271(1)(c): The appeal was against the order of the Commissioner of Income-tax (Appeals) confirming the penalty of Rs. 9,16,120 levied by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961. The Assessing Officer had denied the deduction under section 80-IC, initiated penalty proceedings, and levied a penalty of Rs. 19,16,120. Despite the assessee's submissions, the Commissioner upheld the penalty. However, the Tribunal found that the denial of deduction was based on estimated profits on certain sales, and penal action cannot be taken on estimated additions. Citing relevant case law, the Tribunal set aside the penalty, stating it was not justified. Consideration of Deduction under Section 80-IC: The Tribunal examined the issue of deduction under section 80-IC, where the Assessing Officer initially denied the deduction, citing discrepancies in material transportation to Parwanoo unit. The Commissioner of Income-tax (Appeals) confirmed the denial. However, the Tribunal noted that the denial was based on estimated profits and discrepancies in vehicle details. The Tribunal referred to the Tribunal's earlier decision in a related case where deduction under section 80-IC was allowed. It was argued that the denial was not justified as evidence from the Excise and Taxation Department supported the assessee's claims. The Tribunal, after detailed analysis, held that the denial of deduction on estimated basis did not warrant penal action and allowed the deduction under section 80-IC. Failure to Admit Additional Evidence: One of the grounds raised was the failure of the Commissioner of Income-tax (Appeals) to admit additional evidence without reasons. The Tribunal did not find merit in this argument as it focused on the substantive issues of deduction under section 80-IC and the imposition of penalty under section 271(1)(c). The Tribunal's decision primarily revolved around the legality and justification of the penalty and the denial of deduction, rendering the issue of admitting additional evidence secondary. In conclusion, the Tribunal allowed the assessee's appeal, setting aside the penalty imposed under section 271(1)(c) and confirming the deduction under section 80-IC. The judgment highlighted the importance of factual accuracy in determining penalties and deductions under the Income-tax Act, emphasizing that penal actions cannot be based on estimated additions.
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