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2019 (3) TMI 390 - AT - Income TaxLevy of penalty u/s 271(1)(c) - enhancement of net profit rate - concealment of income or furnishing inaccurate particulars of income - HELD THAT - Even if there is discrepancies noted in the books of account and other records produced by assessee, but, it is not a case of concealment of income or furnishing inaccurate particulars of income by the assessee. Since the assessee has shown higher income by showing better net profit rate in assessment year under appeal as compared to preceding assessment years, therefore, there was no occasion for the assessee to conceal income or file inaccurate particulars of income. The assessee produced complete details and records before AO for his verification. Therefore, it is a case of estimated income, in which, assessee agreed for higher net profit rate because of the discrepancies noted by the A.O. in the record produced by assessee. It is well settled Law that provisions of Section 271(1)(c) are not attracted to the cases where the income of assessee is assessed on estimate basis and additions are made therein on that basis. See HARIGOPAL SINGH VERSUS COMMISSIONER OF INCOME-TAX. 2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT - Decided in favour of assessee.
Issues:
Challenge to penalty under section 271(1)(c) of the Income Tax Act, 1961 based on discrepancies in net profit rate, gross profit rate, and additions made by the assessing officer. Analysis: 1. The appeal was filed against the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2011-2012. The assessing officer noted discrepancies in the net profit rate and gross profit rate compared to preceding assessment years. The assessee's income was estimated higher due to discrepancies in records, resulting in additions of ?13,75,710. Additionally, certain receipts not reflected in the books were added to the income, leading to a penalty of ?14,76,545. 2. The assessee contended that the penalty was unjust as it was based on an enhanced net profit rate and not concealment of income. The CIT(A) upheld the penalty. However, the ITAT Delhi Bench's previous order for the same assessee set aside an addition of ?1,00,835, indicating no fresh order was passed. Consequently, the penalty on this amount was canceled. 3. Regarding the addition of ?13,75,710, it was argued that despite discrepancies, the assessee provided complete details to the assessing officer. The higher net profit rate in the current assessment year was agreed upon by the assessee due to discrepancies noted. The judgment cited precedents that penalties are not applicable when income is estimated, and no definite finding of concealment or inaccurate particulars was made by the assessing officer. 4. The judgment emphasized that the higher income shown by the assessee in the current assessment year, even with discrepancies, did not warrant a penalty under section 271(1)(c). As the assessee cooperated and provided records for verification, it was deemed a case of estimated income adjustment. Citing legal precedents, the penalty on the additional income was canceled, and the appeal of the assessee was allowed. 5. In conclusion, the penalty under section 271(1)(c) for discrepancies in net profit rate and gross profit rate, along with additions made by the assessing officer, was canceled based on the assessee's cooperation, provision of complete details, and the absence of evidence of concealment or inaccurate particulars of income. Order pronounced in the open Court.
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