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2019 (3) TMI 472 - AT - Income Tax


Issues involved:
- Challenge against levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 for assessment years 2007-2008 and 2008-2009.

Analysis:

Issue 1: Assessment Year 2007-2008
1. The Assessing Officer (A.O.) initiated penalty proceedings under section 271(1)(c) due to non-production of books of account by the assessee, leading to an ex-parte assessment order.
2. The A.O. applied a net profit rate of 12% on gross contractual receipts, resulting in an income addition of &8377; 19,85,207 from business and civil construction.
3. The CIT(A) reduced the net profit rate to 8% and restricted the addition to &8377; 11,12,058.
4. The tribunal noted that penalty is not applicable when income is assessed on an estimated basis and additions are made accordingly, as in this case.
5. Since there was no finding of concealment or inaccurate particulars, the tribunal canceled the penalty, citing precedents supporting the assessee's position.

Issue 2: Assessment Year 2008-2009
1. The A.O. rejected the books of account under section 145(3) and applied a profit rate of 8% for income estimation, leading to a penalty imposition.
2. The CIT(A) upheld the penalty decision.
3. The assessee argued that the show cause notice did not specify the grounds under which the penalty was proposed, rendering it invalid.
4. Citing a relevant judgment, the tribunal found the notice inadequate as it did not specify the grounds for penalty under section 271(1)(c).
5. As the notice was deemed invalid, the tribunal canceled the penalty for the assessment year 2008-2009.

In both cases, the tribunal ruled in favor of the assessee, emphasizing the importance of proper notice and lack of evidence for concealment or inaccurate particulars. The decisions were based on legal precedents and the interpretation of relevant sections of the Income Tax Act, leading to the cancellation of penalties for both assessment years.

 

 

 

 

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