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2020 (6) TMI 105 - AT - Income TaxPenalty u/s 271(1)(c) - estimation of net profit - Addition to assessee s income is made on estimate basis - HELD THAT - It is a settled principle of law that where addition to assessee s income is made on estimate basis penalty under section 271(1)(c) cannot be imposed. The different judicial form has already decided in favour of the assessee on the identical issue, of such is passed in the case of Naresh Chand Agarwal 2013 (6) TMI 68 - ALLAHABAD HIGH COURT We have further gone through the written submission made before the authorities below by the appellant. It is on record that the addition was made on estimation of net profit @ 1.5% by the Ld. AO and hence we find there is no merit in levying penalty under section 271(1)(c) - Decided in favour of assessee Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT - Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI
Issues involved:
1. Appeal against penalty under section 271(1)(c) for inaccurate particulars of income. 2. Consideration of estimation basis for addition to assessee's income. 3. Application of settled legal principle regarding penalty imposition. 4. Impact of Covid-19 pandemic on the pronouncement of orders. Analysis: 1. The appeal was filed against a penalty under section 271(1)(c) for inaccurate particulars of income. The assessee argued that the assessment order made additions on an estimate basis without a proper foundation, leading to an unjustified penalty. The AR contended that the penalty could not be justified as there were no positive facts or findings to support the addition. The Tribunal considered the written submissions and noted that the addition was based on an estimation of net profit at 1.5%, which led to the conclusion that penalty under section 271(1)(c) could not be imposed. The Tribunal referred to a judicial decision in favor of the assessee on a similar issue, further supporting the quashing of the penalty. Consequently, the penalty was deleted, and the appeal was allowed. 2. The Tribunal emphasized the principle that when additions to an assessee's income are made on an estimate basis, penalty under section 271(1)(c) cannot be imposed. The Tribunal cited a judicial decision by the Hon'ble Allahabad High Court in a similar case, further reinforcing the position that penalty imposition without concrete evidence is unwarranted. The Tribunal's analysis of the assessment order and the absence of merit in the authorities' decision led to the deletion of the addition and the allowance of the appeal. 3. The Tribunal's decision was based on the settled legal principle that penalties under section 271(1)(c) cannot be levied when additions are made on an estimate basis without sufficient grounds. By referring to previous judicial decisions and the lack of merit in the authorities' order, the Tribunal quashed the penalty and deleted the addition. The Tribunal's detailed examination of the facts and legal precedents supported the conclusion that the penalty was unjustified and, therefore, not sustainable. 4. The Tribunal also addressed the impact of the Covid-19 pandemic on the pronouncement of orders. Considering the extraordinary circumstances caused by the pandemic and the subsequent lockdown, the Tribunal excluded the period of lockdown while computing the time limit for pronouncing the order. Citing legal provisions and directives from higher courts regarding time limits and exceptional circumstances, the Tribunal justified the delay in pronouncing the order. The Tribunal's decision to exclude the lockdown period from the time limit calculation was in line with pragmatic considerations and the need to adapt legal procedures to the current situation.
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