2023 (6) TMI 381 - AT - Income Tax

Penalty u/s 271(1)(c) - Income assessed was based on estimate basis - estimated profit @8% - HELD THAT - As relying on Aero Traders Pvt. Ltd. 2010 (1) TMI 32 - DELHI HIGH COURT and Subhash Trading Company (Guj) 1995 (11) TMI 37 - GUJARAT HIGH COURT additions were made/sustained by the CIT(A) on the basis of estimation and the penalty cannot be levied on the basis of estimated additions and therefore, the Assessee cannot be subjected to levying penalty. Decided in favour of assessee.

Summary

Issues involved:
The issues involved in this case are the imposition of penalty under the Income Tax Act 1961, condonation of delay in filing the appeal, and the validity of penalty proceedings u/s 271(1)(c) based on estimated income.

Imposition of Penalty:
The appeal was filed against the order confirming the imposition of a penalty amounting to Rs. 28,000 under u/s 271(1)(c) of the Income Tax Act. The appellant contended that there were no inaccurate particulars of income furnished, nor was there any concealment of income. The penalty was imposed based on estimated income, which the appellant argued should not be the basis for penalty imposition.

Condonation of Delay:
There was a delay of 798 days in filing the appeal, which the appellant sought to condone. The appellant, a senior citizen who had undergone heart surgeries and faced health challenges, explained the delay due to medical conditions and restrictions caused by the COVID-19 pandemic. The delay was ultimately condoned by the tribunal.

Validity of Penalty Proceedings:
The penalty proceedings were initiated under u/s 271(1)(c) for furnishing inaccurate particulars of income and concealment of income. The Assessing Officer had imposed a penalty of Rs. 28,000, which was challenged by the appellant. The appellant argued that as the income was determined on an estimated basis, penalty proceedings should not be maintained. The appellant cited precedents where penalties were not imposed when income was assessed on an estimate basis.

Conclusion:
After considering the arguments and precedents, the tribunal allowed the appeal of the assessee. The tribunal set aside the order of the CIT(A) and deleted the penalty imposed, concluding that penalties cannot be levied based on estimated additions. The tribunal ruled in favor of the assessee, highlighting that penalties should not be imposed when income is assessed on an estimate basis.