2016 (6) TMI 1501 - HC - Income Tax

Penalty u/s 271(1)(c) - addition on estimation basis - HELD THAT - As decided in BOMBAYWALA READYMADE STORES 2014 (11) TMI 1099 - GUJARAT HIGH COURT There was no scope to levy the penalty under Section 271(1)(c) the appellant had been assessed by the Income Tax. Tribunal has very rightly considered that both the additions are on a estimated basis. Therefore just because estimates are made penalty cannot be levied u/s 271(1)(c). Decided in favour of assessee.

Summary

The Gujarat High Court considered an appeal challenging a judgment of the Income Tax Appellate Tribunal regarding a penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2001-2002. The Court framed the substantial question of law regarding the deletion of the penalty. Citing the case of Income-tax Officer v. Bombaywala Readymade Stores, the Court emphasized that penalties cannot be levied solely on estimated values and rejected books of accounts. Relying on this precedent, the Court ruled in favor of the assessee, holding that the penalty imposed was not justified.