2014 (2) TMI 606 - HC - Income Tax

Additions on estimated basis - Held that - The additions were deleted partly by the CIT(A) and further by the Tribunal - The assessee was engaged in the electronic business and the additions were made on estimate basis which were substantially deleted by the appellate authorities - the addition was made pertaining to the rate of interest - The assessee has shown the rate of interest @ 23% and the A.O. has allowed 18%, the difference of 5% is based on estimate basis - There was no reason to interfere with the order passed by the Tribunal and the same is sustained along with the reasons there was no substantial question of law is emerging from the order Decided against Revenue.

Summary

Issues:
Appeal under Section 260A of the Income-tax Act, 1961 against the Tribunal's order for the assessment year 2000-2001.

Analysis:
The Department filed an appeal against the Tribunal's order for the assessment year 2000-2001. The assessee, engaged in the electronic goods business, filed a return of loss in the status of a Company. The assessment order was completed after making additions on an estimate basis, which were later partly deleted by the CIT(A) and further by the Tribunal. The Tribunal's decision was upheld by the High Court in previous appeals for the same assessment years. The Department relied on the Assessing Officer's order, while the assessee's counsel argued that the penalty amount was inaccurately mentioned. The remaining amount in the quantum appeal was around Rs. 20 lakh after deletions. The addition in question related to the rate of interest, with the assessee showing 23% and the A.O. allowing 18%, resulting in a 5% difference based on estimates.

Legal Precedents:
The judgment referred to various legal precedents such as CIT v. Raj Bans Singh, CWT v. Sanghi Brothers (India) Ltd., CIT Vs. Adam Khan, and Har Gopal Singh Vs. CIT to establish that when additions are made on an estimate basis, no penalty is sustainable. The judgment emphasized the independence of quantum proceedings and penalty proceedings, citing the case of Durga Kamal Rice Mill Vs. CIT.

Conclusion:
After considering the facts and circumstances, the High Court found no reason to interfere with the Tribunal's order. The judgment sustained the Tribunal's decision, citing the reasons provided therein. It was concluded that no substantial question of law emerged from the impugned order. As a result, the appeal filed by the Department was dismissed at the admission stage.