2023 (6) TMI 390 - AT - Income Tax

Penalty u/s 271(1)(c) - addition as made as income from other sources - assessee had taken loans and advances from various parties and AO had made addition of interest calculated @ 0.5% on the aggregate amount of loan - HELD THAT - The addition has been made on purely at the estimate basis. It is a settled position that on the addition made on estimate basis, no penalty u/s 271(1)(c) of the Act is leviable as for levying of penalty u/s 271(1)(c) AO has to clearly prove that assessee has concealed his income or has furnished inaccurate particulars of income. Considering the undisputed fact that addition on which the penalty has been levied is on estimate basis, we are of the view that AO was not justified in leving of penalty u/s 271(1)(c) of the Act. Decided in favour of assessee.

Summary

Issues Involved:
The judgment involves a dispute regarding the levy of penalty u/s 271(1)(c) of the Income Tax Act, 1961 based on an addition made on an estimate basis.

Issue 1: Levy of Penalty u/s 271(1)(c) of the Act

The assessee filed an appeal against the order passed by the Commissioner of Income Tax (Appeals) for Assessment Year 2014-15, where a penalty of Rs. 1,71,411 was levied by the assessing officer u/s 271(1)(c) of the Act. The assessee contended that the penalty was unjustified as it was based on an addition made on an estimate basis. The Tribunal found that the addition was indeed made on an estimate basis without clear proof of concealment of income or furnishing inaccurate particulars. Therefore, the Tribunal directed the assessing officer to delete the penalty, ruling in favor of the assessee.

Conclusion:
The Appellate Tribunal ITAT DELHI ruled in favor of the assessee, allowing the appeal and directing the assessing officer to delete the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961.