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TMI Blog2015 (3) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer by applying 8 per cent. profit rate on the gross receipts from this activity. Since the assessee had claimed loss which it was not able to justify, therefore, the Assessing Officer held that the assessee had furnished inaccurate particulars of income and has levied penalty. The Assessing Officer has not given reason for applying 8 per cent. rate. Of course, there is no finding beyond doubt by the Assessing Officer that any false claim was made by the assessee and there is no dispute that income from onshore supply and other contract receipts has been estimated by the Assessing Officer after rejection of books of account under section 145 of the Act. The estimation of income in this regard has also been made on the basis of the disclosure made by the assessee. It is now a well-established proposition of law that penalty under section 271(1)(c) of the Act cannot be levied on an estimated income. See CIT v. K. L. Mangal Sain [1974 (5) TMI 6 - ALLAHABAD High Court] - CIT(A) correctly deleted penalty.- Decided against revenue. Penalty levied on addition made on account of income from fee for design and engineering under section 115A is concerned there is no reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of equipment were not considered to be chargeable to tax in India. The Technip had established a project office in India for execution of the aforesaid contract. In view of the fact that P.O constituted a permanent establishment of Technip in India under article 5 of the India-Italy treaty, Technip filed a return of income for the subject year on October 31, 2002 declaring business income of ₹ 7,34,39,734 which was adjusted with brought forward losses of the assessment year 2001-02 and nil income return was filed. In the assessment framed under section 134(3) of the Act, the Assessing Officer rejected the books of account of the assessee and the total income was assessed at ₹ 8,91,39,231 with the assistance of following chart, the returned income and the assessed income arising from different activities can be understood : Sl. Issue As per return of income As per assessment order As per ITAT order 1. Offshore supply of equipment Revenue not offered to tax considering the same as nontaxable as per note No. 9 given in the computation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 26, 2009, the learned Commissioner of Income-tax (Appeals) in compliance of the direction of the Tribunal has again confirmed the taxability of offshore supply of equipment. This action of the learned Commissioner of Income-tax (Appeals) was questioned by the assessee before the Tribunal in I.T.A. No. 434/Del/10 and the Tribunal vide its order dated September 30, 2010 has finally deleted the addition. After considering the order of the Tribunal, the final assessed income of the assessee has been worked out at ₹ 8,02,65,698 as against returned income of ₹ 7,34,39,734. 3. The penalty order under section 271(1)(c) of the Act was passed on March 29, 2007, after confirmation of the additions by the learned Commissioner of Income-tax (Appeals) in its first round on November 30, 2005. The Assessing Officer has levied penalty under section 271(1)(c) of the Act at ₹ 75,35,800 on all the additions made in the assessment order and upheld by the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) vide his order dated February 18, 2010, has deleted this penalty of ₹ 75,35,800 against which the Revenue is in appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Asst. CIT v. Allied Construction [2007] 106 TTJ (Delhi) 616 8. CIT v. Aero Traders P. Ltd. [2010] 322 ITR 316 (Delhi) 9. ITO v. Ravi Khurana [2008] 114 TTJ (Delhi) 561 10. CIT v. Modi Industrial Corporation [2010] 34 DTR 158 (P H) 11. CIT v. Vijay Kumar Jain [2010] 325 ITR 378 (Chhattisgarh) 12. Asst. CIT v. Om Prakash Aggarwal I.T.A. No. 5589/Del/2010, ITAT, Delhi E Bench 13. CIT v. Bhoj Raj and Co. [2001] 247 ITR 696 (P H) 14. CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC) 15. CIT v. Tarapore and Co. [2008] 1 DTR 196 (Mad) 16 CIT v. S. Dhanabal [2009] 309 ITR 268 (Delhi) 17. ClT v. Vamchampigons and Agro Products [2006] 284 ITR 408 (Delhi) 18. CIT v. Amit Jain [2013] 351 ITR 74 (Delhi) 19. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious discrepancies in the books of account maintained by the assessee and accordingly the books were rejected under section 145 of the Act and the income from the above activity was estimated by the Assessing Officer by applying 8 per cent. profit rate on the gross receipts from this activity. Since the assessee had claimed loss which it was not able to justify, therefore, the Assessing Officer held that the assessee had furnished inaccurate particulars of income and has levied penalty. The Assessing Officer has not given reason for applying 8 per cent. rate. Of course, there is no finding beyond doubt by the Assessing Officer that any false claim was made by the assessee and there is no dispute that income from onshore supply and other contract receipts has been estimated by the Assessing Officer after rejection of books of account under section 145 of the Act. The estimation of income in this regard has also been made on the basis of the disclosure made by the assessee. It is now a well-established proposition of law that penalty under section 271(1)(c) of the Act cannot be levied on an estimated income. One of such cited decisions is of the hon'ble Allahabad High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has also observed that the assessee had a bona fide belief regarding the manner of taxability of income on account of design and engineering fees on net income basis and that all the facts material to the computation of income were duly disclosed by the assessee and the dispute is limited to the manner of computing taxability on such income and thus there is no concealment of income or furnishing of inaccurate particulars of income. In this regard he has taken support from several decisions including that of the hon'ble jurisdictional Delhi High Court in the case of CIT v. S. Dhanabal [2009] 309 ITR 268 (Delhi) holding that where the explanation offered by the assessee is bona fide and all the facts which were material to the computation of his income were disclosed by the assessee, penalty under section 271(1)(c) is not leviable. Before us the learned authorised representative has also placed reliance on the decision of the hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC) and of the hon'ble Delhi High Court in the case of CIT v. Amit Jain [2013] 351 ITR 74 (Delhi). There is no dispute that penalty under section 271(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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