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TMI Blog2015 (12) TMI 1592X X X X Extracts X X X X X X X X Extracts X X X X ..... ected against the order dated 04.03.2008 of CIT(A), Chandigarh in confirming the penalty of ₹ 6,21,515/- imposed u/s 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act') for assessment year 2007-08. 2. Briefly stated, the facts of the case are that assessee was engaged in the contract work of Government of Haryana. During the assessment year under consideration the assessee undertook total work to the tune of ₹ 1,55,37,887/- with the Executive Engineer, PWD, Public Health Division, Yamunanagar, which was inclusive of cost of cement supplied at 3,78,004/-, steel at 58,015/- and amount of sales tax deducted at source at ₹ 3,10,756/- besides other deductions. The net payment received by the assessee was ₹ 1,17,99,993/-. The Assessing officer framed the assessment u/s 144 of the Act. The Assessing officer after rejecting the books of account adopted the net profit rate of 8% determining income in the hands of the assessee which was approved by the CIT(A). The assessee preferred second appeal before the Tribunal and the Tribunal vide its order dated 27.11.2008 in ITA No. 434/Chd/2008 reduced the net profit rate to 5.5%. The Revenue challenged the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The copy of both the orders were annexed as Annexure-1 and Annexure-II to the appellate order. The relevant paras of the decision of the Tribunal and Hon'ble High Court are reproduced under para 7 at pages 4 to 8 of the appellate order and the same are not being reproduced for the sake of brevity. 12. In the facts of the present case before us though the assessee had furnished return of income declaring the net profit rate of 3.07%, but had failed to justify the said rate as there was no appearance before the Assessing Officer during the assessment proceedings. In the said circumstances the authorities below were left with no option but to estimate the income in the hands of the assessee by applying the suitable net profit rate. The Tribunal in the first round had applied the net profit rate of 5% which has not been accepted by the Hon'ble Punjab Haryana High Court in assessee's own case and the matter has been remitted back to the file of the Tribunal to adjudicate the issue. 13. In the totality of the facts and circumstances, we are of the view that the net profit rate of 7% be applied to determine the income in the hands of the assessee. Accordingly, we dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id that assessee had concealed the particulars of income. The Tribunal further observed that the context in which language used by the Legislature showed that it is the act of commission of default which is subject to penalty and not the act of omission. The Tribunal clearly held that Explanation 3 to section 271(1)(c) of the Act, is not applicable to the existing assessee. The Tribunal concluded that therefore, the explanation has not completely nullified the above view vis-a-vis existing assessee. The Tribunal observed that in that case, the assessee was an existing assessee, did not file his return and hence was not covered by Explanation 3 to section 271(1)(c) of the Act. On this score, the Tribunal cancelled the penalty levied u/s 271(1)(c) of the Act. Shri M.R. Sharma Ld. Counsel for the assessee also relied on the decision of ITAT Chandigarh Bench in the case of ITO v Anil Kaushal [IT Appeal No. 1679 (Chd) of 1993 relating to assessment year 1989-90, wherein the Tribunal cancelled the penalty u/s 271(1)(c) of the Act, observing that levy of penalty u/s 271(1)(c) of the Act in a case where no return is submitted, is not possible. In the said case, the assessee did not submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Tribunal applied the net profit rate of 5.5% in this case. Shri M.R. Sharma, Ld. Counsel for the assessee vehemently argued that there was a difference of opinion as regards the estimate of income of the assessee. Since the Assessing officer and the Tribunal adopted the different estimates in assessing the income of the assessee, it could not be said that the assessee had concealed the particulars of its income so as to attract clause (c) of section 271(1) of the Act. Shri M.R. Sharma Ld. Counsel for the assessee relied on the decision of Hon'ble Jurisdictional High Court in the case of Harigopal Singh v CIT [2002] 258 ITR 85 (Punj. Har.), wherein the Hon'ble High Court held that when assessment order was made on estimate basis, no penalty for concealment of income can be imposed. The relevant observations of the Hon'ble High Court are as under:- In order to attract clause (c) of section 271(1) of the Act, it is necessary that there must be concealment by the assessee of the particulars of his income or if he furnishes inaccurate particulars of such income. What is to be seen is whether the assessee in the present case had concealed his income as held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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