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TMI Blog2020 (10) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... s an appeal filed by the assessee against the order of ld. CIT(A), Ajmer dated 18.11.2019 wherein he has confirmed the levy of penalty u/s 271(1)(c) amounting to ₹ 68,000/- pertaining to A.Y 2009-10. 2. The hearing of the matter was scheduled through Video Conferencing in view of ongoing COVID-19 pandemic situation in the country. 3. During the course of hearing, the ld. AR submitted that the assessee has filed his return of income declaring total income of ₹ 16,48,450/- u/s 139(1) on 27.11.2009. The matter was selected for scrutiny and order u/s 143(3) was passed wherein the AO estimated rental income in respect of Chitrakoot event place at ₹ 3,50,000/-. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has sustained the addition to the extent of ₹ 2,00,000/- and in respect of which, the Assessing Officer has levied the penalty u/s 271(1)(c) amounting to ₹ 68,000/-. It was submitted that the levy of penalty u/s 271(1)(c) is not mandatory but the law requires that where the AO in the course of any proceeding is satisfied that any person has concealed the particulars of his income or furnished inaccurate particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, no alternate was left with the Assessing Officer but to estimate the income of the assessee from the event places. It was accordingly submitted that the rental income has been estimated taken into consideration various factors including gross receipt declared by the assessee before the Commercial Tax Department and the findings of the ld. CIT(A) as well as Tribunal. It was accordingly submitted that it is not correct to say that it is a case of mere estimation of income by the Assessing Officer. It was accordingly submitted that there is no infirmity in the order of Assessing Officer where he has held that the assessee has furnished inaccurate particulars of income to the tune of ₹ 2,00,000/- and it is fit case for levy of penalty u/s 271(1)(c). Regarding other contention advanced by the ld. AR regarding bonafide belief, it was submitted that similar contentions were raised before the ld. CIT(A) and after considering the same, he has held that they cannot be held as bona-fide belief for not disclosing the correct rental income. Further, our reference was drawn to the remand report submitted by the Assessing Officer during the appellate proceedings and content thereof rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that for A.Y 2011-12, the rental income has been determined by the Assessing officer not basis any material or direct evidence found against the assessee but basis the hypothesis that the plot ought to have been let-out at least for the number of occasions on which the Mahurats are there as per the Panchang i.e. 28 during the respective year. Therefore, for the remaining 11 Mahurats other than 17 mahurats for which assessee has already offered rental income, basis the average rate of booking of ₹ 15,000/-, rental income was estimated at ₹ 1,65,000/-. Further, rental for small parties, exhibition and garba party were again estimated by the Assessing officer. Similar findings are recorded for other two assessment years. The said determination of income could form the basis of addition in the quantum proceedings, however for the purposes of levy of penalty, mere addition made in the assessment order could not form the basis of levy of penalty. It is a settled legal proposition that assessment and penalty proceedings are separate proceedings and therefore, mere addition made in the assessment order is not sufficient for levy of penalty. Further, we find that against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed trading addition that the amount in difference between the result shown by the assessee and that estimated by the AO was resultant of concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee, penalty under section 271(1)(c) of the Act cannot be levied. The AO had rejected the books of account and estimated the trading addition on the basis that the assessee had not maintained site-wise account, no head-wise details of claimed purchases were furnished, no separate head of expenses was maintained, work in progress was not declared, some wages were shown outstanding without complete details of creditors, stock register was not maintained and misc. expenses on water transportation etc. were not verifiable and purchase vouchers of sand, steel, bajri etc. were self made etc. Assessee explained reasons for the above defects which were not accepted by the AO as not found satisfactory. The AO accordingly made estimation. The circumstances suggest that it may be just and proper case of making estimated trading addition but an inference therefrom cannot be drawn beyond doubt especially keeping in mind the nature of work in not maintainin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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