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TMI Blog2021 (1) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of income was processed u/s. 143(1) of the Act. The assessment was reopened based on the information received from DGIT (Investigation Wing) that the assessee company has indulged in obtaining the bogus purchase bills and accounted in the financial statements. Therefore, the A.O. has reason to believe that the income has escaped assessment and issued notice u/s. 148 of the Act. Subsequently, the notice u/s. 143(2) and 142(1) of the Act were issued. The A.O. has provided the reasons recorded for reopening of the assessment to the assessee. The A.O. has called for the information in respect of bogus purchases and confirmation from the parties. Since the A.O. was not satisfied with the information and made addition of alleged bogus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure in the return of income and the assessment was reopened based on the information received from DGIT (Investigation Wing). Therefore, the order of the CIT(A) be set aside and allow the revenue appeal. 4. We heard the submissions of the Ld. DR and perused the material on record as none appeared on behalf of the assessee. The sole disputed issue envisaged by the Ld. DR that the CIT(A) erred in deleting the penalty overlooking the facts that the assessee has claimed bogus purchases in the books of accounts and also the information received from external sources is the exception to the monitory limit prescribed under CBDT instruction No. 3/2018 dated 11.7.2018 as amended on 20.08.2018. We find the Ld. CIT(A) has considered the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me on estimate basis. The Assessing Officer did not agree with the estimate of the assessee and brought his income to tax by increasing it to Rs. 2,07,500. This, too, was on estimate basis. The Tribunal agreed that the income of the assessee had to be assessed on an estimate of the turnover but was of the view that the estimate as made by the Assessing Officer was highly excessive and it fixed the total income of the assessee at Rs. 1,50,000 for the year under appeal. It is, thus, clear that there was a difference of opinion as regards the estimate of the income of the assessee. Since the Assessing Officer and the Tribunal adopted different estimates in assessing the income of the assessee, it cannot be said that the assessee had "concealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on any concrete evidence. Accordingly, I direct the A.O. to delete the penalty of Rs. 1,69,293/-. In the result, ground of appeal No. 1 is allowed. 5. We considering the observations of the Ld. CIT(A) find that, the penalty u/s. 271(1)(c) of the Act cannot be sustained when the income has been estimated. We support our view relying on the decision of CIT Vs. Manjunatha Cotton & Ginning Factory, [2013] 359 ITR 0565 (Kar). "In the case of CIT Vs. Manjunatha Cotton and Ginning Factory, Karnataka High Court has laid down the following Principles for levy of penalty Under section 271(1)(c) of the Income Tax Act, 1961:- (a) Penalty under Section 271(1)(c) is a civil liability. (b) Mens rea is not an essential element for imposing penalty f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , unless it is discernible from the assessment order that, it is on account of such unearthing or enquiry concluded by authorities it has resulted in payment of such tax or such tax liability came to be admitted and if not it would have escaped from tax net and as opined by the Assessing Officer in the assessment order. (l) Only when no explanation is offered or the explanation offered is found to be false or when the assessee fails to prove that the explanation offered is not bona fide, an order imposing penalty could be passed. (m) If the explanation offered, even though not substantiated by the assessee, but is found to be bona fide and all facts relating to the same and material to the computation of his total income have been discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings. 6. We are of the substantive opinion that, the penalty u/s. 271(1)(c) cannot be levied when the income has been estimated. The Ld. DR could not controvert the observations of the Ld. CIT(A) with any cogent evidence except relying on the A.O's order. Accordingly, we are not inclined to interfere with the order of the Ld. CIT(A) who relied on the judicial decisions and passed a reasoned order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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