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TMI Blog2023 (6) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... ational faceless Appeals Centre, Delhi has erred in confirming the penalty levied by the AO without consideration of the legal status of the penalty order, which is not legally sustainable, hence, the order passed by the NFAC, delhi confirming the penalty levied by the AO of Rs.2,66,820/-. It is requested that the penalty order may kindly be deleted. 2. The assessee craves right to add, alter, amend, modify, delete the grounds of appeal and right to make detailed submissions, clarifications and explanation on the grounds of appeals at the time of hearing." 2. None appeared for the assessee. The Ld.DR relied on the order of the Assessing Officer(AO) and Ld.CIT(A). The only issue for our consideration is Penalty u/s.270A of the Act. Find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the G.P. at 10% of liquor business turnover. Even in case of food sale, assessee had shown sale of Rs.2,90,974/- without any corresponding purchases. Profit was estimated on account of food sale at 20% of sale." 4. The ld.CIT(A) has given a categorical findings that the AO had estimated Gross Profit at 10% for Liquor Business and 20% on account of Sale of food. Thus there is no denial that the additions have been made on estimated basis. The AO had not bothered to verify the Stock Register maintained by the assessee for his Liquor Business which is mandatory as per the Excise Act and the Excise Inspectors visits the shop to verify the stock. Thus, the AO without bothering to verify the stock register estimated the GP. In these facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal position is that no penalty u/s.271(1)(c) of the Act cannot be imposed. We find strength from the following decisions of the Hon'ble High Courts: i) CIT vs. Aero Traders Pvt. Ltd., 322 ITR 316 (Del) ii) CIT Vs. Subhash Trading Co., 221 ITR 110 (Guj.) iii) Harigopal Singh Vs. CIT, 258 ITR 85 (P & H)" 6. We find that the Hon'ble Delhi High Court in CIT vs. Aero Traders Pvt. Ltd.(supra.) has held that no penalty u/s.271(1)(c) of the Act can be imposed when income is determined on estimate basis. The relevant portion of the judgment reads as follows: "5. Against this order, the assessee filed an appeal before the CIT(A), who deleted the penalty imposed vide order dt. 7th September, 2007, holding that the addition made by the AO on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. As stated the seizure of the books of the police is not an act of the assessee. No motives can be attributed to the nonavailability of books of accounts to examine and verify the various claims made by the appellant." 6. Aggrieved by this order, the Revenue filed an appeal before the Tribunal. The Tribunal, after hearing the submissions made on behalf of the Revenue, came to the conclusion that the CIT(A) had taken the correct decision in deleting the penalty. The operative portion of the impugned order dt. 4th Dec., 2008 is as follows : "As the facts emerge the substantial quantum relief was given by the CIT(A) which has been confirmed by the Tribunal, the balance pertains to estimated rate of profit applied on the turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the opinion that Assessing Officer has failed to establish underreporting. Section 270A of the Act provides for imposition of penalty for underreporting and misreporting of income. Sub-section (2) enlists certain circumstances of under-reporting of income. Sub-section (3) deals with the determination of under-reported income, which, in our context, is by reducing the income returned by the assessee from the amount of income finally assessed. Sub-section (6) is relevant for our purpose which states that under-reported income for the purpose of this section shall not include certain items. Clause (b) of subsection (6) refers to: "the amount of under-reported income determined on the basis of an estimate, if the accounts are correct and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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