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TMI Blog2024 (9) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance warrant the imposition of penalty u/s 271(1)(c) - In this regard, the contention of AR is that the non-charging of interest on certain loans may result into a disallowance out of interest paid to others but the assessee cannot be said to have furnished inaccurate particulars of his income or concealed any income, as all the facts were disclosed truly fully. The expenditure towards professional fee of architect for guest house renovation was treated as capital expenditure and disallowed accordingly, but in a situation like this, question of levy of penalty u/s 271(1)(c) does not arise - In this regard, LD AR again relied on the judgement passed in the case of CIT vs. Reliance Petroproducts [ 2010 (3) TMI 80 - SUPREME COURT] wherein, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was deleted by the learned CIT(A) and the addition on account of GP was reduced by Hon ble ITAT and the deletion was confirmed by the Hon ble ITAT and thus consequently erred in levying penalty on this count He thus failed to appreciate that no penalty could be levied when addition made by AO (on account of which penalty proceeding were initiated) is deleted by the appellate authorities. 2.3 Penalty confirmed by the learned CIT(A) on the ground of addition involving varying estimates made by the learned CIT(A) and Hon ble ITAT, on account of alleged gross profit cannot be sustained in law. 2.4 THAT the learned CIT(A) failed to appreciate that penalty could not be levied when additions including on account of GP are made on an estimated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appeals as may be required in the nature and circumstances of the case. 5.2 The appellant prays leave to adduce such further evidence to substantiate its case as the occasion may demand. 3. The facts, in brief, are that the assessee is a firm engaged in the business of gold and silver, making jewellery and selling such jewellery and bullions. During the course of assessment proceeding, the Assessing Officer got special audit done u/s 142(2A) of the IT Act and on the basis of analysis and comments of special auditor, made the following additions: (i) Excess payment disallowed u/s 40A(2)(a) of the Act of Rs. 33,32,94,731/-, (ii) Disallowance u/s 36(1)(iii) of the Act of Rs. 3,08,889/-, (iii) Disallowance of expenses of capital nature for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by ITAT on estimate basis. 2. Disallowance of proportionate interest paid on secured unsecured loan to the extent of Rs. 3,08,889/- being not charged on loan advanced to others. 3. Disallowance of Rs. 5,59,740/- on account of guest house expenses, treating the same as capital in nature. 7. We find that the penalty u/s 271(1)(c) was imposed on the basis of addition of Rs. 1,76,53,871/- which was purely based on estimation. It was the contention of LD counsel that no penalty u/s 271(1)(c) can be imposed when income is determined on estimate basis. In this regard, LD AR relied on decision passed by the Coordinate Bench of this Tribunal in the case of J. R. Enterprises vs. DCIT in ITA No.3042/Del/2015 for the assessment year 2005-06 order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lment/inaccurate particulars is only an estimate and it is settled law that penalty is not attracted on estimated additions. The Hon'ble Delhi High Court in the case of CTT vs. Aero Traders Pvt. Ltd., reported in 322 ITR 316 (Del), has held that no penalty u/s 271(1)(c) can be imposed when income is Assessment year 2005-06 determined on estimate basis. Similar view has been taken by the Hon'ble Punjab Haryana High Court in the case of Harigopal Singh vs. CIT reported in 258 ITR 85 (P H) and the Hon'ble Gujarat High Court in the case of CIT vs. Subhash Trading Company reported in 221 ITR 110 (Guj). In view of the foregoing precedents including the one from the Hon'ble Jurisdictional High Court, it is apparent that when the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5,59,740/- towards professional fee of architect for guest house renovation was treated as capital expenditure and disallowed accordingly, but in a situation like this, question of levy of penalty u/s 271(1)(c) does not arise. In this regard, it was the contention of LD AR that the facts relating to the issue were disclosed fully truly when the details supplied by the assessee in the return are not found to be incorrect or false, there is no question to invite penalty u/s 271(1)(c) of the IT Act. In this regard, LD AR again relied on the judgement passed in the case of CIT vs. Reliance Petroproducts, 322 ITR 158 (SC), wherein, it was held that a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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