9911796707
TMI Blog2025 (2) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant assessment year is 2016-17 and the corresponding previous year period is from 01.04.2015 to 31.03.2016. 2. Factual Matrix 2.1 The brief facts of the case as per order under Section 271(1)(c) of the Act dated 25.06.2019 hereinafter referred to as the "Impugned Penalty Order" is that the assessment was completed under Section 143(3) of the Act vide order dated 08.12.2018 at an assessed income of Rs. 72,39,660/- against the returned income of Rs. 67,14,314/- by making addition of Rs. 5,25,346/- on account of rejection of books and application of net profit rate. 2.2 Penalty proceedings u/s 271 (l)(c) for concealment of income and for furnishing inaccurate particulars of income were also initiated in respect of above mentioned addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income filed for the year under consideration. 3.2 Vide questionnaire dated 02/12/2018, the assessee was show caused as to why an amount of expenses of which bills/vouchers have not been produced should not be disallowed. 3.3 The relevant extract of the reply of AR is reproduced as under : 'The NP as declared i.e. 22.72% is very reasonable and accurate and on a higher side as compared to the prevailing normal and rates of this type of industry. This is because of the large maintenance expenditure to be incurred to upkeep and maintain and resort. Also, a large amount is spent for up keeping of the same and cleaning after every function. To prove our contention, we are hereby attaching the financial statements and ITS's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to Section 145 of the Act. Action 145 of the Act is reproduced as under: 145. (1) Income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the Official Gazette from time to time accounting standards to be followed by any class of assessee's or in respect of any class of income. (3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 271(1)(c) of the Act bearing No. ITBA/PNL/F/271(1)(c)/2019- 20/1016498274(1) is dated 25.06.2019 and since the assessee was aggrieved, he preferred first appeal under Section 246A of the Act before ld. CIT(A) who by the impugned order has sustained the impugned order of penalty dated 25.06.2019 by ld. AO and has dismissed the appeal of the assessee so filed. 2.9 That the assessee being aggrieved by the impugned order has preferred present appeal before us and has raised following grounds of appeal which are as under : 1. The Ld. CIT(A) NFAC has erred in upholding the penalty order passed by the AO under Section 271(1)(C) of the Income Tax Act 1961. The decision by CIT(A) NFAC contradicts the facts of the case and the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing in the matter took place on 23.12.2024 when both ld. AR for and on behalf of the assessee and ld. DR for and on behalf of the revenue were heard at length on their respective submissions. The ld. AR has placed on record of this Tribunal 'a broad submission' from pages 1 to 16, a Paper Book from pages 1 to 16, and Paper Book (Vol-2) from pages 17 to 28. In brief, it was contended that penalty cannot be imposed on "estimation". The ld. DR has supported the orders of lower authorities. 4. Observations, Findings& Conclusions 4.1 We now examine the legality, validity and proprietary of the impugned order basis records of the case. 4.2 We observe that by an assessment order bearing No. ITBA/AST/S/143(3)/2018-19/1014127521(1) dated 08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fair and reasonable and accepted by Revenue, the question of any willful concealment of income does not arise at all and that no penalty should be imposed. When additions to income are made on an estimation basis following the rejection of books of account, penalty cannot be sustained/imposed under Section 271(1)(c) of the Act. The basis for this principle lies in the fact that estimation indicates a lack of precise evidence regarding the taxpayer's actual income, thereby failing to demonstrate any intention to conceal or misrepresent income. When the Assessing Officer resorts to estimating income rather than relying on documented financial records, it cannot be inferred that the taxpayer has engaged in concealment or provided inaccurate p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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