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TMI Blog2025 (2) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... gns with industry standards, thereby undermining the AO's rationale for estimating a higher profit percentage without adequate justification.
Assessee has relied upon following decisions in support of their plea that when income of the assessee is determined on an estimated basis, it follows that no penalty u/s 271(1)(c) of the Act can be imposed for concealment or furnishing inaccurate particulars of income.
Thus we are of the considered view that since quantum assessment order was based on application of estimated rate of NP @ 24.50% which was found to be applicable and that same was accepted by the Revenue the charge of penalty u/s 271(1)(c) does not survive. Accordingly, impugned order is set aside and penalty is deleted. Assessee appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of M/s Occasion Palace & M/s Oasis Banquet, perusal of which shows that the NP declared by such resort is only 7.725% and 3.54%. The average rate comes out of 5.6325%. Therefore, to avoid any sort of litigation and to buy peace of mind, we accept the profit declared by the assessee in its return of income. Total receipts as per balance sheet and ITR (excluding indirect taxes and hiring charges): Rs. 2,95,36,632/- Applying an estimated: Rs. 2,95,36,632/- x 24.50%= Rs. 72,36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee among other things. 3.10 Accordingly, applying the NP rate of 24.50% on the gross receipts: Rs. Rs. 2,95,49,632/- x 24.50%= Rs. 72,39,660/-. The net profit comes to Rs. 72,39,660/- as against Rs. 67,14,314/-. Therefore, an addition of Rs 5,25,346/- is made to the returned income of the assessee. Penalty proceedings u/s 271(1)(c) of the Act is initiated separately for furnishing of inaccurate particulars of income. 2.7 Basis above premises, the ld. AO concluded that assessee is liable to penal action on account of furnishing inaccurate particulars of income and default has been committed by the assessee within the meaning of Section 271(1)(c) of the Act and has quantified concealment of income to the tune to the tune of Rs. 5,25,346/- and has imposed penalty of Rs. 1,62,330/- under Section 271(1)(c) of the Act. 2.8 The order of penalty under 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 dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 08.12.2018 an addition of Rs. 5,25,346/- was made on basis of rejection of books of account and application of Net Profit rate of 24.50% on gross receipts of Rs. 2,95,49,632/-. The net profit comes to Rs. 72,39,660/- [Rs.2,95,49,632 x 24.50%=Rs. 72,39,660/-]. The net profit comes to Rs. 72,39,660/- as against Rs. 67,14,314/-. Therefore, an addition of Rs. 5,25,346/-[Rs. 72,39,660/- - Rs. 67,14,314/- = Rs. 5,25,346/-]. Hence, addition of Rs. 5,25,346/- was made to return of income of Rs. 67,14,314/- and assessed income was computed as Rs. 72,39,660/- for tax purposes. The ld. AO in the aforesaid assessment order dated 08.12.2018 observed that in view of the facts, he is satisfied that it is a fit case for initiation of penalty under Section 271(1)(c) of the Act. 4.3 We observe from careful perusal of the impugned assessment order dated 08.12.2018 that addition of Rs. 5,25,346/-(supra) was primarily made on by applying NP ..... X X X X Extracts X X X X X X X X Extracts X X X X
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