The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that no penalty is leviable on the assessee, when the addition on account of turnover was estimated merely on the basis of estimation.
The bench of T.R. Senthil Kumar (Judicial Member) and Annapurna Gupta (Accountant Member) has observed that since the AO has not provided any material for estimation of the profit at 40%, penalty under section 271(1)(c) cannot be levied.
The appellant/assessee is a Limited Company engaged in Real Estate Development, Builder and Civil Contractor. For the Assessment Year 2013-14, assessee filed its Return of Income on 21-09-2013 declaring total income of Rs.39,46,540.
Regular assessment under section 143(3) was made disallowing sub contract payments made to M/s. Limestone Properties Pvt. Ltd. as non-genuine and 40% of the same namely Rs.2,63,44,508 was treated as bogus expenses by rejecting the books of accounts. On appeal against the assessment order, CIT(A) restricted the disallowance and estimated it to 7% of the profit instead of 40% disallowed by the AO.
On further appeal, ITAT confirmed the order of CIT(A) by dismissing both Assessee and Revenue appeals. Thereafter the A.O. initiated penalty proceedings and imposed Rs.4,07,772 for concealment of income.
The assessee filed an appeal before CIT(A), by which he has given only one opportunity of hearing to dismiss the appeal filed by the assessee confirming the levy of penalty.
The tribunal held that the addition made by the AO was based on estimation at 40% of the turnover which was modified by the Appellate Authority to 7% in the present case. Therefore, no question of levying Penalty under section 271(1)(c) of the Income Tax Act and itis liable to be deleted, and we direct it to delete the same.
Case Details
Case Title: Maruti Infrastructure Ltd. Versus DCIT
Case No.: ITA No. 1633/Ahd/2024
Date: 03-03-2025
Counsel For Appellant: Parin Shah
Counsel For Respondent: Amit Pratap Singh
Read More: No Service Tax Payable On Cartage Charges: CESTAT
