The Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, has recently, in an appeal filed before it, while directing the AO to delete the penalty-imposed under Section 271(1) (C), held that additions cannot be made on estimation basis.
The aforesaid observation was made by the Jodhpur ITAT, when an appeal was preferred before it by the Assessee, for the assessment year 2008-09, as against the order of CIT(A), Udaipur, dated 26.02.2019.
The ground of the assessee’s appeal being that under the facts and circumstances of the case, the CIT(Appeals), Udaipur, has erred in not allowing the relief in respect of penalty of Rs.1,83,260/- under Section 271(1)(c), despite the fact that additions were made on estimation basis, the facts which gave rise to the present appeal were that in this case, an assessment was framed under Section 143(3) of the Income Tax Act, 1961 ,determining the total income at INR 34,81,720/-.
The Assessing Officer (AO) also initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act. And subsequently in the quantum appeal, the CIT(A) further reduced the addition at INR 21,60,817/-. And, thereafter, the AO imposed penalty of INR 8,31,893/- under Section 271(1)(c) of the Income Tax Act vide order dated 22.03.2013.
Aggrieved by this, the assessee preferred an appeal before the CIT(A), who, after considering the submissions, partly allowed the appeal of the assessee by directing the AO to re-compute the penalty in respect of income of INR 7,63,083/. And, it is being aggrieved by the part sustenance of the penalty, that the assessee has filed the present appeal before Jodhpur ITAT.
With Shri Sandeep Jhanwar, CA, Counsel for the Assessee, having submitted that the penalty order did not specify the charge, he further added that the penalty was imposed purely on the basis of estimation of income. He submitted that under the facts and circumstances of the present case, the authorities below should not have imposed the penalty, and thereby placed his reliance on the decision of Co-ordinate Bench of the Tribunal in the case of ITO vs Shri Uday Kumar D.Bhatt in ITA No.2072/Ahd./2018 & C.O.No.75/Ahd./,2018 for AY 2014-15 order dated 06.08.2021.
Shri S.M.Joshi, the JCIT-DR , on the other hand opposed these submissions and supported the orders of Assessing authority.
Hearing the opposing contentions of either sides and thereby perusing the materials available on record, the Jodhpur ITAT comprising of Kul Bharat, the Judicial Member, and Manish Borad, the Accountant Member noted:
“We have heard Ld. Authorized Representatives of the parties and perused the material available on record. It is seen from the records that the additions were made on the basis of estimation and part relief was granted by the Appellate Authority.”
“Under the facts and circumstances of the present case, we are of the considered view that the AO ought not to have imposed penalty, “the ITAT added.
Thus, allowing the assessee’s appeal, the Jodhpur ITAT held:
“We therefore, considering the binding precedent as relied by the Ld. Counsel for the assessee, direct the AO to delete the penalty-imposed under Section 271(1)(c) of the Act to the assessee. Grounds raised by the assessee are hence, allowed. In the result, the appeal filed by the assessee is allowed.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
