Unreported Decisions – December 2020

By Ajay R. Singh, Advocate

1. Penalty u/s. 271(1)(c) – Bogus Purchase – Estimation no penalty can be levied

The assessee company wasengaged in the business of Builder and Contractor filed its ROI on 28.09.2012 . Assessment was completed 143(3) of the Act on 18- 03-2015, upon making addition of ₹ 49,54,960/- being income calculated on total purchase of ₹ 1,90,63,350/- u/s. 69C of the Act in the absence of verification/non-production of bills/vouchers by the assessee. Penalty proceeding was initiated u/s. 271(1)(c) of the Act .

In appeal, quantum appeal the Ld CIT(A reject the books of accounts and restricted the addition to the tune of ₹ 19,19,401/- applying GP ratio @ 7.3% being average of preceding two years.

The Ld. AO imposed penalty to the tune of ₹ 5,93,095/- on the count of furnishing inaccurate particulars of income of the assessee. In appeal, the same was confirmed by the ld CIT(A) .

The Hon. ITAT observed that the ld CIT(A) while reducing / restricting the addition to the tune of ₹ 19,19,401/- rejected the books of accounts u/s. 145(3) r.w.s 144 of the Act; applied GP ratio @ 7.3% being average of preceding two years as best of his judgment. Thus it is a trite law that penalty cannot be imposed on 271(1)(c) on an estimated income and hence, the penalty is not sustainable and liable to be deleted.

KBC Estates Pvt Ltd vs ITO

[ITA 6790 / DEL / 2019 Bench SMC -1 ; dated: 27.11.2020 AY: 2012-13. Delhi Tribunal]