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2015 (3) TMI 975 - ITAT DELHIPenalty under section 271(1)(c) - additions made on account Offshore supply of equipment - CIT(A) deleted the levy - Held that:- So far as the penalty levied on the addition made on account of offshore supply of equipment is concern, the addition has been finally deleted by the Tribunal vide order [2010 (9) TMI 624 - ITAT, DELHI] Similarly the Tribunal has also deleted the addition made on account of income from foreign exchange fluctuation gain. Thus there is no question of levy of penalty under section 271(1)(c) of the Act on these additions - Decided against revenue. Penalty levied on the addition made on account of onshore supply of equipment is concerned, the assessee had offered the income from onshore supply and other contract receipts to tax on the basis of the audited books of account as maintained by them. The Assessing Officer was of the opinion that there was various discrepancies in the books of account maintained by the assessee and accordingly the books were rejected under section 145 of the Act and the income from the above activity was estimated by the Assessing Officer by applying 8 per cent. profit rate on the gross receipts from this activity. Since the assessee had claimed loss which it was not able to justify, therefore, the Assessing Officer held that the assessee had furnished inaccurate particulars of income and has levied penalty. The Assessing Officer has not given reason for applying 8 per cent. rate. Of course, there is no finding beyond doubt by the Assessing Officer that any false claim was made by the assessee and there is no dispute that income from onshore supply and other contract receipts has been estimated by the Assessing Officer after rejection of books of account under section 145 of the Act. The estimation of income in this regard has also been made on the basis of the disclosure made by the assessee. It is now a well-established proposition of law that penalty under section 271(1)(c) of the Act cannot be levied on an estimated income. See CIT v. K. L. Mangal Sain [1974 (5) TMI 6 - ALLAHABAD High Court] - CIT(A) correctly deleted penalty.- Decided against revenue. Penalty levied on addition made on account of income from fee for design and engineering under section 115A is concerned there is no reason to doubt the submission of the assessee that the assessee had a bona fide basis and reasoning regarding the manner of taxability of income on account of design and engineering fees on net income basis nor is there any dispute regarding this material fact that all the facts necessary for the computation of income were duly disclosed by the assessee. We thus find that the dispute is limited to the manner of computing taxability of such income only about which the assessee was having a bona fide belief as discussed above. Considering these facts in totality we are of the view, that the learned Commissioner of Income-tax (Appeals) has rightly deleted the penalty levied on the addition made on account of income from fee for design and engineering under section 115A of the Act. - CIT(A) correctly deleted penalty - Decided against revenue.
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