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2015 (6) TMI 1189 - AT - Income TaxPenalty u/s 271(1)(c) - difference in the value of stock shown by the assessee and as estimated by the AO by applying the rate of last purchase bill dated 28.3.2009 - HELD THAT:- The only basis of addition is the estimate of valuation made by the AO in valuing the closing stock @ ₹ 200.50 per bag, being the cost price of cement bags vide last purchase bill dated 28.3.2009. Apart from this estimate made by the AO, there is nothing to show that the way in which the assessee valued its closing stock was incorrect. This divulges that the addition has been made only on the basis of estimate made by the AO. It is a settled legal position that when income is estimated, then, there can be no question of imposing penalty u/s 271(1)(c) . The Hon’ble Delhi High Court in CIT vs. Aero Traders Pvt. Ltd., [2010 (1) TMI 32 - DELHI HIGH COURT] , has held that no penalty u/s 271(1)(c) can be imposed when income is determined on estimate basis. Similar view has been taken by the Hon’ble P&H High Court in Harigopal Singh vs. CIT [2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT] and the Hon’ble Gujarat High Court in CIT vs. Subhash Trading Company, [1995 (11) TMI 37 - GUJARAT HIGH COURT] . In view of the foregoing precedents it is apparent that when the bedrock of instant penalty is the estimate of valuation of closing stock, the same cannot be sustained. Thus Penalty deleted - decided in favour of assessee.
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