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2018 (4) TMI 880 - AT - Income TaxPenalty u/s 271(1)(c) - non production of the books of accounts and addition based on the estimate - Held that:- In case where the assessee’s books are rejected and assessment was made on best judgment after estimating the turnover and the rate of gross profit, it cannot be said that penalty cannot be imposed. In each case of the estimated addition it is required to be examined whether there was material to implicate the assessee for having concealed or furnished inaccurate particulars of income. In fact assessment by estimate is one of the accepted methodology of the taxation. Where the assessee conceals relevant material and evidence, the revenue has no option but to make the best judgment by an estimate. An addition made by estimation is as much legal as any other assessment. In the present case, hence, it cannot be said that merely because the estimate of income penalty cannot be levied. Here, there is no explanation by the assessee that why the books of accounts are not been produced by the assessee Non consideration of the decision of Hon'ble Karnataka High Court in CIT Vs. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] which was cited before the bench but was not considered - Held that:- In the present case such decision was cited before us, however inadvertently same was not considered while deciding the penalty appeal of the assessee. In view of this we are of the opinion that not considering the decision of Hon'ble Karnataka High Court cited before us, renders the order of the tribunal suffering from mistake apparent from record. I Penalty initiated u/s 271(1)(c) - non specification of charge - Held that:- In the present case at the time of framing the assessment order the ld Assessing Officer has recorded a satisfaction that the assessee has furnished inaccurate particulars of income and concealed its income which attracts the provisions of section 271(1)(c) of the Act. while levying the penalty the AO has levied it holding that assessee has furnished inaccurate particulars of income. Therefore, while issuing notice has to come to the conclusion that whether it is a case of ‘concealment of income’ or is it a case of ‘furnishing of inaccurate particulars’. Both the above phrases have different connotation - levy of penalty has to be clear for which penalty is levied, the position is unclear then penalty is not sustainable. In the present case the situation is identical when there was no clear charge that whether the penalty is being initiated for ‘furnishing of inaccurate particulars of income’ or ‘concealment of income’ but levied penalty on furnishing of inaccurate particulars of income renders the order of the penalty unsustainable.
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