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2019 (1) TMI 930 - AT - Income TaxLevy of penalty u/s.271(1)(c) - addition on an estimated basis by rejecting the book results - Held that:- As settled legal position on the issue of requirement of initiation of penalty as well as levy of penalty by the CIT(A) who makes the addition for the first time on new grounds, the penalty stands unsustainable on technical grounds. In any case, the addition of ₹ 5 lakhs constitutes adhoc addition based on the estimations. On this ground also, assessee gets relief. Penalty levied originally by the AO stands deleted as they no longer exists. See Arya Hybrids Seeds Ltd. Vs. DCIT [2017 (1) TMI 993 - ITAT PUNE]. CIT(A) deleted the same. Further, the penalty levied on the addition of ₹ 5 lakhs sustained by the CIT(A), will be unsustainable in law as the relevant penalty proceedings should have been initiated by the CIT(A) only as the addition of ₹ 5 lakhs is his creation. Considering all we are of the considered opinion that the penalty levied by the AO is required to be quashed. We accordingly order the AO to delete the same. - Grounds raised by the assessee are allowed.
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