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2020 (1) TMI 773 - AT - Income TaxLevy of penalty u/s 271(1)(c) - estimation of rental income - HELD THAT:- We find that for A.Y 2011-12, the rental income has been determined by the Assessing officer not basis any material or direct evidence found against the assessee but basis the hypothesis that the plot ought to have been let-out at least for the number of occasions on which the Mahurats are there as per the Panchang i.e. 28 during the respective year. Therefore, for the remaining 11 Mahurats other than 17 mahurats for which assessee has already offered rental income, basis the average rate of booking of ₹ 15,000/-, rental income was estimated at ₹ 1,65,000/-. Further, rental for small parties, exhibition and garba party were again estimated by the AO. Similar findings are recorded for other two assessment years. The said determination of income could form the basis of addition in the quantum proceedings, however for the purposes of levy of penalty, mere addition made in the assessment order could not form the basis of levy of penalty. It is a settled legal proposition that assessment and penalty proceedings are separate proceedings and therefore, mere addition made in the assessment order is not sufficient for levy of penalty. Against said estimation of income done by the AO CIT(A) has reduced the quantum of estimation of rental income. Therefore, where there is no positive evidence or material beyond doubt of assessee having concealed the particulars of income or furnishing inaccurate particulars of income, mere addition in the quantum proceedings is not sufficient to hold assessee liable for levy of penalty. Levy of penalty on estimated rental income cannot be sustained and is hereby directed to be deleted. Mere disallowance of depreciation claim where all particulars are on record and inadvertent mistake of disclosing the interest income net of TDS instead of gross of TDS in the return of income where both interest income and TDS is apparent from the return of income cannot form the basis for levy of penalty on account of furnishing inaccurate particulars of income and is hereby directed to be deleted. - Decided in favour of assessee.
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