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2023 (6) TMI 513 - AT - Income TaxPenalty u/s. 270A - GP estimation - underreporting of income - AO had estimated Gross Profit at 10% for Liquor Business and 20% on account of Sale of food - HELD THAT:- There is no denial that the additions have been made on estimated basis. AO had not bothered to verify the Stock Register maintained by the assessee for his Liquor Business which is mandatory as per the Excise Act and the Excise Inspectors visits the shop to verify the stock. Thus, the AO without bothering to verify the stock register estimated the GP. In these facts and circumstances we are of the opinion that AO has failed to establish underreporting. We find that in CIT vs. Aero Traders Pvt. Ltd [2010 (1) TMI 32 - DELHI HIGH COURT] has held that no penalty u/s.271(1)(c) of the Act can be imposed when income is determined on estimate basis. We are of the opinion that AO has failed to establish underreporting. Section 270A of the Act provides for imposition of penalty for underreporting and misreporting of income. Sub-section (2) enlists certain circumstances of under-reporting of income. Sub-section (3) deals with the determination of under-reported income, which, in our context, is by reducing the income returned by the assessee from the amount of income finally assessed. In the case under consideration, the addition is based on GP estimation. Hence, we hold that the penalty levied u/s.270A is not maintainable - Decided in favour of assessee.
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