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2014 (4) TMI 679 - DELHI HIGH COURTCancellation of penalty u/s 271(1)(c) of the Act – Concealment of income – Acceptance of profits @ 11% - Projects on turn-key basis taken by the assessee contractor – Held that:- The decision in MAK Data P. Ltd. Versus Commissioner of Income Tax-II [2013 (11) TMI 14 - SUPREME COURT] followed - The number of discrepancies and irregularities listed by the special auditor in his report which are reproduced in the assessment order bear testimony to the fact that the books of accounts maintained by the assessee were wholly unreliable - there can be no sanctity attached to the figure of gross contract receipts on which the assessee estimated 3% as its income - the AO did not enhance the figure of gross receipts but that is not because he gave a clean chit to the books of accounts maintained by the assessee. He could not have given a clean chit in the face of the defects, discrepancies and irregularities reported by the special auditor - the mere fact that the estimate was reduced by the Tribunal to 8% would in no way take away the guilt of the assessee or explain its failure to prove that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on its part - the assessee was taking a chance - sitting on the fence - despite the fact that there was a search towards the close of the relevant accounting year in the course of which incriminating documents were found - the intention of the assessee was to take a risk and disclose a lesser income than what it actually earned and rely upon the minor variations in the rate of profits adopted by the taxing authorities and the Tribunal as a defence in the penalty proceedings - The plea - accepted by the Tribunal - that the assessee agreed to be assessed at 11% of the gross receipts only “to buy peace” and “avoid litigation” cannot be accepted - the Tribunal was in error in upholding the order of the CIT (Appeals) cancelling the penalty – Decided in favour of Revenue.
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