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2017 (6) TMI 551 - AT - Income TaxPenalty proceedings u/s 271(1)(c) - estimation of income @ 12.5% of gross receipts - right of the assessee to challenge the order of the assessment - Held that:- Assessing Officer accepted only one part of the consent of the assessee being adhoc estimation of income but has not accepted the request for not initiating the penalty proceedings. There is no dispute that the Assessing Officer is not bound by the said request made by the assessee for not initiating the penalty proceedings and therefore it was well within the jurisdiction of the Assessing Officer to initiate the penalty proceedings. However the levy of penalty is always subject to the explanation and all other relevant factors and circumstances under which the addition was made by the Assessing Officer. Once the Assessing Officer is not bound by the consent of the assessee then on the similar analogy the assessee is also not bound by one part of the consent when the other part of the consent was not accepted by the Assessing Officer. Thus when the Assessing Officer has not accepted the consent of the assessee in toto then the said consent cannot be applied as a Doctrine of estoppels against the assessee and the assessee has a legal right to challenge the assessment order before the appellate authority.Therefore the right of the assessee to challenge the order of the assessment is a material legal right, which cannot be denied by applying the Doctrine of Estoppel. The percentage as provided under Section 44AD is certainly has a guidance and persuation value while estimating the income of the assessee which are not falling under the category of small assessees as per the provisions of Section 44AD of the Act. Hence in this case, when the business of the assessee is not in dispute and the turnover of the assessee was also not found to be incorrect or inconsistent with the other record, then the estimation of income has to be made by applying the rate of 8% of the turnover/gross receipt as provided under Section 44AD of the Act. Consequently, the impugned order of the CIT (Appeals) is set aside and the Assessing Officer is directed to compute the income of the assessee @ 8% of the turnover / gross receipts. - Decided partly in favour of assessee.
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