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2017 (11) TMI 196 - AT - Income TaxPenalty u/s 271(1)(c) - N.P. determination - Held that:- AO, in the penalty order, has observed that the assessee had concealed the income and has furnished inaccurate particulars. However, the penalty order is woefully silent on the issue as to how this satisfaction of concealment/furnishing of inaccurate particulars was arrived at. The penalty was imposed on the quantum addition which was estimated by applying the net profit rate of 5% as against the net profit rate of 3.65% declared by the assessee. Thus, the addition was, at best, an estimate of the profit by the AO which the assessee would have earned. Therefore, the quantification of the alleged concealment/inaccurate particulars is only an estimate and it is settled law that penalty is not attracted on estimated additions. The Hon'ble Delhi High Court in CIT vs. Aero Traders Pvt. Ltd., (2010 (1) TMI 32 - DELHI HIGH COURT ), has held that no penalty u/s 271(1)(c) can be imposed when income is determined on estimate basis. Thus it is apparent that when the bedrock of instant penalty is the estimate of net profit, the same cannot be sustained. Accordingly, we set aside the order of the Ld. CIT (Appeals) and direct the AO to delete the penalty. - Decided in favour of assessee.
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