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2020 (4) TMI 523 - AT - Income TaxPenalty levied u/s 271(1)(c) - Defective notice - non specification of charge in notice - not intimated the specific charge of "Concealment of income" or "Furnishing inaccurate particulars of income" - addition @ 1% of commission on accommodation entries - HELD THAT:- AO found that there was total transaction during the year of ₹ 5.38 crore. AO made addition of 1% commission on the entire transaction. No further appeal was filed by assessee against the said addition in the quantum assessment. Penalty proceeding are separate and independent. Penalty under section 271(1)(c) is not automatic on the basis of additions made or part of the additions sustained in the appeal. In the assessment, the addition can be on the basis of presumption for making estimated addition. AO estimated the addition on account of commission income, on the basis of entire transaction during the year. The Assessing Officer levied the penalty @ 300% without specifying special reason for levying maximum penalty. CIT(A) restricted the penalty @ 100% of the tax sought to be evaded. In Gurunanak Oil Agency [2013 (3) TMI 718 - ITAT JODHPUR] held that when the addition are based on estimated basis, the penalty under section 271(1)(c) could not be imposed. Also in CIT vs. Dhillon Rice Mills [2000 (9) TMI 10 - PUNJAB AND HARYANA HIGH COURT] held that addition made on estimation basis would not automatically lead to conclusion that there was failure to return the correct income by mean of fraud or gross wilful neglect. No justification in levying the penalty under section 271(1)(c). - Decided in favour of assessee.
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