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TMI Blog2014 (3) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the levy of penalty are as under: 3. The assessee is an individual. He filed his returns of income for the respective assessment years. Thereafter, a search and seizure operation was conducted on the assessee on 07/10/2004 u/s 132 of the IT Act. The assessee, subsequently, filed his return of income for the respective assessment years on 16/08/2005 admitting additional income which was not offered in his original return of income. Block assessments u/s 143(3) read with section 153A of the Act were completed determining the taxable income by accepting the additional income offered by the assessee and also making additions on account of undisclosed investment, interest income received, difference in investment in assets and difference i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to be evaded for all the assessment years under consideration. 5. Aggrieved, the assessee preferred appeal before the CIT(A) for all the assessment years under consideration stating that the penalty orders are barred by limitation and also that penalty levied for confirmation of the addition on account of difference in cost of construction is not valid as the addition has been made on an estimate basis and, therefore, penalty is not justified. 6. The learned CIT(A) deleted the penalty levied on the confirmed addition on account of difference in cost of construction holding that the said addition has been confirmed by the ITAT on estimate basis and penalty on account of estimated income is not leviable. He further held that the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order is the subject matter of appeal before the CIT(A), a penalty order shall not be passed after expiry of the FY in which the assessment order has been passed or six months from the end of the month in which the order of the CIT(A) is received by the CCIT or CIT, whichever is later. He submitted that the order of the CIT(A) is dated 13/03/2008 and the AO initiated penalty proceedings by issuance of show cause notice in February, 2009 and the assessee filed his explanation on 16/03/2009. He submitted that pursuant to the said notice, no penalty order has been passed and, therefore, it is deemed to have been dropped. According to the learned counsel for the assessee, penalty was initiated on the offering of additional income in the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of adoption of CPWD rates by valuation cell and further 10% on account of self supervision, which was not allowed earlier. Thus, it is a clear case of estimation of cost of construction and as rightly pointed by the CIT(A) there was no material found during the course of search on the basis of which such addition has been made. Therefore, we do not see any reason to interfere with the order of the CIT(A) deleting penalty. As held by the Courts in a Catena of cases, every addition will not automatically attract penalty and further as held by the Hon'ble Delhi High Court in the case of CIT Vs. Aero Traders (P) Ltd., 322 ITR 316, penalty is not leviable on estimated income. 9.2 With regard to period of limitation in passing the penalty orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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