TMI Blog2019 (8) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Delhi Bench of the Tribunal in Mitsui Prime Advanced Composites India (P) Ltd. Vs. DCIT [ 2016 (6) TMI 588 - ITAT DELHI] . Respectfully following the precedent, we uphold the impugned order on this score. Penalty for disallowance u/s 35DD - expenses incurred for increase in share capital after amalgamation - quantum addition deleted by Tribunal - HELD THAT:- Since the very foundation for the imposition of penalty, being the addition made in the assessment, ceases to exist, there can be no question of imposition of any penalty thereon. We, therefore, accord our imprimatur to the view taken by the CIT(A) on the above issue. Penalty for disallowance of Miscellaneous Expenses - these expenses included Software development expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that there is a lack of precision as to concealment of income or furnishing of inaccurate of particulars of income. It is only an estimation shorn of any certainty or accuracy. Reverting to the facts of the instant case, it is clearly established that sustenance of disallowance of expenses @ 40% is merely an estimation, which is devoid of any proper authentication. As such, it does not call for imposition of any penalty. - ITA No.428/PUN/2015 - - - Dated:- 20-8-2019 - Shri R.S. Syal, Vice President And Shri Partha Sarathi Chaudhury, Judicial Member For the Assessee : Shri R. Murlidhar And Shri Prashant Gandhi For the Revenue : Shri Neeraj Bansal, CIT ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethod (TNMM) in an aggregate manner considering two other transactions including Payment of Royalty . The Transfer Pricing Officer did not approve the aggregation approach of the assessee. He separated the international transaction of `Export of manufactured finished goods . Considering the fact that the assessee sold certain similar products to non-AEs as well, the TPO made addition of ₹ 2.24 crore under this transaction. When the matter came up before the Tribunal in ITA No. 736/PUN/2011 and ITA No.732/PUN/2011, it held vide order dated 05-08-2019 that considering non-AE transactions at par with AE transactions on sale of similar products was not appropriate in as much as there was difference in quantity sold to AEs and non-AEs, lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. It is pertinent to mention that the Tribunal has deleted the above addition in its order passed in quantum proceedings. Since the very foundation for the imposition of penalty, being the addition made in the assessment, ceases to exist, there can be no question of imposition of any penalty thereon. We, therefore, accord our imprimatur to the view taken by the ld. CIT(A) on the above issue. 8. The next item on which the AO imposed penalty is disallowance out of certain Miscellaneous Expenses. The assessee claimed deduction of ₹ 11,13,64,581/- under the head Miscellaneous Expenses . These expenses included Software development expenses of ₹ 23,99,234/-; expenses on premises at ₹ 82,70 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but directed to allow depreciation on such capitalized account. It is observed that the addition has been made on estimate basis which again came to be reduced in the first appeal on estimate basis. 11. It is settled legal position that no penalty u/s 271(1)(c) of the Act can be imposed when addition is made on or sustained on estimate basis. In CIT vs. Aero Traders (P.) Ltd. (2010) 322 ITR 316 (Del), the assessee filed return declaring loss of ₹ 83,64,468. A note was attached stating that it was impossible for them to substantiate its claim of loss by way of any evidence as the relevant records were lying seized with the police authorities. The AO, after being unable to obtain copies of the seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by mere application of Explanation thereof in the absence of any evidence to conclude a positive finding that there was concealment of income. The Hon ble Punjab Haryana High Court has reiterated this view in Hari Gopal Singh vs. CIT (2002) 258 ITR 85 (P H). 13. What follows from the above discussion is that where income is estimated or disallowance of expenses is made on estimate basis, there can be no penalty. The reason for non-imposition of penalty in both the situations is that there is a lack of precision as to concealment of income or furnishing of inaccurate of particulars of income. It is only an estimation shorn of any certainty or accuracy. Reverting to the facts of the instant case, it is clearly establi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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