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TMI Blog2016 (12) TMI 1794X X X X Extracts X X X X X X X X Extracts X X X X ..... 41,75,722/-. The action of the Ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the penalty of Rs. 41,75,722/- imposed u/s 271(1)(c). 2. The brief facts of the case are that the assessee is a civil contractor carrying on contract work mainly for PWD Rajasthan in the name of Tiwari Construction Co. The assessee filed his return of income on 30.09.2009 declaring total income of Rs. 62,82,080/-. The assessment was completed u/s 143(3) vide order dated 25.07.2011 at a total income of Rs. 1,85,67,230/- resulting into addition of Rs. 1,22,85,150/-. Aggrieved by the said order, assessee filed appeal before the ld. CIT(A)-II, Jaipur who disposed off the appeal vide appeal No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n following judicial pronouncements: - Hari Om Kumar Umesh Chand v. ITO (2002)2124 Taxman 213 - VIP Industries Ltd. vs. ACIT 21 DTR Mum Tri 153, AIT 2009-122-ITAT The AO did not accept the plea of assessee and levied penalty y/s 271(1)(c) on the trading additions made. 2.2 The ld AR further submitted that no penalty can be imposed where the whole addition is based on estimates. The estimate has also undergone change. The estimate of ld. AO for addition of Rs. 74,50,155/- is reduced and replaced by a sum of Rs. 20,57,558/- by the Hon'ble ITAT. (ii) The ld. CIT(Ä) has upheld the penalty and rejected the plea that no penalty can be imposed where addition is based on estimate. Ld.CIT(A) has observed that Ld. AO has never estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52) * Vijay Solved Ltd. ITA No. 641/JP/14 (compilation page 58-63) * Deepshree Buildcon Ltd. ITA No. 310/JP/12 (compilation page 64-69) 2.3 In respect of levy of penalty in respect of additions under section 68 of the Act, the ld AR submitted that the additions of Rs. 48,34,995/- made by the ld. AO u/s 68, in quantum proceedings and upheld by the ld. CIT(A) were deleted by the Hon'ble ITAT, Jaipur Bench, Jaipur. As the entire additions made under section 68 have been deleted by the Hon'ble ITAT, corresponding penalty levies u/s 271(1)(c) cannot be sustained and deserves to be deleted in entirety. 2.4 In the quantum proceedings, the Tribunal in ITA No. 771/JP/2012 vide its order dated 10.11.2016 has given its findings as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would certainly increase the profit margin of the assessee. As per the AO, in the assessment year 2008-09 the assessee has incurred hire charges expenditure of Rs. 45,62,140/- whereas hire charges incurred in the present year i.e. Rs. 80,000/- . The assessee has not brought on record any material suggesting that the hire charges were paid on account of non functioning of the assessee's own machinery. Therefore, we deem it proper to restrict the disallowance @ 10% of the Net Profit subject to interest and depreciation keeping in view the fact in earlier year's net profit as estimated by the Coordinate Bench @ 8% subject to allowance of depreciation and interest. These grounds are disposed off accordingly." "6.2 We have heard the rival c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timation basis @ 8% of N.P rate, N.P rate of 10% was determined. In the context of levy of penalty on such estimated additions, the ld AR has drawn our reference to earlier decision of the Coordinate Bench for AY 2005-06 (supra) where penalty was deleted on estimated additions. Further, decision of the Hon'ble Rajasthan High Court in case of Mahendra Singh Khedia (supra) also supports the case of the assessee. In light of above, there is no basis for levy of penalty in respect of trading additions which have been sustained on an estimation basis. In respect of additions under section 68, since the entire additions have been deleted in the quantum proceedings by the Coordinate Bench, corresponding levy of penalty cannot be sustained. We acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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