TMI Blog2021 (7) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that lower GP may be cause for investigation but that is not the cause for increase in the assessment. Hence, this limb of learned CIT(A) s decision is totally devoid of cogency and the same is liable to be quashed An assessment based upon low GP without recording any reason of inaccurate particulars involved is not sustainable. Thereafter learned CIT(A) has given direction to the Assessing Officer to levy penalty equivalent to 100% tax under section 271(1)(c) of the Act. Mere estimate of income cannot fasten liability upon the assessee u/s.271(1)(c) of the Act. In Reliance petro products, it was held that mere disallowance cannot ipso facto fasten liability u/s.271(1)(c) of the Act. Further, it is settled law that learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of ₹ 7,90,595/-. The Assessing Officer was of the opinion that the assessee has wrongly deferred the said income in A.Y. 2014-15. The Assessing Officer further was of the opinion that the assessee has followed two different methods to recognize the revenue on one building project. 4. The assessee appealed against this order before learned CIT(A). Learned CIT(A) has noted the date of institution of appeal is dated 20.4.2015. The grounds of appeal that were raised by the assessee were as under :- 1) The learned A.C.I.T. has erred in law, on facts, while making an addition of ₹ 7,90,595/- to our returned income. The said amount is me estimated amount of profit related to that part of our construction work, which had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profit on the basis of percentage completion method in respect of buildings bearing Nos. A,B,C D wings. It was also stated that the information called for should reach in this office on or before 22.3.2018. Referring to the percentage of profits in those years learned CIT(A) opined that the profit in the present year is very low. Hence, he issued a notice for enhancement of income under section 251(2) of the Act on 13.4.2018. In the said notice he proposed that as to why net profit should not be estimated @ 20% on the sales as well as on the work-in-progress. That the reasons for low GP may be submitted and also show-cause as to why the book results under section 145(3) of the Act should not be rejected. He noted the assessee s respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 271(1)(c) of the Act should not be imposed for furnishing of inaccurate particulars of income. He noted that assessee sought several adjournments. Learned CIT(A) referred to the provisions of section 271(1)(c) of the Act read with Explanation (1) of the Act. He concluded as under :- During the appellate proceedings, had this issue not been considered, to the suppressed income of ₹ 14,39,102/- would have not been detected. in view of these facts, it is held that the appellant had evaded the tax/suppressed his income, by filing inaccurate particulars, to this extent. Accordingly, I am satisfied that without any sufficient and reasonable cause the appellant had committed default, by furnishing inaccurate particulars defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in not recording any reason as to why he is not permitting the assessee to withdraw the appeal. Thereafter learned CIT(A) has proceeded as if he is setting in revision of the order u/s 263 and he has done enhancement. Enhancement is also on a very absurd reasoning that the GP is very low. Reasoning adduced by the assessee has totally been ignored. Just because the GP rate is low as compared to earlier years that is not conclusive proof that income is suppressed. Hon'ble Punjab Haryana High Court in the case of Commissioner of Income Tax Vs. Ajay Kumar Singla (ITA No. 181 of 2014 dated 7 October, 2014) has held that lower GP may be cause for investigation but that is not the cause for increase in the assessment. Hence, this limb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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