TMI Blog2023 (9) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... on estimation basis, no penalty can be levied. Disallowance of expenditure cannot be said to be considered as underreporting of the income. In the instant case, even though the Ld. AO has discussed about the self-made vouchers but has not quantified the same thereby resorting to estimation of 20% of disallowance of expenditure claimed by the assessee. Therefore, the penalty levied by the Ld. AO and confirmed by the Ld. CIT(A)-NFAC on this issue is unsustainable - Decided in favour of assessee. Penalty order u/s. 271B - tax audit report U/s. 44AB of the Act was not filed for the AY 2017-18 at the time of filing of return of income - AR argued that the tax audit report was filed by the assessee through online but while selecting the Assessment Year, the assessee has wrongly selected the AY 2016-17 instead of AY 2017-18 - HELD THAT:- We find merit in the arguments of the Ld. AR that the assessee has mistakenly selected the AY 2016-17 instead of selecting the AY 2017-18. Section 271B of the Act can be invoked only if an assessee fails to get its accounts audited in respect of any Previous Year relevant to the Assessment Year. Assessee has wrongly uploaded the Form 3CD by select ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT filed by the assessee-firm and found that the assessee-firm reported excess purchases of Rs. 2,81,128/- and short reported sales of Rs. 28,247/- in the books of account for the FY 2016-17 relevant to the AY 2-017-18. The Ld.AO therefore treated Rs. 3,09,600/- [Rs. 2,81,128 + Rs. 28,472/-] as business income of the assessee firm and initiated penalty proceedings U/s. 270A of the Act. Further, the Ld. AO also observed that the assessee has claimed expenses aggregating to Rs. 5,18,767/- which were not duly supported by proper vouchers which are self made vouchers and considered it as defective thereby disallowing 20% of the said expenses amounting to Rs. 1,03,753/- while framing the assessment proceedings. The Ld. AO therefore considered the above income of Rs. 4,13,353/- as underreported as per the provisions of section 270A(10) of the Act and levied a penalty of Rs. 200% on the tax amounting to Rs. 2,55,452/-. Aggrieved by the order of the Ld. AO levying the penalty, the assessee filed an appeal before the Ld. CIT(A)-NFAC. On appeal, the Ld. CIT(A)-NFAC considering the submissions of the assessee, confirmed the order of the Ld.AO and dismissed the appeal of the assessee. Aggrieve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sales returns before the Ld. AO which cannot be considered as underreported arising out of the misrepresentation or suppression of facts. In these circumstances, we find it deem to be fit to restrict the penalty to 50% of the amount of tax payable on the above underreported income and thereby direct the Ld. AO accordingly. Further, with respect to disallowance of expenditure arising out of estimation, we are of the considered view that once the disallowance is made on estimation basis, no penalty can be levied. Disallowance of expenditure cannot be said to be considered as underreporting of the income. In the instant case, even though the Ld. AO has discussed about the self-made vouchers but has not quantified the same thereby resorting to estimation of 20% of disallowance of expenditure claimed by the assessee. Therefore, the penalty levied by the Ld. AO and confirmed by the Ld. CIT(A)-NFAC on this issue is unsustainable and deserves to be deleted. 6. In the result, appeal of the assessee is partly allowed as indicated herein above. ITA No.31/Viz/2023 (AY: 2017-18) 7. This appeal filed by the assessee against the order of the Ld. CIT(A)-NFAC, in DIN Order N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copy of the uploaded tax audit report. The Ld. AR also submitted the screen shot of the audit report uploaded wrongly in the Income Tax Portal. The Ld. AR also submitted that the Form 3CD was prepared and signed on 30/10/2017 and a copy of which has been produced before us in the paper book pages 1 to 13. The Ld. AR therefore pleaded that it is a bonafide mistake made by the assessee while uploading the tax audit report and pleaded that the penalty may please be deleted. Per contra, the Ld. DR relied on the orders of the Ld. Revenue Authorities and fully supported the same. 10. We have considered the rival submissions and perused the material available on record. Admittedly, the Revenue has not disputed the date of audit report prepared by the assessee for the AY 2017-18. Further, we also find from the paper book filed before us wherein the assessee has submitted the audit report prepared for the earlier AY ie AY 2016-17 dated 17/10/2016. In paper book page 14, the assessee has also submitted the screen shot of the Form 3CB and Form 3CD filed by the assessee wherein it can be found that the tax audit report is dated 30/10/2017 for the AY 2016-17. We therefore find merit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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