TMI Blog2023 (11) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... various judicial forums across India. As find in the case of Gipilon Texturising Pvt. Ltd. Vs. ITO [ 2021 (4) TMI 860 - ITAT SURAT] held that penalty on estimated addition is not sustainable in the eye of law - Penalty deleted - Decided in favour of assessee. - Dr. A. L. Saini, AM For the Assessee : Ms. Chaitali Shah, CA For the Respondent : Shri Vinod Kumar, Sr. DR ORDER PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2014-15, is directed against the order passed by the National Faceless Appeal Centre, Delhi [in short, NFAC/Ld. CIT(A) ] dated 18.04.2023, which in turn arises out of a penalty order passed by the Income Tax Officer Ward-1 Bardoli, under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk of India during the year under consideration. In this regard the assessee had stated that he was earning agricultural income from last many years and he has deposited the said cash from earning from the agricultural activities. On perusal of bank account and cash-in-hand of the assessee, it was noted by the assessing officer that arguments made by the assessee were not true and arguments of the assessee were not fully acceptable because source of cash deposits in the saving bank account of the assessee was not of agricultural earning from the past years. Therefore, addition of Rs. 10,00,000/-, out of Rs. Rs. 51,54,000/-, was made by the assessing officer on estimated basis, treating the income as the unexplained sources. Hence penalty pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on estimation, to the tune of Rs. 10 lakh and initiated penalty proceedings on estimated addition of Rs. 10 lakh u/s 271(1)(c) of the Act. The Ld. Counsel also submitted that since the penalty was initiated on estimated addition and therefore penalty on estimated addition is bad-in-law and for that Ld. Counsel has invited my attention to the judgment of this co-ordinate Bench of ITAT-Surat, in the case of Gipilon Texturising Pvt. Ltd. Vs. ITO in ITA No.293 294/SRT/2013 dated 13.04.202. 7. The Ld. Counsel further submitted that Assessing Officer initiated penalty on account of concealment of income and furnishing inaccurate particulars of income i.e., on both the limbs. During the penalty proceedings, the Assessing Officer has issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, I find that the issue involved in the present appeal is no longer res integra. The question as to whether the penalty u/s 271(1)(c) of the Act, on estimated addition is sustainable or not, was considered by various judicial forums across India. I find that Co-ordinate Bench of ITAT-Surat, in the case of Gipilon Texturising Pvt. Ltd. Vs. ITO in ITA No.293 294/SRT/2013, order dated 13.04.2021, held that penalty on estimated addition is not sustainable in the eye of law. The detailed findings of the Coordinate Bench are reproduced below: 7. At the outset of hearing, the Ld. AR of the assessee submits that though the assessee has raised two separate sets of appeal for both the assessment years i.e. 1988-89 and 1989-90. The Ld. AR for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions the ld. SR DR for the revenue submits that the assessing officer rejected the books of accounts of the assessee and made fair addition @ 10% of GP, though, it was restricted by Tribunal to 5% of GP, thus, the assessee is liable to saddle with the penalty on such additions and the matter may be restore to the assessing officer for passing order afresh. 10. We have considered the rival submission of both the parties and have gone through the order of Lower Authorities. We have also deliberated on various case laws relied by the ld. AR for the assessee. We have also perused the contents of the order of Tribunal in quantum assessment appeals in ITA No(s). 186 187/Ahd/1998 dated 08.03.2004, the order of Tribunal dated 01.04.2005 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttled position in law that no penalty under section 271(1)(c) can be levied on additions made on estimation. The similar view was taken by the Hon'ble Jurisdictional High Court in Manish Dhirajlal Mehta Vs. ACIT, Vijay Proteins Ltd., Vs. CIT (supra), in Vijay Proteins Vs CIT (supra) and other case laws relied by ld. AR for the assessee. No contrary facts or law is brought to our notice. In the result, Ground No.1 of appeal is allowed. 13. In the result, appeal of the assessee is allowed on ground No.1 itself. 11. I note that assessee has deposited cash to the tune of Rs. 51.56 lakhs in his Saving Bank account, out of its earning from agricultural source. However, the Assessing Officer has partly accepted, (out of Rs. 51.56 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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