TMI Blog2024 (3) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee that the claim was malafide. There is nothing on record that inadmissible expenses were claimed or that the expenses were incurred for purposes other than assessee s business. AO imposed the impugned penalty on the assessee for concealing particulars of his income. This is contrary to the facts on record. AO proceeded to compute the income of the assessee on the basis of the particulars as per tax audit report of gross turnover, gross profit, GP rate, depreciation, net profit and net profit rate. AO accepted the income declared but disallowed 10% of the claim of expenses on the turnover on the basis of details furnished during the course of assessment proceedings. Therefore, there is no concealment of particulars of income by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 143(3) were on estimate basis. 3. The Ld. AO has not marked on the notice for which default the penalty is initiated. 3. Briefly stated, the assessee is engaged in the proprietary business of trading and manufacturing of timber products and firewood. He e-filed his return for AY 2013-14 on 04.10.2013 declaring income of Rs. 4,82,499/-. Subsequently, the return was revised on 17.06.2014 declaring income of Rs. 6,34,500/-. His case was selected for scrutiny through CASS for the reason mismatch in Sales Turnover in Audit Report and ITR . Statutory notice(s) were issued/served upon the assessee and complied with. The Ld. Assessing Officer ( AO ) found that in the original return on gross turnover of Rs. 42,41,398/- net profit of Rs. 4,82,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(c) of the Act for concealing particulars of his income applying the provisions of the Explanation-1(B) of section 271(1) of the Act. 5. The assessee filed appeal before the Ld. CIT(A) challenging the levy of impugned penalty on the grounds, inter alia that the Ld. AO erred in holding that the assessee has concealed his income which in quantum assessment was determined only on the basis of estimates. Observations made, inferences drawn and findings recorded in this regard are illegal, arbitrary and bad in law (Ground No.2). The Ld. CIT(A), however confirmed the penalty for two reasons - (i) the reply uploaded on the ITBA on 11.11.2021 reproduced in para 5 of the appellate order had no relevance with the levy of penalty under section 271( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income or furnishing of any inaccurate particulars of income. The Ld. AO disallowed out of expenses claimed by the assessee on estimate and adhoc basis due to absence of supporting evidence and to cover up possible leakage of revenue. However, in our view addition to the income of the assessee on account of said disallowance does not justify levy of penalty under section 271(1)(c) of the Act. Following guideline from the decision of Hon ble Supreme Court in Dilip N. Shroff vs. JCIT (2007) 291 ITR 519 (SC), Hon ble Madras High Court decided in CIT vs. Cafco Syndicate Shipping Co. (2007) 294 ITR 134(Mad) that disallowance on the ground that the expenditure was huge or that some vouchers were not available is not good enough to justify penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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