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TMI Blog2024 (12) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed the appeal against the Penalty Order, dated 28/02/2018, passed under Section 271(1)(c) of the Act for the Assessment Year 2009-10. 2. The Revenue has raised following grounds of appeal : "1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty levied u/s 271(1)(c) of the IT Act. of Rs. 1,44,633/- ignoring the fact that the Sales Tax Department has proved beyond doubt that parties declared as hawala traders were involved in providing accommodation entry of purchases and the assessee was one of the beneficiary of accepting accommodation entry for the purchase and the penalty was levied on the basis of the addition made on account of bogus purchases.? 2. Whether on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K.P.Madhusudhan Vs CIT reported in 251 ITR 99(SC)? 5. This appeal is being filed as it is covered under the exception clause provided in para 3.1(h) of the CBDT's Circular No.5 of 2024 dated 15.03.2024, as amended vide F.No.279/Misc. 142/2007-ITJ(Pt) dated 15.03.2024 ". 6. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 3. The relevant facts the return of income for the year under consideration has been filed on 29/09/2009 declaring total income of INR.89,730/-. Subsequently, assessment in this case was completed under Section 143(3) read with Section 147 of the Act assessing total income of INR.24,54,320/- on 19/03/2015. The CIT(A) after making addition of the amount INR.23, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of the Assessee to 2% of alleged bogus purchases of INR.1,89,16,685/- and penalty of INR.1,44,633/- was levied under Section 271(1)(c) of the Act being 100% of the tax sought to be evaded in respect of the disallowance sustained by the Tribunal. 5.2. We note that the CIT(A) deleted the penalty, inter alia, on the ground that penalty levied on ad-hoc estimated income cannot be sustained. During the course of hearing the Learned Authorised Representative for the Appellant has placed on record the order, dated 03/10/2024, passed by the Co-ordinate Bench of the Tribunal in the case of the Assessee for the Assessment Year 2012-13 and 2011-12 [ITA No.4203 & 4204/Mum/2024], wherein it was held by the Tribunal that penalty levied on gross pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011- 12 and Rs. 1,83,870/- for A.Y. 20-12-13 being minimum penalty leviable @100% of the tax sought to be evaded. Aggrieved by the penalty order, the assessee filed appeal before the ld.CIT(A). The ld.CIT(A) upheld the penalty orders. Being aggrieved on the appeal orders, the assessee filed the present appeals before us. 4. We heard the rival submissions and considered the documents available in the record. The assessment was completed with an addition @5% of Rs.1,71,492/-on the alleged bogus purchases and accordingly tax was levied. The assessee withdrew the appeal filed before the ld. CIT(A). Accordingly, the penalty was levied on the basis of estimated addition of alleged bogus purchases. 5. The ld.DR argued and fully relied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealers. During assessment proceedings, the addition was made on estimation @ 12.5%. In the first appeal, the addition was restricted to 3% and on further appeal to the Tribunal by the Revenue, the addition was enhanced to 6%. The entire addition right from assessment stage to the Tribunal was merely on estimations. There is no definite finding on the quantum of concealment of income. It is an accepted legal position that penalty under section 271(1)(c) of the Act levied on additions made merely on estimations is unsustainable. 10. The Hon'ble Rajasthan High Court in the case of CIT vs. Krishi Tire Retreading and Rubber Industries reported as 360 ITR 580 has held that where addition is made purely on estimate basis, no penalty u/s. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs under consideration. 8. In the result, all the three appeals filed by the assessee are allowed." 6. Therefore, admittedly the Id. AO made an addition on estimated basis. It has been decided in a number of judgments that when income of assessee was determined on estimation basis, then no penalty under section 271(1)(c) could be imposed for concealment and furnishing inaccurate particulars. The quantification of the addition is admittedly only an estimate. Needless to mention that it is settled principle of law that penalty is not attracted on estimated additions. In that view of the matter, we find no justification imposing penalty for concealment of income or furnishing of inaccurate particulars of income by the assessee. We respec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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