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of <h1>Concealment penalty deleted under IT Act due to estimation discrepancies.</h1> <h3>M/s. Indus Jewellery Pvt. Ltd., Versus The DCIT, Circle-6, Jaipur</h3> M/s. Indus Jewellery Pvt. Ltd., Versus The DCIT, Circle-6, Jaipur - TMI Issues:Confirmation of penalty under section 271(1)(c) of I.T. Act, 1961.Analysis:The appeal pertains to the confirmation of a penalty under section 271(1)(c) of the I.T. Act, 1961, amounting to Rs. 25,245. The assessee, engaged in the trading of gems and jewellery, declared a loss of Rs. 7,21,357 in the assessment year. The Assessing Officer (AO) examined the reasons for the loss, where sales of Rs. 41,62,599 resulted in a gross profit of Rs. 3,03,572. Due to various expenditures, a net loss was incurred. The AO doubted certain purchases and invoked section 145(3) of the IT Act, applying a gross profit rate of 18% on sales. The difference between the calculated gross profit and the disclosed amount led to a tax liability of Rs. 4,45,695 on the assessee.Upon challenging the addition before the ld. CIT (A), the trading addition was restricted to Rs. 75,000. Consequently, a penalty under section 271(1)(c) was imposed at Rs. 25,245. The issue revolved around the discrepancy in estimations made by the AO and the CIT (A), leading to the imposition of the penalty. The Departmental Representative argued that the invocation of section 145(3) was due to unverifiable purchases, indicating incorrect income disclosure and concealment of particulars.The Judicial Member analyzed the situation, noting that the AO's estimation was revised by the CIT (A), resulting in penalization based on differing estimations. While the Departmental Representative cited a precedent to support the penalty imposition, the Judicial Member observed that the mere estimation for a quantum addition should not warrant a concealment penalty. Referring to relevant case laws, including Ajaib Singh and Co. vs. CIT and Navjivan Oil Mills vs. CIT, the Judicial Member directed the deletion of the penalty, emphasizing that concealment penalty should not be solely based on estimations.In conclusion, the appeal was allowed, and the penalty under section 271(1)(c) was deleted based on the assessment of estimations and the application of relevant legal precedents.
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