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of <h1>Tribunal sets aside IT penalty due to revised return disclosure, emphasizing assessment post-search.</h1> <h3>Rajesh D. Dedhia Versus ACIT, Central Circle-23, Mumbai</h3> Rajesh D. Dedhia Versus ACIT, Central Circle-23, Mumbai - TMI Issues:Confirmation of penalty under section 271(1)(c) of the IT Act, 1961 based on estimation of gross profit, applicability of Explanation-5A to section 271(1)(c), validity of penalty confirmed by Commissioner (Appeals).Analysis:The appellant challenged the penalty confirmed by the Commissioner of Income Tax (Appeals) under section 271(1)(c) of the IT Act, 1961. The case involved a search and seizure action on the appellant's business premises, leading to the declaration of undisclosed income due to estimated gross profit on unaccounted sales. The appellant argued that the penalty was wrongly levied and cited legal precedents to support their case.The appellant contended that the return filed under section 139(1) of the Act became non-existent after the search and seizure action, and the subsequent return filed under section 153A disclosed the income, thus no concealment occurred. The Assessing Officer accepted the return but assessed the gross profit at a slightly higher percentage, leading to the penalty imposition. The appellant relied on judicial decisions to argue against the penalty, emphasizing that the change in income estimation did not warrant penalty imposition.The Tribunal considered the facts, legal arguments, and precedents cited by both parties. It noted that the abatement of the original return under section 139(1) rendered it non-existent, and the revised return under section 153A should be the basis for assessing concealment. Citing relevant case laws, the Tribunal concluded that the penalty was not sustainable in law due to the disclosure of income and the estimation basis used by the Assessing Officer. Consequently, the Tribunal set aside the Commissioner (Appeals)'s decision and deleted the penalty, allowing the appellant's appeal.In light of the above analysis and legal reasoning, the Tribunal found in favor of the appellant, ruling that the penalty under section 271(1)(c) was not justified based on the circumstances of the case and the applicable legal principles. The Tribunal's decision highlighted the importance of assessing concealment based on the relevant return filed under section 153A after the abatement of the original return under section 139(1), leading to the deletion of the penalty imposed by the Assessing Officer.
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