Penalty for estimated business profits overturned where assessments lacked conclusive evidence, leading to deletion of the penalty.

Penalty for alleged concealment was held unsustainable where additions were made on an estimated basis without conclusive evidence. The tribunal found that estimations of gross profit for liquor and food sales, relied upon by the assessing officer, were not supported by verification of statutory stock records and did not establish intentional concealment. Because the penalty standard requires solid proof beyond speculative estimates, the tribunal directed deletion of the penalty as legally untenable and allowed the assessee's appeal, resulting in removal of the impugned levy.

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Issues:
The judgment involves the confirmation of penalty under section 270A of the Income Tax Act, 1961 by the National Faceless Appeals Centre, Delhi without considering the legal status of the penalty order.

Summary:

Issue 1 - Confirmation of Penalty under Section 270A:
The appeal was filed against the penalty order dated 11.10.2021 under section 270A of the Income Tax Act, 1961 for the A.Y.2017-18. The Assessee contended that the penalty levied by the AO was not legally sustainable, and requested for its deletion. The only issue for consideration was the Penalty u/s.270A of the Act.

Findings and Analysis:
The AO had levied the penalty under section 270A of the Act, based on estimated Gross Profit for the liquor business and sale of food. The Ld.CIT(A) found that the AO had not verified the stock register maintained by the assessee for the liquor business, which is mandatory under the Excise Act. The ITAT Pune bench held that when additions are made on an estimated basis, penalty under section 270A cannot be imposed. The judgment cited various precedents where penalties were deleted due to assessments being made on an estimate basis without conclusive evidence of concealment of income.

Conclusion:
The ITAT Pune directed the AO to delete the penalty levied under section 270A of the Act, as it was based on estimation and not on concrete evidence of underreporting. The appeal of the assessee was allowed, and the order was pronounced in the open Court on 29th March, 2023.

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