2025 (7) TMI 1362 - AT - Income Tax

Penalty under Section 271(1)(c) deleted for profit re-estimation; quantum additions not always penalizable

The ITAT Delhi deleted the penalty under section 271(1)(c) imposed on the assessee for quantum additions arising from re-estimation of profits in business ... Levying Penalty u/s 271(1)(c) - quantum addition on difference in business income after re-estimation of the profits element therein - HELD THAT:- This being the clinching factual position, we hereby quote CIT vs. Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT] that it is not each and every quantum disallowance which would automatically attract the impugned penalty provision, to delete the penalty levied in the assessee’s hands in very terms. It is re iterated that the assessee’s instant case involves a subjective issue of re-estimation of profits it’s the business turnover which could hardly be covered under the above penal provision. Deleted accordingly. Assessee’s appeal is allowed. The Appellate Tribunal (ITAT Delhi) in the appeal for AY 2015-16 against the CIT(A)/NFAC's order under section 271(1)(c) of the Income Tax Act, 1961, dealt with penalty imposition of Rs. 1,40,466/- for furnishing 'inaccurate particulars of income' related to a quantum addition of Rs. 4,54,583/- due to re-estimation of business income profits. The Tribunal relied on the Supreme Court ruling in CIT vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC), emphasizing that 'it is not each and every quantum disallowance which would automatically attract the impugned penalty provision.' Since the issue involved a subjective re-estimation of business turnover profits, it did not fall within the scope of section 271(1)(c) penalty. Consequently, the penalty was deleted and the appeal allowed.