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 income. Citing SC precedent, the tribunal held that not every quantum disallowance attracts penalty, especially when the issue involves subjective re-estimation of profits rather than clear concealment or misreporting. The penalty was therefore deleted, and the assessee's appeal was allowed.

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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.

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