Penalty levied u/ss 271(1)(c) and 271AAA for unexplained investment and addition made by adopting net profit as per the books of accounts at 12.85% on the suppressed sales. The key points are: The addition was modified from gross profit basis to net profit basis by the CIT(A) and further restricted to 1% of turnover by the ITAT. Different authorities adopted varying estimates for determining the assessee's income, ranging from GP/NP on alleged suppressed turnover to 1% net profit on declared turnover. The addition towards undisclosed investments was deleted. The High Court confirmed the ITAT's order. In such cases of differing estimates, penalty cannot be levied for concealment or furnishing inaccurate particulars. The jurisdictional High Court's judgment in CIT vs. Valimkbhai H. Patel supported this view. Penalty under 271(1)(c) was deleted. For 271AAA, no penalty can be imposed on the remaining 1% net profit addition on declared turnover in the absence of identified assets representing undisclosed income.
Penalty levied u/ss 271(1)(c) and 271AAA for unexplained investment and addition made by adopting net profit as per the books of accounts at 12.85% on the suppressed sales. The key points are: The addition was modified from gross profit basis to net profit basis by the CIT(A) and further restricted to 1% of turnover by the ITAT. Different authorities adopted varying estimates for determining the assessee's income, ranging from GP/NP on alleged suppressed turnover to 1% net profit on declared turnover. The addition towards undisclosed investments was deleted. The High Court confirmed the ITAT's order. In such cases of differing estimates, penalty cannot be levied for concealment or furnishing inaccurate particulars. The jurisdictional High Court's judgment in CIT vs. Valimkbhai H. Patel supported this view. Penalty under 271(1)(c) was deleted. For 271AAA, no penalty can be imposed on the remaining 1% net profit addition on declared turnover in the absence of identified assets representing undisclosed income.
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