TaxTMI 
TaxTMI 
2018 (5) TMI 1577
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....the facts of the instant case as there was no specific charge in the show cause notice issued by the Ld. assessing officer to the said effect, the impugned addition on which the penalty has been levied by the Ld. assessing officer, the Hon‟ble high court has admitted the appeal of the assessee against that addition and independently the additions are based on mere suspicion, surmises and conjectures on which penalty cannot be levied. 3. The brief facts of the adjustment/addition made to the total income of the assessee on which penalty has been levied are culled out from assessment order for assessment year 2004 - 05 passed by the Ld. assessing officer under section 143 (3) read with section 153A of the Act. Search and seizure operation were carried out in the business premises of the assessee on 16/2/2005, who is a manufacturer of „ Chaini Khaini‟ - a tobacco product. The product is new concept wherein the material is packed in a filter, which is put in mouth without actually chewing it. The assessee filed its return of income on 8/11/2006 declaring total income of Rs. 802150/- in response to notice under section 153A of the Act dated 10/07/2006. During the cour....
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.... 53.31%. Therefore the gross profit was computed at Rs. 10.97 crores and consequently the assessment under section 143 (3) of the act was passed on that sum. Assessee challenged the matter before the higher forum which reached the doorstep of Hon‟ble Delhi High Court wherein Hon‟ble high court was pleased to admit the appeal of the assessee Vide ITA No. 1/2017 dated 18/07/2017 wherein Hon‟ble high court is seized of the matter whether the ITAT was correct in law in upholding the addition of Rs. 10.97 crores to the returned income on an estimation of profits upholding the rejection of the books of accounts under section 145 (3) of the act. 5. Meanwhile for assessment year 2004-05 the Ld. Assessing Officer initiated the penalty proceedings under section 271 (1)(c) of the act issuing the show cause notice dated 28/12/2006 under section 274 read with section 271 (1)(c) of the act for respective years which was replied by the assessee stating that the statement of the persons were recorded behind the back of the assessee who are merely supervisors. The Ld. AO rejected all the contentions of the assessee and levied a penalty under section 271 (1)(c) of the act of Rs. 2....
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....SSA Emerald Meadows 73 Taxmann.com 241 and 242 taxman 180 that in such case penalty cannot be levied. He further referred the decision of the Hon‟ble Bombay High Court in the case of CIT versus Samson Perichery 392 ITR 4, where similar view was taken. iii. He further submitted that the penalty is an independent proceedings and Ld. assessing officer has not reached at the conclusion that how the assessee has concealed or furnished inaccurate particulars of the income. iv. He further submitted that the additions have been based on estimate basis. He stated that when the addition has been made on estimated basis the penalty under section 271(1) (c) cannot be levied. v. He further submitted that the addition has been made on the basis of the statement of the employees of the assessee who were not allowed to be cross-examined. He stated that even the addition deserves to be deleted however in the case of the penalty at least it cannot be levied. 9. The Ld. departmental representative vehemently supported the orders of the lower authorities and submitted that assessee has suppressed the sales which has been proved by the Ld. assessing officer and also confirmed by the concur....
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....vt.Ltd. vs. The Income Tax Officer in Income Tax Appeal No. 2379/Mum/2009 rendered on 18th March, 2011 and the decision of the Delhi High Court in CIT vs Liquid Investment and Trading Co (ITA No.240/2009) rendered on 5th October, 2010 to hold that when an appeal has been admitted in quantum proceedings by the High Court, then that itself is an evidence of the issue being debatable, not warranting any penalty. 5. The Revenue had filed an appeal from the order of the Tribunal in Nayan Builders and Developers Pvt. Ltd. (supra) deleting the penalty. This appeal being CIT vs. Nayan Builders and Developers [(2014) 368 ITR 722] was not entertained by this Court. It upheld the view of the Tribunal that the imposition of penalty was not justified as admission of appeal in quantum proceeding on this issue as substantial question of law was proof enough of the issue being debatable. The aforesaid decision in Nayan Builders and Developers Pvt.Ltd (supra) was also followed by this Court in CIT-8 vs. Aditya Birla Power Co. Ltd. in Income Tax Appeal No. 851 of 2014 rendered on 2nd December, 2015 . 6. However, Mr. Tejveer Singh, learned Counsel appearing for the appellantRevenue seeks to dis....
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.... has further been taken by the Hon‟ble Delhi High Court in the 334 ITR 367 wherein it has been held in para No. 3 that once the appeal preferred by the assessee has been admitted that would show that substantial question of law on the income addition is involved and thus the issue is clearly debatable. We are also aware that Hon‟ble Gujarat High Court has taken a contrary view in [2015] 58 taxmann.com 334 (Gujarat)/[2015] 232 Taxman 352 (Gujarat)/[2014] 272 CTR 353 (Gujarat CIT Vs. Prakash S Vyas holding that Unless there is any indication in order of admission passed by High Court, simply because tax appeal is admitted, would not give rise to presumption that issue is debatable; penalty under section 271(1)(c) could not be deleted on this ground. However as Hon‟ble Delhi High Court being jurisdictional High Court binds us and further such view is also supported by the Hon‟ble Bombay High Court, we take a view that when the appeal of the assessee has been admitted by the Hon‟ble Delhi High Court on the merits as well as on the legal issue the penalty levied by the Ld. assessing officer and confirmed by the Ld. CIT(A) for assessment year 2004 - 2005 and....