2016 (12) TMI 1794

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....(1)(c) of Income Tax Act, 1961 amounting to Rs. 41,75,722/-. The action of the Ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the penalty of Rs. 41,75,722/- imposed u/s 271(1)(c). 2. The brief facts of the case are that the assessee is a civil contractor carrying on contract work mainly for PWD Rajasthan in the name of Tiwari Construction Co. The assessee filed his return of income on 30.09.2009 declaring total income of Rs. 62,82,080/-. The assessment was completed u/s 143(3) vide order dated 25.07.2011 at a total income of Rs. 1,85,67,230/- resulting into addition of Rs. 1,22,85,150/-. Aggrieved by the said order, assessee filed appeal before the ld. CIT(A)-II, ....

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..... For the above contentions, reliance was placed on following judicial pronouncements: - Hari Om Kumar Umesh Chand v. ITO (2002)2124 Taxman 213 - VIP Industries Ltd. vs. ACIT 21 DTR Mum Tri 153, AIT 2009-122-ITAT The AO did not accept the plea of assessee and levied penalty y/s 271(1)(c) on the trading additions made. 2.2 The ld AR further submitted that no penalty can be imposed where the whole addition is based on estimates. The estimate has also undergone change. The estimate of ld. AO for addition of Rs. 74,50,155/- is reduced and replaced by a sum of Rs. 20,57,558/- by the Hon'ble ITAT. (ii) The ld. CIT(Ä) has upheld the penalty and rejected the plea that no penalty can be imposed where addition is based....

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.... * Indus Jewellery Private Limited , ITA No.8933/JP/13 (compilation page 52) * Vijay Solved Ltd. ITA No. 641/JP/14 (compilation page 58-63) * Deepshree Buildcon Ltd. ITA No. 310/JP/12 (compilation page 64-69) 2.3 In respect of levy of penalty in respect of additions under section 68 of the Act, the ld AR submitted that the additions of Rs. 48,34,995/- made by the ld. AO u/s 68, in quantum proceedings and upheld by the ld. CIT(A) were deleted by the Hon'ble ITAT, Jaipur Bench, Jaipur. As the entire additions made under section 68 have been deleted by the Hon'ble ITAT, corresponding penalty levies u/s 271(1)(c) cannot be sustained and deserves to be deleted in entirety. 2.4 In the quantum proceedings, the Tribunal in ....

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.... charges expenditure. This fact is not rebutted by the assessee, hence this reduction of expenditure would certainly increase the profit margin of the assessee. As per the AO, in the assessment year 2008-09 the assessee has incurred hire charges expenditure of Rs. 45,62,140/- whereas hire charges incurred in the present year i.e. Rs. 80,000/- . The assessee has not brought on record any material suggesting that the hire charges were paid on account of non functioning of the assessee's own machinery. Therefore, we deem it proper to restrict the disallowance @ 10% of the Net Profit subject to interest and depreciation keeping in view the fact in earlier year's net profit as estimated by the Coordinate Bench @ 8% subject to allowance of deprec....