2021 (7) TMI 1101

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....al. 3. Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of real estate. It filed its return of income on 29th October, 2013 declaring total income at Rs. 1,78,80,820/-. The AO completed the assessment u/s 143(3) of the IT Act, 1961 on 30th December, 2015 determining the total income of the assessee at Rs. 2,00,28,920/- wherein he made an addition of Rs. 21,48,102/- by estimating the profit at 14.5% as agreed by the assessee for such estimation. Subsequently, the AO initiated penalty proceedings u/s 271(1)(c) of the Act. Rejecting the various explanations given by the assessee and distinguishing the various decisions cited before him, the AO levied penalty of Rs. 6,63,763/- being 100% of tax....

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.... the profit was estimated after confronting the assessee and the assessee agreed for the addition to an extent of Rs. 21,48,102/-. Further, the addition was on account of difference in sales during the year after revision of sales in the immediately preceding year. Therefore, merely because the profit was estimated by rejecting the book results cannot be a ground to delete the penalty levied by the AO u/s 271(1)(c) of the IT Act. 8. We have considered the rival arguments made by both the sides , perused the orders of the authorities below and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find, the AO, in the instant case, made addition of Rs. 21,48,102/- to the total inc....

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....d by the Explanation to section 271(1)(c) stood rebutted by the fact that there was no suppression of any sales or inflation of any purchases. The mere fact that the Income-tax Officer proceeded to estimate the net profit at a figure higher than that what was disclosed by the assessee, would not lead to the conclusion that there was a failure to return the correct income arising out of fraud or any gross or willful neglect on the part of the assessee. The Hon'ble Delhi High Court in the case of Aero Traders Pvt. Ltd. (supra) has dismissed the appeal filed by the Revenue against the order of the Tribunal, which, in turn, has upheld the order of the CIT(A) deleting the penalty on the ground that addition made by the AO on the basis of estimat....