TaxTMI 
TaxTMI 
2021 (7) TMI 1217
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent year 2011-12. 2. When the case was called for hearing, no one was present on behalf of the assessee to represent the case. There is no application for adjournment of hearing either. Therefore, we proceed to dispose off the appeal ex-parte qua the respondent assessee after hearing the learned Departmental Representative and on the basis of material available on record. 3. Facts in brief:- In this case, as stated by the Assessing Officer, the assessee being a partnership firm is engaged in the business of executing various jobs related to civil construction works as a sub-contractor for the main contractors who are working for Government and the assessee firm has developed specialization in irrigation work. The assessee, for the year u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of the appellant, perused the material on record and carefully gone through the order of the A.O. 6.3.2 In this case, the learned A.O. has made additions of an addition of Rs. 16,06,00,655, on account disallowance of direct expenses after the appellant failed to file the complete details with supportive documentary evidence. And though the CIT(A) has also confirmed the addition, the Hon'ble ITAT Mumbai has restricted the addition on estimated basis @ 5% of the bogus purchase. 6.3.3 The facts of the present case are now tested in the light of the above background. The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enalty may not be levied. But if the explanation is found to be fake or fanciful and without any foundation or basis, it is certainly open to the revenue authorities to impose penalty. It would all depend upon the acceptability of the explanation offered by the assessee in the background of the statutory provisions as prevailing at the relevant time. 6.3.5 In the present case, the learned AO has made an addition of Rs. 15,06,00,655/- on account disallowance of direct expenses after the appellant failed to file the complete details with supportive documentary evidence, which was confirmed by the CIT(A). However, the Hon'ble ITAT Mumbai; has restricted the addition on estimated basis @ 5% of the alleged purchases finding that the appell....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... when income is estimated, then there can be no question of imposing penalty u/s 271 (1',(c) of the Act. The Hon'ble Delhi High Court in CIT Vs, Aero Traders Pvt. Ltd (2010) 322 ITR 316 (Del.) has held that no penalty us 271 (1)(c) can be imposed when income is determined on estimate basis. The similar view has been taken by: a) Hon'ble Punjab and Haryana high Court in Harigopl Singh V. CIT, (2002) 256 ITR 85 (P&H); b) Hon'ble Gujarat High Court in CIT v/s Subhash Trading Co. 22 ITR 110 (Guj.). 6.3.8 Further, it is seen that the assessment order of the AO in the quantum proceedings was altered by the Hon'ble ITAT in a significant way, hence, the very basis of initiation of the penalty proceedings was rendered non-existent. Hen....