2022 (9) TMI 575

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....(c) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide order dated 14.11.2018. 2. Grounds of appeal raised by the assessee are as follows: "1. The order dated 14/11/2018 imposing penalty u/s. 271(1)(c), simultaneously with issuance of the SCN dated 14/11/2018 fixing the date of hearing at 29/11/2018 is bad in law liable to be quashed. 2. The order imposing penalty of Rs. 154,601/- u/s. 271(1)(c) on estimated addition for alleged low G.P. is unwarranted, unjustified & illegal." 3. At the outset, Ld. Counsel for the assessee begins by pointing out that Assessing Officer rejected the books of account and estimated @ 8% gross profit on the turnover. The Assessing Officer having rejected books....

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.... the assessee and made addition of Rs. 50,08,257/- in this regard. During appellate proceedings, Ld. AR of the assessee has been provided the copies of final accounts of "comparable cases" to defend his case. In this regard, Ld. AR of the assessee has made detailed analysis of facts and figures of both the comparable cases and pointed out their non-comparability on various counts/parameters viz. Amount of capital deployed. Huge amount of secured/unsecure loans. Incomplete data about chemical consumption, Difference in nature of type of Raw Material and those parties being very old in business etc. In nutshell, Ld. AR could successfully pointed out that both cases used by Ld. AO as perfect comparable cases were actually not comparable at all....

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....of profit results depends on various factors such quality of Raw Material used, scale of production & use of technology, market place & share, turnover, capital employed etc. Ld. AR has demonstrated that on so many counts the so-called comparable cases have failed in test of comparability. So, I hereby rejected GP addition based on two comparable cases picked up by Ld. AO which I find not comparable in various aspects. Therefore, applying GP Rate @ 8% is not at all justified in this case. It is trite law that past history of the assessee himself is the best to compare with. In the case of Kansara Bearings Pvt. Ltd. Vs. ACIT 270 ITR 235 (Raj) & Ajay Goyal Vs. ITO (99 TTJ 164) - it was held that past years profit declared by the asse....

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....ssessing Officer also made line by line addition on account of brokerage to the tune of Rs. 3,17,881/-. However, on appeal addition on account of brokerage to the tune of Rs. 3,17,881/- has been deleted by Ld. CIT(A) and Ld. CIT(A) further re-estimated assessee's gross profit from Rs. 50,08,257/- to Rs. 5,00,000/-. Therefore, we note that the penalty was levied on the assessee on estimated addition and it is settled principle of law that no penalty u/s. 271(1)(c) can be levied on addition made on estimation. For that we rely on the order of Co-ordinate Bench of this Tribunal in the case of Gopilon Texturising Pvt. Ltd. vs. Income Tax Officer Ward-1(2), Surat in ITA No. 293-294/AHD/2005 for A.Ys. 1988-89 & 1989-90 order dated 13.04.2021,....