2024 (3) TMI 725

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ng Officer to confirm the penalty under section 271(1)(c) for Rs. 5,38,200/-. 2. The Ld. CIT(A) has erred in confirming the penalty under section 271(1)(c) without considering the fact that all additions made in the assessment order under section 143(3) were on estimate basis. 3. The Ld. AO has not marked on the notice for which default the penalty is initiated." 3. Briefly stated, the assessee is engaged in the proprietary business of trading and manufacturing of timber products and firewood. He e-filed his return for AY 2013-14 on 04.10.2013 declaring income of Rs. 4,82,499/-. Subsequently, the return was revised on 17.06.2014 declaring income of Rs. 6,34,500/-. His case was selected for scrutiny through CASS for the ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....sessee was dismissed by the Ld. CIT(A), Muzafarnagar vide his appeal order dated 30.11.2017. The Ld. AO issued show cause notice on 11.02.2019 again but no compliance was made by the assessee. The Ld. AO, therefore, imposed the penalty of Rs. 5,38,180/- under section 271(1)(c) of the Act for concealing particulars of his income applying the provisions of the Explanation-1(B) of section 271(1) of the Act. 5. The assessee filed appeal before the Ld. CIT(A) challenging the levy of impugned penalty on the grounds, inter alia that the Ld. AO erred in holding that the assessee has concealed his income which in quantum assessment was determined only on the basis of estimates. Observations made, inferences drawn and findings recorded in this reg....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... in all to Rs. 2,00,21,292/-. The Ld. AO disallowed 10% of the total expenses claimed amounting to Rs. 20,02,131/- on adhoc basis. It is, therefore, obvious that the impugned disallowance and consequent addition to the income of the assessee is not due to detection of any concealment of income or furnishing of any inaccurate particulars of income. The Ld. AO disallowed out of expenses claimed by the assessee on estimate and adhoc basis due to absence of supporting evidence and to cover up possible leakage of revenue. However, in our view addition to the income of the assessee on account of said disallowance does not justify levy of penalty under section 271(1)(c) of the Act. Following guideline from the decision of Hon'ble Supreme Court in ....