AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (8) TMI 336
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....aw and on facts of the case for want of jurisdiction and various other reasons and hence the same kindly be quashed. 2. Rs. 13,25,297/-: The AO erred in laws as well as on the facts of the case in imposing penalty u/s 271(1)(c) of Rs. 13,25,297/-. The penalty so imposed and confirmed by the ld. CIT(A) being totally contrary to the provisions of law and facts kindly be deleted in full. 3. That the impugned show cause notice issued u/s 274 r.w.s. 271(1)(c) of the Act is quite vague. The impugned penalty based on such a notice being contrary to the provisions of law and facts kindly be quashed. 2.1 Apropos ground No. 1 to 3 of the assessee, the facts as emerges from the order of the ld.CIT(A) are as under:- "5. De....
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....ement order. ........ Looking to the totality of facts Involved in the case, I would consider an increase in GP just on the basis of discrepancies pointed out in the accounts, and not for any other reason up by 0.20% to 3.82%. In real terms it will take the GP to Rs. 7,86,25,764/- as against the GP of Rs. 7,45,41,013/- shown by the appellant. The addition confirmed will be Rs. 40,84,751/- The balance addition of Rs. 1,39,96,209/- is accordingly directed to be deleted. 5.1 From the above it is seen that the appellant could not justify the various claims as discussed in the appellate order and the AO had to determine the profits/ income based on rejection of books of accounts u/s. 145(3) and framing the best judgmen....
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....orities. 2.4 We have heard both the parties and perused the materials available on record including the written submission of the assessee.. It is noticed that penalty of Rs. 13,25,297/- imposed u/s 271(1)(c) is under challenge before us, which was imposed with reference to the trading addition made by the AO at Rs. 1,80,80,961/- but in the first appeal was partly sustained by the ld. CIT(A) up to Rs. 40,84,751/-. There appears no further appeal by the assessee against this part sustenance of the trading addition. A careful perusal of the orders of the authorities below in the quantum proceedings as also in the penalty proceedings show that the entire discussion is only in reference to the trading addition made by the AO but partly reduc....
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....red that the addition has been sustained purely on estimate basis and, in our view, no positive fact or finding has been found so as to even make the said addition. It is, according to us, a pure guess work and, in our view, on such guess work or estimation, no penalty u/s. 271(1)(c) of the Act can be said to be leviable. For imposing penalty u/s. 271(1)(c) of the Act, the Assessing Officer has to clearly prove the conduct of the assessee, which in this case, has not been proved. Merely because the books of account of the assessee were rejected or estimated addition was made, in our view, no penalty is leviable. The assessee offered an explanation, which could not be termed as not bona fide. In the absence of any corroborative evidence to p....
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....pointed out several discrepancies but ultimately that has culminated into the rejections of books of account and estimated trading addition was made by the AO at the end of the day which was substantially reduced by the ld. CIT(A) on estimate basis. The ld. CIT(A) didn't demonstrate as to how the cases cited before him were not applicable. It is also worthwhile to mention that no penalty can be imposed on estimate basis. Thus, considering the totality of the facts and circumstance, we are of the considered view that the impugned penalty needs to be quashed. There appears yet another reason not to confirm the impugned penalty being that the AO has not specified which limb of the provision, he wanted the assessee to reply. It is not known whe....