2025 (3) TMI 218

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....ection 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') relating to the Assessment Year 2013-14. 2. Brief facts of the case is that the assessee is a Limited Company engaged in Real Estate Development, Builder and Civil Contractor. For the Asst. Year 2013-14, assessee filed its Return of Income on 21-09-2013 declaring total income of Rs. 39,46,540/-. Regular assessment u/s. 143(3) was made disallowing sub contract payments made to M/s. Limestone Properties Pvt. Ltd. as nongenuine and 40% of the same namely Rs. 2,63,44,508/- was treated as bogus expenses by rejecting the books of accounts. On appeal against the assessment order, Ld. CIT(A) restricted the disallowance and estimated to 7% of the profit instead of....

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....cer only estimated income at 40% on the sub contract payments made to M/s. Limestone Properties Pvt. Ltd. as non-genuine. Whereas the Ld. CIT(A) restricted the disallowance at 7% which was confirmed by ITAT. The following case laws makes it very clear that penalty u/s. 271(1)(c) cannot be levied against the estimation of income, therefore the penalty levied by the lower authorities liable to be deleted. Sr. No. Case Law Citation Judicial Forum 1 Subhash Trading Co. 221 ITR110 Gujarat 2 Navjivan Oil Mills 252ITR417 Gujarat 3 Valmikbhai H Patel 280 ITR 487 Gujarat 4 Bombaywala Readymade Stores 55 taxmann.com 258 Gujarat 5 Hariyana Textile Industries Pvt. Ltd. 741 of 2009 ....

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....tiated for concealing particulars of income - Whether since no income had been filed by assessee and income was assessed on estimate basis by revenue, no penalty under section 271(1)(c) could be levied for concealment of income Held, yes [Para 6] [In favour of assessee]" 8.2. The Co-ordinate Bench of Surat decision in the case of Thakorbhai & Company Vs. ITO (In ITA No. 641/Srt/2023 order dated 06/11/2023 wherein it was held as follow: "5. I have considered the rival submissions of both the parties and perused the record carefully. I find that the Assessing Officer while passing the assessment order, noted that the has shown purchases in cash aggregating to Rs. 77,03,224/-. The Assessing Officer after giving show cause notice, d....