2017 (11) TMI 2070

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.... Act, 1961 (In short "the Act") by the Assessing Officer (in short "the AO"), without appreciating the fact and merits of the case. 2. The brief facts are that the A.O, rejected book results u/s 145(3) and estimated profit @12.5% of the gross receipts while completing the assessment. The same was reduced to 6% by the ld. CIT (A) observing that the estimation appears to be on higher side. This is further reduced to 3% by the ITAT, Agra Bench, Agra. The A.O has levied the penalty in respect of this addition. 3. While confirming the penalty order, the ld. CIT (A) has observed as under: - "8. The aspect of the department accepting a much lower rate of net profit in earlier years is only an indicator but not decisive for penal pro....

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....rities cited above demonstrate the same. The aspect of inflation of expenses is a key finding of fact on which the foundation of penalty is laid down. I am in respectful disagreement with decision of my predecessor (Ref. Para 4 Appeal No.605 AY 2010-11, order dated 10.09.2014 in appellant's own case cited by him) because firstly, the factual aspect is different in as much as the finding of Hon'ble ITAT is present. Secondly, the legal position brought out in respect of penalty and estimated addition was not considered." 4. The AO has rejected the books of accounts under Section 145(3) of the Income Tax Act and applied the net profit rate 12.5% on the total receipts shown by the assessee. In the appeal, net profit rate was reduced ....

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.... income or concealment of income and hence imposing penalty is not justified relying on the following decisions. I. ACIT Vs. Naresh Katare Contractor, ITA No. 333/Agr/2014, Agra Bench Agra. II. CIT Vs Reliance Petro Products (p) Ltd. [2010] 322 ITR 158 (Sc). III. CIT Vs Aero Traders (Pvt.) Ltd. [2010] 322 ITR 316(Del). IV. CIT Vs Modi Industries Corporation [2010] 115 Taxman 68 P&4 [2010]21 DTR 158. V. Dy. CIT Vs. Kalindi Rail Engg. Ltd. ITA No. 322 [Del of 2008] [2012] 21 Taxman.Com 24 (Del tribunal). VI. CIT V/s Iqubal Singh & Co. (2009) 180 Taxman 355 Punjab & Haryana. VII. ITAT Agra Bench, Agra in the cases of- • Hariyana Delhi Tpt Commission Agency Vs. ACIT, IT....

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....o 3% as against 6% estimated by ld. CIT(A) and 12.5% estimated by the AO, of the gross total receipt as above. The ld. AR contended that it is a case of an estimate against an estimate. As such, there was no concealment of income and accordingly no penalty is imposable as held in the case of 'CIT vs. Raj Ban Singh', (2005) 276 ITR 351(All). The Hon'ble Delhi High Court in the case of 'CIT vs. Aero Traders Pvt. Ltd.', (2010) 322 ITR 316(Del); and '(2010) 231 CTR 524', and in many decisions of ITAT, Agra Bench, Agra, (Supra), it was held that penalty is not leviable when income was assessed based on estimated profit and substantially reduced by the Tribunal. In the present case, the assessment was based on estimated profit @ 12.5 % which is s....