TaxTMI 
TaxTMI 
2026 (2) TMI 690
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....ion on estimate basis or any subsequent uncalled for addition. 4. For that in any view of the case the notice issued u/s 274/270A and the conclusion in order of assessment was itself vague and as such, penalty imposed thereby is void. 5. For that other grounds in detail will be argued at the time of hearing." 2. There is a delay of 92 days in filing of this appeal for which the assessee has filed application for condonation of delay mentioning the fact that since beginning of the proceedings the assessee had always been misrepresented with the facts and legal procedure by the CA/AR of the company. An affidavit to that extent is attached. It is only in 1 week of May 2024 when the assessee contacted their Advocate for legal opinion and payment of outstanding demand that the entire case records were perused and it was suggested to immediately file appeal with prayer for admission of the grounds and this delay petition. The assessee should not be a sufferer at the cost of misconduct by its CA/AR. It is prayed that the delay caused due to such misconduct may kindly be condoned and the appeal of the assessee be heard and adjudicated upon on merits. The ld. Sr.DR did ....
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....ition in dispute pertains to estimation of Gross Profit @ 10% after rejecting the books of the assessee. We would like to mention that the quantum appeal against the addition made is still (as on date) pending with Id CIT(A) 3 Patna wherein an application under Vivad se Vishwas Scheme 2024 was filed and has been rejected by the Ld PCIT. 4) That anyhow as the case may be, it is a settled principle of law that penalty should not be imposed against the addition which has been made on estimate basis. The lower authorities have failed to consider this contention of the assessee. The sub section 6 to section 270A clearly states that no penalty should be imposed for alleged under reporting of income if the same is determined on estimate basis. For ready reference, the extract of the provision reads as below:- Section 270A (6). The under-reported income, for the purposes of this section, shall not include the following, namely:- (a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer or 20[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as....
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....nalty under section 271(1)(c) is not leviable when the profit is estimated. The same corollary in our opinion is also applicable to the provisions of section 270A. Therefore, there is no infirmity in the order of the Commissioner (Appeals) cancelling the penalty levied by the Assessing Officer under section 2704(9) [Para 7.7] Rajendra Bahusaheb Deshmukh vs. Income-tax Officer [2023] 157 taxmann.com 746 (Pune-Trib.)[29-03-2023] 7. In these facts and circumstances, we are of the opinion that Assessing Officer has failed to establish underreporting. Section 2704 of the Act provides for imposition of penalty for underreporting and misreporting of income. Sub-section (2) enlists certain circumstances of under-reporting of income. Sub-section (3) deals with the determination of under-reported income, which, in our context, is by reducing the income returned by the assessee from the amount of income finally assessed. Sub-section (6) is relevant for our purpose which states that under-reported income for the purpose of this section shall not include certain items. Clause (b) of subsection (6) refers to "the amount of under-reported income determined on the basis of an est....
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.... placed reliance on the various decisions of the Tribunal i.e. in the case of DCIT vs. Chakradhar Contractors and Engineers (P.) Ltd. [2025] 171 taxmann.com 133 (Pune-Trib.) [26-12- 2024] wherein the Tribunal has held as follows: "Even otherwise also, it is an admitted fact that profit of the assessee has been estimated by resorting to the provisions of section 145(3). It has been held in various decisions that penalty under section 271(1)(c) is not leviable when the profit is estimated. The same corollary in our opinion is also applicable to the provisions of section 270A. We, therefore, do not find any infirmity in the order of the ld. CIT(A) cancelling the penalty levied by the Assessing Officer u/sec. 270A(9) of the Act. The ground raised by the Revenue are accordingly dismissed." The Pune Bench of the Tribunal in the case of Rajendra Bahusaheb Deshmukh vs. Income-tax Officer [2023] 157 taxmann.com 746 (Pune-Trib.)[29-03-2023] has held as under: "7. In these facts and circumstances, we are of the opinion that Assessing Officer has failed to establish underreporting. Section 2704 of the Act provides for imposition of penalty for underreporting and misreporti....