In the case of estimation of income, no concealment penalty is leviable

1. The assessee, a Private Limited Company, filed return of income for the assessment year 2005-06, declaring a taxable income of Rs.1,27,217/-. The AO assessed the income at Rs.1,66,98,147/-, vide assessment order passed u/s 144 (of Income Tax Act, 1961). In the penalty order, the AO reiterated that due to non-furnishing of details and books of account, he had estimated the income @ 10% of the turnover from contract receipt of Rs.3,92,28,150/- and had arrived at an income of Rs.39,22,515/-, in view of the judgment of the ITAT, Amritsar, in the case of 'M/s. Pooja Construction Company', 66 TTJ (Asr) 733, wherein the ITAT upheld the estimation of net profit at the rate of 10% of the gross receipts as reasonable in construction contracts.

2. CIT(A) deleted the penalty of Rs.13,88,830.

3. On appeal, the ITAT held as under:

"4. In the present case, as correctly noted by the ld. CIT(A), the addition was by way of estimating the income and such estimate was not a result of any finding of any concealment of income, or of furnishing of inaccurate particulars of income by the assessee. The estimation u/s 144 (of Income Tax Act, 1961) was of Rs.1,66,98,147/-. This was reduced to an estimate of Rs.39,22,515/-, vide order passed u/s 164 (of Income Tax Act, 1961). Even the AO has, in the penalty order, admitted the factum of estimation of income.

5. Thus, the ld. CIT(A) has correctly relied on the decisions for the proposition that in the case of estimation of income, no concealment penalty is leviable. No decision to the contrary has been placed before us.”

Case Reference - Income Tax Officer, vs. M/s. Age Construction Pvt. Ltd

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR.

BEFORE SH. A.D. JAIN, JUDICIAL MEMBER

AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER

ITA No.293(Asr)/2013

Assessment year: 2005-06

PAN :AIKPK4965G