ITAT upheld deletion of penalty levied on estimated income
ITAT upheld deletion of penalty levied on estimated income
After a search at assessee's business premises, in which certain incriminating material was found, and a notice u/s 158C (of Income Tax Act, 1961), assessee declared total undisclosed income for a block period. AO eventually made addition and total income was assessed, which included the undisclosed block return income. AO imposed penalty u/s 158BFA(2) (of Income Tax Act, 1961) of Rs. 43,42,100. CIT(A) deleted the penalty as it was levied on estimated income. ITAT upheld the deletion.-501334
1. A search and seizure operation was carried out at the business premises of the assessee. During the search proceedings, certain incriminating documents were found consisting of a bunch of loose papers, a pocket diary, duplicate book, note book and ledger. A notice u/s. 158BC (of Income Tax Act, 1961) was issued and duly served on the assessee. The assessee filed a Return of income for the above mentioned block period declaring total undisclosed income at Rs.21,36,111/-. The order u/s. 158BC (of Income Tax Act, 1961) was passed by the AO declaring the total undisclosed income at Rs. 2,92,43,457/- against the returned undisclosed income of Rs. 21,36,111/-. CIT(A) held that the unaccounted cash balance with the assessee at any point of time was not more than Rs 6,76,393/- and accordingly confirmed the addition of Rs. 6,76,393/- only and deleted the balance addition of Rs. 2,35,65,207/-. The Tribunal upheld the estimated GP rate @4.4% which was taken by the AO and reversed the order of the CIT(A). AO eventually made addition of Rs. 65,78,933/- and total income was assessed at Rs. 87,15,044/- which included the assessee's undisclosed block return income of Rs. 21,36,111/-. Assessee filed petition u/s. 154 (of Income Tax Act, 1961) before the AO which was rejected by the AO. The AO passed a penalty order u/s. 158BFA(2) (of Income Tax Act, 1961) imposing the penalty of Rs. 43,42,100/- .
2. Ld. CIT(A)allowed the appeal of the Assessee, and deleted the penalty.
3. On appeal, the ITAT held as under:
“We find considerable cogency in the Ld. CIT(A) order wherein the observed that the Assessee has stated that that the AO has made double addition of Rs. 21,36,111/- which has already been offered by the assessee in the block return income and accordingly, the Ld. CIT(A) has rightly directed the AO to assess the total undisclosed income of Rs. 65,78,933/- only (Rs. 6,76,393/- + Rs. 59,02,540/-) after the order of the Tribunal and as such the appeal of the assesse was rightly allowed. Keeping in view of the facts and circumstances of the case, we do find any infirmity in the order of the Ld. CIT(A), which in our opinion, does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on the issue in dispute and dismiss the ground raised by the Revenue. As a result, the Revenue's appeal stands dismissed.
4. In the background of the aforesaid discussions and precedents relied upon, in the CIT(A)'s as well as case laws cited before us by the Ld. Counsel of the assessee, we are of the view that AO has levied the penalty on the estimated income and as such there is no proper justification for the levy of penalty on the estimated, hence, the Ld. CIT(A) has rightly cancelled the penalty, which in our considered opinion does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on this issue on which he cancelled the penalty in dispute and dismiss the ground raised by the Revenue.”
Case Reference - Assistant Commissioner of Income Tax vs. M/s Vinod Raj Co.
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'H', NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND
SHRI L.P. SAHU, ACCOUNTANT MEMBER
IT(SS)A Nos. 37 & 36/Del/2012
Block Period : 01.04.1996 to 25.02.2003
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