ACIT,CIRCLE PANCHKULA, PANCHKULA vs. M/S V.K.SOOD ENGINEERS & CONTRACTOR, PANCHKULA

The brief facts of the case are that the Assessee firm engaged in construction activity filed its return of income for the assessment year under consideration. Accordingly, A.O. passed assessment order under section 143(3) of the Act determining the total income at Rs. 1,97,42,335/- as against the returned income of Rs. 49,56,930/- . The AO determined the total income of the Assessee after making addition of Rs. 1,29,89,679/- on account of unverifiable bogus and excessive expenses claimed, Rs. 1,16,995 on account of disallowance of expenses of personal nature, Rs. 13,25,838/- on account of interest free advances made by the assessee and Rs. 3,52,893/- on account of disallowance made on excessive depreciation

In the second appeal, the ITAT set aside the order passed by the ld. CIT(A) and sent the appeal back to the ld. CIT(A) with the direction to decide the same afresh. Accordingly, the Ld. CIT(A) partly allowed the appeal of the assessee and deleted the additions made by the assessee on account of un unverifiable bogus and excessive expenses, interest free advances made by the assessee and excessive depreciation claimed, however, restricted the addition of 20% made on account of expenses of personal nature to 10%. In the meantime the A.O. initiated the proceedings under section 271(1)(c) of the Act and imposed penalty of Rs. 61,48,730/- under section 271(1)(c) of the Act. The Assessee challenged the penalty order passed by the AO before the CIT(A). The Ld. CIT(A) set aside the order passed by the AO and deleted the penalty levied u/s 271(1)(c) of the Act. Against the said findings the ld. CIT(A) the Revenue is in appeal before this Tribunal.

Revenue has raised the following grounds of appeal:

Before us, the Ld. Departmental Representative submitted that since the Ld. CIT(A) has sustained the addition of 10% of the addition made on account of expenses of personal nature in quantum appeal, the ld. CIT(A) ought to have sustained the penalty to the extent of the addition sustained. Hence, the Ld. CIT(A) has wrongly deleted the penalty levied by the A.O.

Ld. Counsel for the Assessee on the other hand supporting the order passed by the Ld., CIT(A) submitted that since the ld. CIT(A) has sustained 10% of the addition made by the AO on account of expenses of personal nature on estimate bases and deleted the remaining additions in quantum appeal, no case of either concealment of income or furnishing of inaccurate particulars of income is made

We have heard the rival submissions of the parties and perused the material on record including the case relied upon by the Ld. Counsel for the Assessee. We notice that the ld. CIT(A) has deleted the three additions out of the four addition made by the A.O. and in respect of one addition made on estimate basis, restricted the addition to 10% of the expenses claimed by the Assessee. As pointed out by the Ld. counsel for the Assessee, the Hon'ble Jurisdictional High Court in the case of Shri Hari Gopal (supra) has held that the provisions of section 271(1)(c) of the Act are not attracted where addition is made on estimate basis.

In our considered view the findings of the Ld. CIT(A) are in accordance with law laid down by the Hon’ble jurisdictional High Court in the aforesaid case. Hence, we do not find any infirmity in the order passed by the ld. CIT(A). We accordingly, uphold the order passed by the Ld. CIT(A) and dismissed the appeal of the Revenue.

In the result, appeal filed by the Revenue is dismissed.