ACIT, JAIPUR vs. M.R.K.PIPES LTD., JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 636/JP/2019 fu/kZkj.k o"kZ@Assessment Year : 2013-14 cuke The DCIT Miss. MRK Pipes Ltd. Vs. Circle – 4 Parasrampuria Chambers Jaipur Road No.1, VKI, Sikar Road , Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCM 9497 L vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by : Shri Vimlendu Verma , (CIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.L. Poddawr, Advocate lquokbZ dh rkjh[k@ Date of Hearing : 01/10/2019 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 03/10/2019 vkns'k@ ORDER PER: SANDEEP GOSAIN, J.M.

The present appeal has been filed by the Revenue against the order of CIT(A)-2, Jaipur dated 27.02.2019 for the assessment year 2013-14 wherein the Revenue has raised following ground. ‘’Whether on the facts and circumstances of the case and in law the ld. CIT(A) is justified in deleting the penalty levied u/s 271(1)(c) amounting to Rs. 1,35,94,869/- holding that penalty u/s 271(1)(c) cannot be levied against estimated addition. DCIT, Circle4, Jaipur vs MRK Pipes Ltd. , Jaipur 2.1 Apropos Ground No. 1 of the Revenue, the AO imposed the penalty of Rs. 1,35,94,869/- on tradition addition of Rs. 4,19,01,278/- by increasing the gross profit at 10% on estimation basis.

2.2 In first appeal, the ld. CIT(A) has taken into consideration the decisions of Hon'ble Rajasthan High Courts in the case of Shri Shiv Lal Tak wherein it was held that ‘’Estimation of income is neither a case of addition nor disallowance but it is a case of substitution on which penalty u/s 271(1)(c) is not leviable.’’ and also the decision in the case of Krishi Tyre Retreating and Rubber Ltd (2014) 44 Taxmann.com 9 (Raj) wherein it was held that ‘’The issue pertains to the penalty imposed u/s 271(1)(c) by the AO on amount of Rs. 100,000/- which was sustained as addition and confirmed by the CIT(A) . On perusal of the facts it transpired that the addition has been sustained purely on Estimate Basis and no positive fact or things has been found so as to even make the said addition. It is pure guess work and on such guess work or estimation, no penalty u/s 271(1)(c) can be said to be leviavble. For imposing penalty u/s 271(1)(c) the AO has to clearly prove the conduct of the assessee which in this case, has not been DCIT, Circle4, Jaipur vs MRK Pipes Ltd. , Jaipur proved. Merely, because the books of account of the assessee were rejected or estimated addition was made, no penalty is leviable. The assessee offered an explanation which could not be termed as not bona fide. In the absence of any corroborative evidence to prove the charge of concealment, the penalty could not be imposed.’’ The ld. CIT(A) has further observed that from the above decision of Hon'ble Court, it is clear that on estimated addition, no penalty is levaibale. The ld. CIT(A) noted that the fact of the present case is similar as here also. He noted that the AO estimated the profit without pointing out any specific instance of suppression of profit. Thus the ld. CIT(A) concluded that that the entire addition made by the AO is on estimation basis and he thus deleted the addition made by the AO.