FALCON SUBMERSIBLE PVT. LTD.,,RAJKOT-GUJARAT vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-5,, RAJKOT-GUJARAT

As per grounds of appeal, the assessee has challenged the imposition of penalty under s.271(1)(c) of the Act on the quantum additions towards profit element on unaccounted sale transactions.

In the course of the haring, the leaned AR for the assessee pointed out that penalty amount of Rs.3,83,920/- only is in dispute as against the penalty of Rs.12,06,600/- mentioned in the grounds of appeal.

The learned AR for the assessee referred to the decision of the co-ordinate bench of ITAT in ITA No. 169/Rjt/2011 order dated 28.11.2018 in respect of quantum additions. The learned AR for the assessee pointed out that the co-ordinate bench has approved the estimations of net profit @ 7% as adopted by the CIT(A) as against 4.89% as declared by the assessee on other recorded sales. The learned AR also submitted that the net profit is merely an estimation and therefore no penalty on such estimation is proper.

On consideration of the submissions of the assessee and the orders of the lower authorities, we find no substance in the plea of the assessee for deletion of penalty. The fact towards existence of unrecorded sales cannot be disputed in view of the findings of the co-ordinate bench in quantum proceedings. Now what is left is estimation of net profit thereon. The Revenue has estimated 7% profit and imposed penalty for concealment of such estimated income whereas the assessee canvasses for adoption of 4.89% as fair estimate. Therefore, the entire issue being the realm of estimation for quantification of concealment, we give benefit of

In the result, the appeal of the assessee is allowed in part.