AVANCE TECHNOLOGIES LIMITED,MUMBAI vs. DCIT, CENTRAL CIRCLE -2(1), MUMBAI, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL
“A” BENCH, MUMBAI
BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER&
SMT. RENU JAUHRI, ACCOUNTANT MEMBER
(Physical hearing)
Avance Technologies Limited
Office No. 209, 2nd Floor, Kapadia
Chambers, 599, J.S.S. Road, Marine Lines,
Mumbai – 400002. [PAN: AAECA5763B]
Vs
DCIT Central Circle -2(1) Mumbai,
Pratishtha Bhawan,
M.K. Road, Mumbai-40002. Appellant / Assessee
Respondent / Revenue
Assessee by Shri Neeraj Mangla, CA
Revenue by Shri Surendra Mohan Sr-DR
Date of Institution
03.08.2025
Date of hearing
29.10.2025
Date of pronouncement
30.10.2025
Order under section 254(1) of Income Tax Act
PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of ld. CIT(A)/NFAC, Delhi dated 15.07.2025 in confirming penalty of Rs. 26,02,441/-, levied under section 271(1)(c) dated 28.02.2023 for A.Y. 2007-08. The assessee has raised multiple grounds of appeal however substantial grounds of appeal relates to validity of penalty levied under section 271(1)(c) being illegal and not tenable under the law. 2. Rival submissions of both the parties have been heard and record perused. The ld. AR of the assessee submits that he has three fold submissions, (i) that assessing officer has not specified charge in the show cause notice issued under section 274 r.w.s. 271(1)(c), copy of such show cause notice dated 27.03.2025
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is filed on record at page No. 1 of paper book. In absence of specific charge, the order of penalty is not valid. The invalidity of notice is not rectifiable mistake. The Hon’ble Bombay High Court in Mohd. Farhan A. Shaikh vs DCIT (2021) 125
taxmann.com 253 (Bombay) also held that assessee is not required to substantiate prejudice caused to him. Further, the assessing officer initiated penalty on one limb that the furnished inaccurate particular of income and held guilty on another limb that is concealed income. Secondly, the assessing officer made addition on the basis of peak theory by taking a view that assessee indulged in arranging bogus bills of Rs. 5.13 crores to Empower Industry India
Ltd. The assessing officer made addition of Rs. 84,22,139/- being peak balance and treated the same as unexplained expenditure. Such addition is based on estimation. It is an admitted position under the law that penalty is not leviable on addition made on estimation basis and thirdly, the penalty proceedings are separate and independent, finding recorded in assessment proceeding would not operate as res judicata. The claim made by assessee in return of income, if not acceptable to the assessing officer, which by itself would not attract penalty. The ld. AR submits that each of his submissions are without prejudiced to each other and the assessee has good case on merit on each and every such submission.
3. The ld. AR for the assessee fairly submits that addition in the quantum assessment has been upheld upto the stage of Tribunal. Even such confirmation of addition per se cannot be a basis to uphold the penalty as penalty proceedings
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are separate and independent. To support his submission, the ld. AR of the assessee relied upon the following case laws:
Mohd. Farhan A. Shaikh vs DCIT (supra)
CIT vs State Bank of India (2025) 302 Taxman 365 (SC)
PCIT vs Unitech Reliable Prujects (P) Ltd. (2024) 166 taxmann.com 135 (SC)
ACIT vs Dipesh M Panjwani in ITA No. 6330/Mum/2012
Dr. Sarita Milind Davare vs ACIT (2017) 88 taxmann.com 902 (Mumbai).
Kapil Sharma (Executor of the Estate) vs ITO in ITA No. 97/Agr/2019. •
arising after such adjustment of deposit/withdrawal becomes the peak in the accounting period. Thus, the additions in other way are estimation. We find that Hon’ble Madras High Court in CIT Vs Soundara Pandian & Brothers (1983) 13
Taxman 47 (Mad) confirmed the order of Tribunal in deleting the penalty levied on peak additions.
6. We find that it is settled position under the income tax proceedings that no penalty under section 271(1)(c) is leviable when the addition is made on estimation/adhoc basis. Similar view was taken in the case laws relied by ld. AR of the assessee. Similar view was taken by this combination in Khodiyar Impex in ITA No. 2199/M/2025 dated 26.08.2025. Thus, respectfully following such decisions of penalty levied by assessing officer and confirmed by ld. CIT(A) is deleted. Considering the facts that we have accepted one of the plea of ld AR of the assessee and deleted the penalty, thus, all other alternative submissions raised by him have become academic. In the result, grounds of appeal of assessee are allowed.
7. In the result, the appeal of the assessee is allowed.
Order was pronounced in the open Court on 30/10/2025. RENU JAUHRI
ACCOUNTANT MEMBER PAWAN SINGH
JUDICIAL MEMBER
MUMBAI, Dated: 30/10/2025
Biswajit
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Copy of the order forwarded to:
(1)
The Assessee;
(2)
The Revenue;
(3)
The PCIT / CIT (Judicial);
(4)
The DR, ITAT, Mumbai; and (5)
Guard file.
By Order