PADMINI AGENCIES PVT. LTD.,,KOLKATA vs. ITO, WARD 1(1),, KOLKATA

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ITA 2746/KOL/2025Status: DisposedITAT Kolkata21 April 2026AY 2014-20155 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that penalty under Section 271(1)(c) cannot be levied on income sustained purely on an estimate basis, especially when there are no positive facts or findings to support the addition. Therefore, the penalty order was set aside.

What were the facts?

The assessee's income was assessed at Rs. 1,00,28,660/-, including an addition of Rs. 1,00,00,000/- on account of unexplained credits. The ITAT later sustained an addition of Rs. 3,00,000/- on an estimated basis for the quantum appeal. Penalty proceedings were initiated under Section 271(1)(c) based on the original addition.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable on an addition sustained purely on an estimated basis. Whether the ITAT's decision in the quantum appeal, which sustained an addition on estimate, precludes penalty proceedings.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 68

AI-generated summary — verify with the full judgment below

Before: ShriRajesh Kumar & ShriPradip Kumar Choubey

IN THE INCOMETAXAPPELLATE TRIBUNAL “D” BENCH, KOLKATA Before ShriRajesh Kumar, Accountant Member and ShriPradip Kumar Choubey, Judicial Member ITA No.2746/Kol/2025 Assessment Year: 2014-215 Padmini Agencies Pvt.Ltd.,………………………….………………………….Appellant 14/1, Shree Gopal Mullick Lane, Kolkata, West Bengal, 700012 [PAN No. AAECP7899M] Vs. ITO, Ward 1(1)……………………..…………….………... Respondent Aayakar Bhawan, P-7, Chowringhee Square, West Bengal- 700069 Appearances by: Shri Pranbesh Sarkar, Advocate,appeared on behalf of the Appellant. Shri S.B. Chakraborthy, Sr. DR,appeared on behalf of the Respondent. Date of concluding the hearing : April 13, 2026 Date of pronouncing theorder : April 21 ,2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the assessee is directed against the order dated 14.10.2025 of the National Faceless Appeal Centre (NFAC) passed under Section 271(1)(c) of the Assessment Year 2014-15 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2. The brief facts of the case of the assessee is that the assessee filed its return of income for the assessment year 2014-15 disclosing an income of Rs. 341/-. The case of the assessee was selected for scrutiny and assessment was made U/s 143(3) at an income of Rs. 1,00,28,660/- by making addition on account of disallowance of Rs. 2,52,59/- U/s 14A and unexplained credits U/s 68 of Rs. 1,00,00,000/-. Penalty proceedings were also initiated U/s 274 read with Section 271(1)(c) of the Act. The assessee preferred appeal before

ITA No.2746/Kol/2025 Assessment Year- 2014-15 the CIT(A) wherein CIT(A) has confirmed the addition of Rs. 1,00,00,000/- on account of unexplained cash credit and deleted the addition of Rs. 2,52,59/-. AO initiated penalty proceeding U/s 271(1)(c) on the amount of Rs. 1,00,00,000/- sustained by the CIT(A). The assessee had filed appeal before the Hon’ble I.T.A.T. Kolkata against the order of the CIT(A) and Hon’ble ITAT in its order has held that estimate income of the assessee at the rate of 3% of the total loans advanced that is 3% of Rs. 1,00,00,000/- which comes to Rs. 3,00,000/- and direct the Assessing Officer to sustained the said addition and the remaining addition of Rs. 97,00,000/- stands deleted. The Ld. AO passed a penalty order on an amount of Rs. 1,00,00,000/- and against the said penalty proceedings assessee preferred appeal before the CIT(A) wherein CIT(A) considering the order passed by the ITAT in quantum appeal modified the penalty order to the tune of Rs. 30,00,00/-.

Being aggrieved by and dissatisfied, assessee preferred appeal before us.

3.

The Ld. AR challenges the very impugned order thereby submitting that Ld. CIT(A) was wrong in not considering the fact that in quantum appeal ITAT Kolkata vide order dated 29.08.2022 sustained the addition of Rs. 3,00,000/- on estimate basis, ignoring the law that penalty U/s 271(1)(c) cannot be levied on estimate income. He has placed decision of High Court of Rajasthan passed in CIT versus Krishi Tyre Retreading & Rubber Industries reported in (2014) 44 taxmann.com 9 (Rajasthan). He has also placed the decision of the Coordinate Bench, Kolkata passed in ITA No. 455/2024.

Contrary to that Ld. DR supports the impugned order

ITA No.2746/Kol/2025 Assessment Year- 2014-15 4. Upon hearing the submission of the counsel of the respective parties and on perusal of the impugned order, there is no denying to this fact that in quantum appeal filed by the Assessee ITAT vide order dated 29.08.2022 sustained the addition of Rs. 3,00,000/- that is the 3% of loan advanced Rs. 1,00,000,00/- on estimate basis (order of the ITAT passed in ITA No. 1540/2019 is enclosed).We have gone through the order passed by the Rajasthan High Court and find that Hon’ble High Court of Rajasthan has held thus:-

Section 271(1)(c) of the Income-tax Act, 1961 – Penalty – For concealment of income (In case of addition on estimate basis)- Assessment year 1996097 – Whether where addition had been sustained purely on estimate basis and no positive fact or finding had been found so as to even make said addition, no penalty was leviable under section 271(1)(c) – Held, yes [In favour of assessee]

We have also gone through the order passed by the ITAT in ITA No. 455/2024 in which Hon’ble ITAT has held thus:

5.

With the assistance of ld. Representatives, we have gone through the record carefully. Though earning of alleged commission income by providing accommodation entry in itself is a doubtful activity, but Id. Assessing Officer has not doubted this activity. He has accepted the alleged commission income of the assessee in providing accommodation entry of huge sum of Rs.78.9 crores. He only made changes that instead of half percent, it should be 1% of commission income. The assessee should have earned in this activity. To our mind, the income of the assessee has been revised on an estimate basis, which is based on difference of opinion without any scientific method. Therefore, on such an issue the Id. Assessing Officer as well as by the Id. CIT(Appeals) should have not been visited the assessee with penalty. Accordingly, we allow this appeal of the assessee and delete the penalty. 3

ITA No.2746/Kol/2025 Assessment Year- 2014-15 5. Keeping in view the facts of the case as well as considering the judicial pronouncement we find substance in the argument of the AR; accordingly, Penalty order passed by the AO confirmed by the CIT(A) are set aside, penalty as levied is hereby deleted.

In the result the appeal of the assessee is allowed.

Kolkata, the 21st April, 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member

Dated:. 27.04.2026. DC, PS

Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches

ITA No.2746/Kol/2025 Assessment Year- 2014-15

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