ASHOK KUMAR SOBTI,LUDHIANA vs. ITO, W-1(1), LUDHIANA

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ITA 1006/CHANDI/2018Status: DisposedITAT Chandigarh18 January 2019AY 2008-093 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that there was no evidence of concealment of income or furnishing of inaccurate particulars by the assessee. The addition was made on estimation due to a lack of evidence, but the assessee's explanations were not disproved.

What were the facts?

The assessee, a civil contractor, declared a gross profit rate of 8%. The AO rejected the books of accounts and estimated the gross profit at 12% due to the inability to produce certain bills and vouchers. The CIT(A) restricted the estimation to 10%. Subsequently, a penalty was levied under Section 271(1)(c) for the addition confirmed.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when additions are made on estimation basis due to lack of evidence, without proving concealment or inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHANDIGARH

Before: Sh. SANJAY GARG

For Appellant: Shri Vibhor Garg
Hearing: 24.12.2018Pronounced: 21.01.2019

आदेश/ORDER

The present appeal has been preferred by the assessee against the order dated 16.05.2018 of the Commissioner of Income Tax (Appeals)-I, Ludhiana [hereinafter referred to as CIT(A)] agitating the confirmation of the penalty levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 ( in short 'the Act').

2.

The brief facts relating to the issue are that the assessee is in the business of civil contractor. The assessee filed its return of income u/s 139(1) of the Act declaring gross profit rate @ 8%, however since the assessee could not produce certain bills and vouchers when demanded by the AO, the AO rejected the books of Accounts and estimated the gross profit rate @ 12%. Being aggrieved by the above order of the AO, the assessee preferred appeal before the CIT(A).

ITA-1006/CHD/2018 Page 2 of 3

3.

The ld. CIT(A) considering the overall facts and

circumstances of the case and after hearing the ld.

Representative of the assessee restricted the estimation of

gross profit @ 10% of the turnover. In the meantime, the AO

initiated penalty proceedings u/s 271(1)(c) of the Act and

levied the impugned penalty of Rs. 1,35,586/- in respect of

the addition confirmed by the ld. CIT(A). The assessee

unsuccessfully contested the aforesaid levy of penalty before

the CIT(A).

4.

Before us, ld. counsel for the assessee has submitted

that there was no act on the part of the assessee of

concealment of particulars of income or furnishing of

inaccurate particulars of income. That since the assessee

was a Civil Contractor and most of the payments were made

to small contractors/parties, hence those parties did not

issue bills and vouchers and hence the assessee could not

produce the said bills and vouchers. However, there was no

fact on the file that the assessee had furnished inaccurate

particulars of income or had concealed his income. That the

aforesaid disallowance and consequently addition was made

on estimation basis because of certain lack of evidence,

however any fact on the file or explanation given by the

assessee has not been disproved by the AO.

5.

The ld. DR on the other hand, has relied upon findings

of the lower authorities and has submitted that the penalty

has rightly been levied in this case.

6.

After considering the rival submissions, this Bench is of

the view that this is not a fit case for levy of penalty u/s

ITA-1006/CHD/2018 Page 3 of 3

271(1)(c) of the Act. The lower authorities have not proved or

established on the file any fact which can be said to be an act

on the part of the assessee to conceal his income or of

furnishing of inaccurate particulars of income. The

estimated addition in this case has been made by the lower

authorities on account of failure of the assessee to furnish

certain documents regarding which one assessee has given

explanation also. However, it has not been proved on file

that any fact, submission or evidence furnished by the

assessee was false or inaccurate inviting penal action under

the provisions of Section 271(1)(c) of the Act.

7.

In view of this, the penalty levied in this case is set

aside. The appeal of the assessee is hereby allowed.

Order pronounced in the Open Court.

Sd/- ( संजय गग� ) (SANJAY GARG) �या�यक सद�य/ Judicial Member

Dated: 21.01. 2019 “Poonam” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��यथ�/ The Respondent 2. आयकर आयु�त/ CIT 3. आयकर आयु�त (अपील)/ The CIT(A) 4. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File 6.

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

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