ASIAN PETROPRODUCTS & EXPORTS LTD.,,BARODA vs. THE DY.CIT., CIRCLE-1(1),, BARODA

Grievance of the assessee is that the ld.CIT9A) has erred in confirming penalty of Rs.2,45,000/- which was imposed by the AO under section 271(1)(c) of the Income Tax Act.

Brief facts of the case are that the assessee has filed its return of income on 27.10.2005 declaring loss of Rs.47,36,330/-. An assessment order was passed under section 143(3) r.w.s. 144 of the Act on 16.11.2007 whereby the income of the assessee was assessed at (-)34,85,184/-. The ld.AO has made two additions viz. Rs.6,36,675/- unexplained cash credit, and Rs.6,14,472/- being net profit worked at 1% of the turnover. The AO initiated

With the assistance of the ld.representatives, we have gone through the record. The assessee did not participate in the assessment proceedings simply for the reason that it has a loss and nothing will happen. It did not submit any details. Even in the penalty proceedings, the assessee failed to offer any explanation as to why it should not be visited with penalty. Before us, the ld.counsel for the assessee submitted that since the assessee was suffering huge loss, it was not having complete details, and therefore it did not produce them before the AO. We are of the view that by accepting these contentions would be giving a premium to a negligent person. The income of the assessee was estimated under compelling circumstances i.e. mode of quantification of income. It has not been estimated simply by disbelieving any details submitted by the assessee. Say for example, if an assessee has claimed certain expenditure, but failed to substantiate it, then on an adhoc basis ld.AO partly disallowed, that expenditure would be considered as a disallowance on estimation basis. But here the assessee failed to give any explanation. The income has been estimated on compulsion basis in order to quantify. Thus, we are of the view that the ld.CIT(A) has rightly confirmed the levy of penalty. We do not find any merit in this appeal of the assessee. It is dismissed.

In the result, appeal of the assessee is dismissed.