MRS SHEETAL GOKUL PARIKH,MUMBAI vs. ITO WARD-30(2)(6), MUMBAI, MUMBAI

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ITA 919/MUM/2020Status: DisposedITAT Mumbai27 October 2021AY 2007-084 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 the additions made on an estimation basis, due to the assessee's non-compliance, do not automatically lead to a penalty. Relying on a Supreme Court decision, the levy of penalty was deemed not justifiable.

What were the facts?

The assessee failed to appear before the AO and provide details for sundry creditors and expenses. The AO made additions to income based on estimations and initiated penalty proceedings. The CIT(A) confirmed the penalty.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when income is assessed on an estimation basis due to non-compliance by the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI M. BALAGANESH, AM & SHRI AMARJIT SINGH, JM

Hearing: 30/08/2021Pronounced: 27/10/2021

O R D E R

PER AMARJIT SINGH, JM:

1.

The assessee has filed the present appeal against the order dated 23.06.2010 passed by the Commissioner of Income Tax (Appeals)-41, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y. 2007-08 wherein the penalty levied by the AO has been ordered to be confirmed.

2.

The assessee has raised the following grounds: - “

1. The Hon’ble CIT(A) has erred in upholding the order passed by the Ld. Assessing Officer levying penalty under section 271(1)(C) of the I. T. Act, 1961. A.Y. 2007-08 The appellant prays that the penalty levied by the learned Assessing Officer be deleted as it is against the principle of law and natural justice.

2. The appellant prays to add, amend and alter above mentioned grounds of appeal."

3. The brief facts of the case are that the assessee filed her return of income on 31.10.2007 declaring total income to the tune of Rs.2,77,940/-. The case was selected for scrutiny. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee failed to appear before the AO despite giving number of opportunities, therefore, the assessment was finalized u/s 144 of the Act. The assessee has shown the sundry creditors of Rs.43,02,528/- as on 31.03.2007. No details were given, therefore, the AO treated the 50% of Rs.43,02,528/- as unexplained liability. The assessee has claimed the total expenses of Rs.10,70,019/- to the profit and loss accounts under various heads. Since the assessee did not file the details and nor verified and did not appear, therefore, the 20% of Rs.10,70,019/- i.e. 2,14,003/- was disallowed and added to the income. The penalty proceeding was initiated. The notice was given but the assessee did not appear, therefore, the penalty a sum of Rs.7,36,122/- was levied. The assessee filed an appeal before the CIT(A) who confirmed the penalty, therefore, the assessee has filed the present appeal before us.

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