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Facts
The assessee's appeal was filed against the order of the CIT(A) confirming a penalty under section 271(1)(c) of the Income Tax Act for Assessment Year 2008-09. The penalty was levied based on additions made to income. The assessee contended that the additions were made on an estimation basis and without proper opportunity for being heard.
Held
The Tribunal noted that a previous order by the same bench had deleted the major part of the quantum addition. The remaining minor addition of Rs. 36,730 was also confirmed on an estimation basis. The Tribunal held that the nature of this addition did not warrant the levy of penalty under section 271(1)(c) as it did not indicate concealment of income or furnishing of inaccurate particulars.
Key Issues
Whether the penalty levied under section 271(1)(c) is sustainable when the addition confirmed by the ITAT was on an estimation basis and the assessee was not provided with proper opportunity of being heard.
Sections Cited
271(1)(c)
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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: Shri Sanjay Garg & Shri Bijayananda Pruseth
Year : 2008-09 Gunjan Agarwal The ITO बनाम/ (Prop. Shree Grih Shobha Ward-1(2)(2) v/s. Sarees Surat 457, Millennium Textile Market-2 Ring Road, Surat - 395 002 �थायी लेखा सं./PAN: AEWPA 8182 K (अपीलाथ�/ Appellant) (�� यथ�/ Respondent) Assessee by : Ms. Dalzin Madan, CA Revenue by : Shri Mukesh Jain, CIT (DR) सुनवाई की तारीख/Date of Hearing : 30/04/2025 घोषणा की तारीख /Date of Pronouncement: 27/05/2025 आदेश/O R D E R
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 21/11/2024 for the Assessment Year (AY) 2008-09.
The assessee has raised the following grounds of appeal:
1. On facts and circumstances of the case and in law, the learned CIT(A), NFAC has grossly erred in passing the impugned appellate order on an Ex- 2 parte basis, without providing the appellant a proper opportunity of being heard. Therefore, the appellate order of the learned CIT(A), needs to be quashed and the penalty u/s. 271(1)(c) of the Act as levied by the learned ITO needs to be deleted.
2. On facts and circumstances of the case and in law, the learned CIT(A), NFAC has grossly erred in confirming the penalty of Rs. 1,53,834/- u/s. 271(1)(c) of the Act in respect of additions made purely on estimate, guesswork, conjectures and surmises without appreciating that there is neither concealment of income nor furnishing of inaccurate particulars in respect thereof. Hence, the impugned penalty levied u/s 271(1)(c) of the Act, is absolutely erroneous, incorrect and bad-in-law and needs to be deleted.
Without prejudice to the aforesaid ground of appeal
no. 2, even otherwise on facts and circumstances of the case and in law, the learned CIT(A), NFAC has grossly erred in confirming the penalty at Rs. 1,53,834/u/s. 271(1)(c) of the Act in respect of the entire additions of Rs. 5,12,779 as confirmed by the learned CIT(A), despite the fact that in further appeal the Hon'ble ITAT has upheld an addition of only Rs. 36,730/ out of the said addition of Rs. 5,12,779/-, which needs to be rectified as being absolutely erroneous and illegal.
4. The appellant craves to add, amend, alter, substitute, modify any or all the above grounds of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing.
3. At the outset, the Ld.Counsel for the assessee has invited our attention to the order of the Surat Bench of the Tribunal dated 05/05/2019 passed in whereby, the Tribunal has deleted the major part of the quantum addition in the case of the assessee and only the addition of Rs.36,730/- has been confirmed out of total addition made by the lower authorities of Rs.5,12,779/-. Even the minor addition of Rs.36,730/- has been confirmed, only on estimated basis, by applying Gross Profit (GP) rate in respect of deficit in the quantity of goods/cloth sent by the assessee for the job-work against the goods/cloth received from job-workers holding the 3 same was not fully explained. It seems that the impugned minor addition has been confirmed by the Tribunal on estimation basis, however, the nature of the said addition in our view, does not warranted levy of penalty u/s.271(1)(c) of the Income Tax Act, 1961. Therefore, it is not a case of concealment of income or furnishing of inaccurate particulars of income. The impugned order of penalty is, therefore, not sustainable and the same is set aside and the impugned penalty stands deleted.
In the result, the appeal of the assessee is hereby allowed. Order pronounced in the Open Court on 27/05/2025.