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Facts
The assessee's appeal concerns a penalty levied under section 271(1)(c) of the Income Tax Act, 1961, amounting to Rs. 6,80,360. This penalty arose from a quantum addition of Rs. 28,34,537, which represented 15% of estimated undisclosed income from cash payments made to farmers.
Held
The Tribunal held that a quantum addition made on an estimate basis does not automatically attract a penalty under section 271(1)(c) of the Act, as penalty proceedings are distinct from assessment proceedings. Therefore, the penalty levied was deleted.
Key Issues
Whether penalty under section 271(1)(c) can be imposed solely based on an estimated addition without substantial material indicating concealment or furnishing of inaccurate particulars?
Sections Cited
271(1)(c), 1961
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Income Tax Appellate Tribunal, MUMBAI “D” BENCH : MUMBAI
Before: SHRI SATBEER SINGH GODARA & SHRI GIRISH AGRAWAL
ORDER PER SATBEER SINGH GODARA, J.M. This assessee’s appeal, for assessment year 2014-2015, arises against the National Faceless Appeal Centre [in short the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/2022-23/ 1045051423(1) dated 30.08.2022, in proceedings u/s.271(1)(c) of the Income Tax Act, 1961 (in short “the Act”).
2 ITA.No.4166/MUM./2023 Heard both the parties. Case file perused.
Coming to the assessee’s sole substantive grievance seeking to delete sec.271(1)(c) penalty of Rs.6,80,360/-; it transpires with the able assistance coming from both the parties that the same pertains to quantum addition of Rs.28,34,537/- representing estimated undisclosed income @ 15% of the corresponding cash payments made to farmers amounting to Rs.1,88,96,917/- which has admittedly attained finality; the Assessing Officer concludes this an instance of furnishing of inaccurate particulars of taxable income. The CIT(A)-NFAC has confirmed the impugned penalty in very terms.
Both the parties reiterated their respective stands against and in support of the impugned penalty. The Revenue, more particularly, submitted that we ought to confirm the impugned penalty even the case that assessee has been found to have committed the default in issue u/sec.271(1)(c) of the Act. We note in this factual backdrop that the foregoing quantum addition was itself made on estimate basis than based on any cogent material in the assessee’s records indicating him either to have concealed or 3 ITA.No.4166/MUM./2023 furnished inaccurate particulars of taxable income. Faced with this situation, we quote CIT vs. Reliance Petro Products [2010] 322 ITR 158 (SC) wherein their lordships’ have settled the law that each and every quantum disallowance(s)/addition(s) does not attract the impugned penalty, since both are parallel proceedings in nature. We, therefore, delete the impugned penalty in very terms. Ordered accordingly.
This assessee’s appeal is allowed in above terms.
Order pronounced in the open Court on 22.07.2024