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Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI
ORDER
Per N. K. Saini, AM:
This is an appeal by the department against the order dated 11.03.2014 of ld. CIT(A), Rohtak.
The only grievance of the assessee in this appeal relates to the deletion of penalty of Rs.27,86,740/- levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act). 3. Facts of the case in brief are that the assessee filed the return of income on 31.03.2009 declaring an income of Rs.4,64,687/-. Later on, the case was selected for scrutiny. The AO framed the assessment u/s 144 of the Act and computed the income by applying net profit rate of 12% on the gross receipts of Rs.12,24,63,747/-. Thereafter, the matter travelled up to the ITAT wherein net profit rate was reduced to 8% as 2 Balwan Singh & Co. against 12% applied by the AO. Subsequently, the AO imposed a penalty of Rs.27,86,742/- u/s 271(1)(c) of the Act. 4. Being aggrieved, the assessee carried the matter to the ld. CIT(A) who deleted the penalty by observing in para 3 of the impugned order as under: “3. I have considered the issue and the submissions made by the AR. The penalty proceedings were initiated in respect of the unconfirmed sundry creditors whereas the income was finally assessed on estimate basis @ 8% on gross receipts as per the order of Hon'ble ITAT. No concealment penalty can be levied in respect of assessing income on estimate basis, as contended by the AR and supported by a plethora of case laws. The penalty levied by the AO is liable to be quashed on this issue. In view of the above, the penalty levied by the AO is cancelled and the ground of appeal
is allowed.”
5. Now the department is in appeal. During the course of hearing the ld. Counsel for the assessee at the very outset stated that the issue is squarely covered in favour of the assessee vide order dated 07.01.2016 of this bench of the Tribunal in in assessee’s own case for the preceding assessment year 2007-08. The aforesaid contention of the ld. Counsel for the assessee was not controverted by the ld. DR who supported the penalty order passed by the AO.
6. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that an identical issue having similar facts has already been adjudicated by this Bench of the Tribunal in assessee’s own case in ITA No.
3 Balwan Singh & Co. 179/Del/2014 for the assessment year 2007-08 vide order dated 07.01.2016 wherein the relevant findings have been given in para 7 which read as under: “7. We have perused all the records and heard the DR. While the penalty proceedings have been initiated in respect of sundry creditors, no penalty could be levied on account of assessing the income on some other basis. Further, it is settled law that no penalty can be imposed when the addition is made on estimate basis. The penalty proceedings were initiated in respect of the unconfirmed sundry creditors whereas the income was finally assessed on estimate basis @ 8% on gross receipts as per the order of Hon'ble ITAT. It is pertinent to note that levying of penalty in respect of issues on which penalty proceedings have not been initiated is not valid. Further, no concealment penalty could be levied in respect of assessing income on estimate basis. The CIT(A) rightly quashed the penalty levied by the A.O.” So, respectfully following the aforesaid referred to order in assessee’s own case. We do not see any merit in this appeal of the department.
In the result, the appeal of the department is dismissed. (Order Pronounced in the open Court on 23/11/2016)