ANIL KUMAR,SAHARANPUR vs. ITO, SAHARANPUR

The assessee has challenged the penalty of `1,79,600/- levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961.

The facts of the case are that as against the returned income of `7,00,859/-, the Assessing Officer completed the assessment at `41,91,281/-. Learned CIT(A) deleted all the additions except the addition made by the Assessing Officer to the net profit by estimating the profit at 8%. Learned CIT(A) also reduced the estimation of profit by the Assessing Officer and as against the addition of more than `10 lakhs made by the Assessing Officer to the net profit, the CIT(A)

2 ITA-1633/Del/2014 sustained the addition to the extent of `4,94,782/-. The Assessing Officer levied penalty u/s 271(1)(c) in respect of the estimated addition to the net profit sustained by the CIT(A).

We have heard the arguments of both the sides and have perused the material placed before us. We find that the assessee derived income from civil contract work from CPWD. The Assessing Officer did not accept the trading result but determined the income of the assessee at 8% of the net profit. Learned CIT(A) reduced the estimate. In our opinion, merely by estimation of higher net profit, it cannot be said that the assessee has concealed the particulars of income. The main reason for the rejection of books of account and application of net profit rate was that the assessee has incurred various expenditure in cash which were not properly verifiable. The same may be good enough for rejection of book results and estimation of profit but certainly not sufficient for the purpose of levy of penalty u/s 271(1)(c) of the Act. We, therefore, cancel the penalty levied u/s 271(1)(c).