SARVESH MERCANTILE P.LTD,MUMBAI vs. ACIT 2(3), MUMBAI

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ITA 6040/MUM/2013Status: DisposedITAT Mumbai17 March 2017AY 2007-082 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 penalty under Section 271(1)(c) is not leviable in cases of additions made based on estimations and ad-hoc additions. Therefore, the levy of penalty was not justified.

What were the facts?

The Assessing Officer rejected the assessee's books of account and estimated profits at 8% of turnover. The CIT(A) reduced this estimation to 3%, which was upheld by the ITAT. Subsequently, the AO levied a penalty under Section 271(1)(c) for concealment of income.

What were the issues?

The primary issue was whether penalty under Section 271(1)(c) can be levied on additions made based on estimations and ad-hoc additions.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAO & SHRI SANDEEP GOSAIN

For Respondent: Ms. Pooja Swarup, DR
Hearing: 06.03.2017Pronounced: 17.03.2017

सुनवाई की तायीख / Date of Hearing : 06.03.2017 घोषणा की तायीख /Date of Pronouncement : 17.03.2017 आदेश / O R D E R

PER D. KARUNAKARA RAO, AM:

1.

This appeal filed by the assessee on 14.10.2013 is against the order of the CIT (A)-6, Mumbai for the AY 2007-2008. In this appeal, assessee raised the following grounds which read as under:- “1. (a) The Assessing Officer erred in levying penalty of Rs. 16,08,885/- u/s 271(1)(c) of the Act on the ground that the assessee has concealed its income and has furnished inaccurate particulars thereof. (b) The Ld CIT (A) erred in confirming the order of the AO levying penalty as mentioned above.”

2. Before us, none attended to represent the case of the assessee. At the outset, Ld DR for the Revenue submitted that the notice was duly served on the assessee. Therefore, despite the fact that nobody is present for the assessee, case could be heard. After hearing the Ld DR as well as considering the issues involved in the appeal, we proceed to adjudicate this appeal on merits with the help of the Ld DR for the Revenue in the succeeding paras of this order.

3. The only issue involved in this case relates to the levy of penalty u/s 271(1)(c) of the Act. In this regard, Ld DR for the Revenue mentioned that the Assessing Officer rejected the books of account and proceeded to estimate the profit at the flat rate of 8% and determined the assessment. Matter travelled to the first appellate

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