ADITYA ARAV DEV-CONS CO PRIVATE LIMITED,RAMNAGARGARH, DHANBAD vs. DCIT, CIRCLE-1, KALI MITRA LANE KOLKATA

The present appeal is directed at the instance of the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter the “ld. CIT(A)”) dt. 29/05/2023, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2013-14.

Only grievance of the assessee is against the finding of the ld. CIT(A) confirming the penalty of Rs.14,21,776/- levied by the ld. Assessing Officer u/s 271(1)(c) of the Act.

At the outset, the ld. Counsel for the assessee submitted that the impugned penalty has been levied on the additions made on estimate basis and there is no specific finding for making the addition that the assessee has concealed particulars of income or furnished inaccurate particulars of income.

We have heard rival contentions and perused the material placed before us. We observe that the assessee is a private limited company engaged in the civil constructions business. Return for Assessment Year 2013-14 furnished on 27/09/2013 declaring income of Rs.94,57,450/-. During the course of scrutiny proceedings carried out after selecting the case through CASS and validly serving statutory notices, the ld. Assessing Officer examined the books of accounts and other details. The ld. Assessing Officer noticed that the assessee had claimed direct expenses of Rs.4,60,12,179/- paid to sub-contractors. Information about the genuineness of the transactions was examined by issuing notice u/s 133(6) of the Act to 22 sub-contractors. Few replies were received and there were certain mis-match in the closing balances with the sub- contractors. However, ld. Assessing Officer not making addition specifically for the difference in the figures or any other information received in compliance to notice u/s 133(6) of the Act and proceeded to make an adhoc disallowance @10% of the total sub-contract expenses and made addition of Rs. 46,01,218/-. Though there were certain other additions but the impugned penalty has been levied on the adhoc disallowance of sub-contract expenses. 4.1. Admittedly, the penalty has been levied on addition made estimate basis and no specific observation of the ld. Assessing Officer is available on record which could indicate that for arriving at the amount of addition any reference has been made towards furnishing of inaccurate particulars of income by the assessee or concealing Assessment Year: 2013-14 Aditya Arav Dev-Cons Co Private Limited particulars of income. It has been consistently held by various judicial forums that if an addition has been made purely on estimate basis, then penalty u/s 271(1)(c) of the Act is unjustified. We draw reference from the following decisions:-  CIT VS. Subhash Trading Co. 1996-131 CTR (Gujarat) 121.  Naresh Chandra Agarwal Vs. CIT 2013-237 CTR 514 (Allahabad) Lucknow Bench.  CIT Vs. Arjun Prasad Ajit Kumar 2008 - 214 CTR Allahabad 355 (U.P.).  CIT Vs. Bijay Kr. Jain 325 ITR 378 (Chhattisgarh).  CIT Vs. Modi Industrial Corporation 2010 - 34 DTR 158 (Punjab Haryana)  CIT Vs. Sangrur Vanaspati Ltd. 2008-303 ITR 53 (Punjab- Haryana)  M/s Amitabh Cons. Pvt. Ltd. (PAN - AAECA5404H) Vs. ACIT, Circle 2, Hazaribag ITA No. - 142/RAN/2016 ITAT (Ranchi). (Copy of appellate order attached.)