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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI R. S. SYAL & SMT SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM
This appeal is filed against the order dated 12/11/2013 passed by Ld. CIT (A), Rohtak. This appeal is filed by the Revenue for the Assessment Year 2007-08.
The grounds of appeal are as follows:-
“1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and in facts by deleting the penalty of Rs.16,70,004/- imposed by A.O u/s 271(1)(c) of the IT Act, while erroneously making the observation that penalty proceeding were initiated in respect of unconfirmed sundry creditors thereby ignoring the facts of the case.
2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law and in facts by deleting the penalty of Rs.16,70,004/- imposed by A. O u/s 271(1)(c) of the I.T Act while the assessee has not preferred an appeal against the quantum addition made thereby accepting the order passed by the Assessing Officer .
3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and in facts by deleting the penalty of Rs.16,70,004/- imposed by A. O u/s 271(1)(c) of the IT Act, with the observations that no concealment penalty could be levied in respect of assessing income on estimated basis; whereas inspite of ample opportunities afforded to the assessee during assessment proceedings no books of accounts/bills/vouchers were produced for verification in absence of which the returned income remained unverifiable and genuineness of the expenses claimed wholly and exclusively for the business could not be proved and net profit was estimated and hence the said penalty was rightly imposed by the Assessing Officer.
The assessee is a civil contractor and declared total income of Rs.3,99,510/-. The assessee derived income from civil construction on contract basis. The original assessment was completed u/s 144 on 15/12/2009 and initiated penalty proceedings u/s 271(1)(c) at total income of Rs.84,38,480/-. During the course of assessment proceedings, profit was estimated by applying net profit rate of 12% on the total receipts of Rs.7,03,20,659/-. The assessee filed an appeal before Ld. CIT(Appeals) Rohtak who also confirmed the order of the A.O. The assessee filed second appeal before Hon’ble ITAT New Delhi in dated 23/07/2010.
The A.O levied minimum penalty of Rs.16,70,004/- u/s 271(1)(c) on the balance taxable income.
The A.O initiated penalty proceedings in respect of the addition made on account of sundry creditors. The CIT (A) deleted the said addition and estimated the profit @ 12% which has been further reduced by Hon’ble ITAT to 8%.
The DR relied upon the Penalty order.
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.
In result, Appeal of the Revenue is dismissed.
The order is pronounced in the open court on 07th of January 2016.