SHRI MAHENDRA ISHWARSINGH BAIS,PARATWADA vs. I.T.O. WARD -1, AMARAVATI

This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-1, Nagpur (‘CIT(A)’ for short) dated 15.12.2016 for the assessment year 2011-12 confirming the levy of penalty of Rs.2,85,750/- u/s 271(1)(c) of the Income Tax Act, 1961 (‘the Act’).

Briefly, the facts of the case are that the appellant is an individual engaged in the business of execution of contracts. The return of income for the assessment year 2011-12 was filed on 08.03.2012 declaring total income of Rs.6,77,670/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-1, Amravati (‘the Assessing Officer’) vide order dated 25.02.2014 passed u/s 144 of Act estimating the total income of contract receipts of Rs.2,34,94,425/- and also initiated penalty proceedings u/s 271(1)(c) of the Act for concealment of income. In response to the show-cause notice, it is submitted that since the income was assessed on estimate basis, no penalty can be levied. Rejecting the above explanation, the Assessing Officer proceeded with levy of penalty of Rs.2,85,750/- u/s 271(1)(c) of the Act vide order dated 19.08.2014. Even on appeal before the ld. CIT(A), the same was confirmed. 3. Being aggrieved, the appellant is in appeal before us in the present appeal. 4. When the matter was called on for hearing, none appeared on behalf of the assessee despite due service of notice. 5. After hearing the ld. Sr. DR and perusing the material on record, we proceed to dispose of this matter. The only issue in the present appeal relates to levy of penalty u/s 271(1)(c) in case where the income was assessed on estimate basis. It is settled position of law that no penalty can be levied u/s 271(1)(c) in case the income was assessed on estimate basis. Reliance in this regard can be placed on the decision of the Hon’ble Supreme Court in the case of ACIT vs. Dhariya Construction Co., 328 TTR 515 (SC). 6. In the light of the above settled legal position of law, we direct the Assessing Officer to delete the penalty of Rs.2,85,750/- levied u/s 271(1)(c) of the Act. Thus, the ground raised by the assessee stands allowed.

In the result, the appeal filed by the assessee stands allowed.