No penalty for concealment if addition is based on estimation of Gross Profit

Vide a penalty order u/s 271(1)(c) dated 27-03-2009, it was held that the assessee has concealed the income of Rs.8,16,617/- which was taxed on account of estimation of profit. The First Appellate Authority has expressed that since the addition was in respect of Gross Profit and work-in progress was based upon certain estimation, therefore, it was not a case of concealment, hence, deleted the penalty following the judgment of Hon’ble jurisdictional High Court in the case of CIT v. J.H. Parabia (Transport) P. Ltd. (2006) 284 ITR 361 (Guj).

 INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD

ITA No. 125/Ahd2010 – Assessment Year: 2004- 05

Dy. Commissioner of Income Tax, Circle- 1

V/s.

M/s Krishna Art Silk

Date of Pronouncement: 24-02-2012

 O R D E R

 PER Mukul Kumar Shrawat, Judicial Member:-

This appeal has been filed by the Revenue arising from the order of Ld. Commissioner of Income-tax (Appeals)-I, Surat dated 12-11-2009 for the assessment year 2004-05 in respect of deletion of penalty levied u/s 271(1)(c) of the I.T. Act of Rs.2,92,261/-.

2. Vide a penalty order u/s 271(1)(c) dated 27-03-2009, it was held that the assessee has concealed the income of Rs.8,16,617/- which was taxed on account of estimation of profit. The First Appellate Authority has expressed that since the addition was in respect of Gross Profit and work-inprogress was based upon certain estimation, therefore, it was not a case of concealment, hence, deleted the penalty following the judgment of Hon’ble jurisdictional High Court in the case of CIT v. J.H. Parabia (Transport) P. Ltd. (2006) 284 ITR 361 (Guj). Now, the Revenue is before us.

3. As far as impugned quantum addition is concerned the same has now been deleted by ITAT “C” bench of Ahmedabad vide ITA No. 4121/Ahd/2007, A.Y. 2004-05 order dated 21-01-2011, wherein vide para-8, it was concluded that no addition was justifiable on account of estimation of net profit. In short, once the quantum addition has already been deleted therefore there was no occasion left on the part of the Revenue to contest the concealment penalty. Therefore, the deletion of concealment penalty is hereby confirmed.

4. Ground of the Revenue is dismissed.

5. In the result, appeal of the Revenue is dismissed.