ITAT Ahmedabad held in Sohan Builders Vs ACIT that if the AO had assessed the income of the assessee at some higher percentage than what the assessee had already shown in the computation then it would not amount to the concealment of income, so penalty u/s 271(1)(c) could not be levied provided there was not any additional material in the hands of revenue which could prove the concealment of income. As the assessee had already been assessed at higher percentage which was acceptable by the assessee but after that, penalty for accepting such higher percentage of profit could not be levied. ITAT relied on the case of Hon’ble Gujarat High Court in the case of CIT vs. Whitelene Chemicals, (2014) 360 ITR 385(Guj.) in which it was held that if the income of the assessee was assessed at higher percentage of profit then penalty u/s 271(1)(c) could not be levied provide no evidence was found to prove the concealment of income.
Facts of the case:
The assessee was in the business of construction work of bunglows and sales thereof. The assessee used to do some additional work at cost after sales of the bunglows as per the requirement of the buyers i.e on no profit no loss basis. He did not earn any profit out of that. But still he showed the profit of 10.75% of total receipts from the above transactions. AO refused to accept the above percentage of profit and assessed the income at 25% of total receipts and also levied the penalty for the concealment of income u/s 271(1)(C) which was opposed by the assessee in the ITAT.
Contention of the assessee:
Assessee was of the view that the extra work which was done by the assessee was just as a after sales service provided to the customers who had purchased the bunglows from him and even after doing the work at break-even point he had showed the profit @ 10.75% of the total receipts and also accepted the estimated 25% rate of profit of the CIT. So even after accepting the very high percentage of profit which he was not actually earning, the penalty for concealment of income u/s 271(1)(c) could not be levied.
Contention of the revenue:
Revenue was of the view that as the assessee had shown less profit at which he was assessed by the CIT and which was accepted by assessee so the excess amount which he had not shown would be a concealment of income so penalty u/s 271(1)(c) should be levied.
Held by ITAT:
ITAT after relying at the decision given in Hon’ble Gujarat High Court in the case of CIT vs. Whitelene Chemicals, (2014) 360 ITR 385(Guj.) held that as the assessee had already been assessed at the higher percentage which was accepted by the assessee so penalty u/s 271(1)(c) could not be levied. Moreover the revenue was not having any supporting which could justify the higher percentage fixed by CIT.In other words AO was unable to prove the fact that the assessee had actually concealed the income, so no question of penalty u/s 271(1)(c) would arise.
Appeal of the assessee would be allowed.
