Manish Chawla Vs Additional/Joint/Deputy/ACIT/ITO (ITAT Delhi)
Delhi ITAT deleted penalty levied u/s 271(1)(c), holding that penalty cannot be sustained on income assessed purely on estimation.
Assessee, engaged in commission business, filed return declaring income of ₹1,87,132/- u/s 44AD on turnover of ₹22.5 lakh. AO, relying on Form 26AS, noticed total commission receipts of ₹38 lakh & held that Assessee had concealed income. AO made addition of ₹36,12,868/- & levied penalty of ₹4,29,510/- u/s 271(1)(c).
In appeal, CIT(A) restricted addition to 25% of commission income & reduced penalty from 300% to 100%, sustaining ₹1,43,170/-. Assessee carried matter to Tribunal.
Assessee’s Explanation was that he was following cash system of accounting. Only ₹22.5 lakh was actually received during the year, balance ₹15.5 lakh was received next year & duly offered to tax. Difference in Form 26AS arose as TDS was deducted by payer on accrual basis.
Tribunal noted that the addition sustained by CIT(A) was based on estimation of income, not on concrete concealment. It is settled law that no penalty can be levied on estimated additions since concealment & non-concealment cannot co-exist. Penalty u/s 271(1)(c) requires clear evidence of concealment or furnishing of inaccurate particulars, which was absent in this case.
