K.P. Enterprises Vs ACIT (ITAT Agra)
Penalty on Estimated Income Deleted – ITAT Agra Rules No Concealment on Presumptive Additions
Assessee, a civil contractor, declared income of ₹41.98 lakh. AO rejected books u/s 145(3) & estimated profit @ 8% of turnover, computing total income at ₹56.90 lakh. Later, after appeal effects & revisions, assessed income stood at ₹47.44 lakh. AO imposed penalty u/s 271(1)(c) of ₹1.68 lakh alleging concealment. CIT(A) upheld the penalty.
Before Tribunal, Assessee argued that both AO & CIT(A) had determined income purely on estimation basis, hence penalty could not stand. Reliance was placed on Pawan Kumar Gupta (ITAT Delhi, 07.02.2025), Sara Sae (Del HC), Krishi Tyre Retreading (Raj HC), Sangrur Vanaspati Mills (P&H HC) & Subhash Trading Co. (Guj HC).
ITAT noted that the entire quantum addition was based on estimates with inherent subjectivity & no specific concealment was found. Since estimated income cannot give rise to definite concealment or furnishing of inaccurate particulars, penalty was unjustified. Accordingly, Tribunal deleted penalty u/s 271(1)(c) in full.
Held: No penalty lies where income is determined on estimation basis; concealment cannot be inferred from presumptive additions.
FULL TEXT OF THE ORDER OF ITAT AGRA
1. This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax Appeals/National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT (A)] dated10.06.2025 for Assessment Year2014-15 affirming the penalty order dated 15.02.2022 passed under section 271(1)(c) of the Income-tax Act, 1961 (for short ‘the Act’).
