Imposition of penalty based on estimation of income not justified

Here, it is the admitted case that the assessee filed revised profit and loss account statement showing the net profit of Rs. 3,92,649/- being 5% on Rs. 78,52,980/- and the same having been done before the assessment was completed, we fail to understand as to how the Revenue is justified in imposing penalty under Section 271 (1) (c) of the Act. Therefore by applying the decision of the Hon’ble Supreme Court in (2010) 322 ITR 158 (SC) as well as the decision of the Division Bench of this Court in Tax Case (Appeal) No.273 of 2012 dated 12.09.20012, we reject the appeal filed by the Revenue by answering the substantial question of law against the Revenue.

IN THE HIGH COURT OF MADRAS

Tax Case (Appeal) No. 341 of 2010