ITAT Mumbai Rules No Section 271(1)(c) Penalty on Estimated Additions

Fancy Diamonds India Pvt Ltd Vs DCIT (ITAT Mumbai) Introduction: In a ruling, the Income Tax Appellate Tribunal (ITAT) in Mumbai has provided significant relief to Fancy Diamonds India Pvt Ltd. The ITAT ruled that penalties under Section 271(1)(c) of the Income Tax Act, 1961, aren’t leviable on additions made purely on an estimated basis. This ruling came against the decision by the Commissioner of Income Tax (Appeals), who had confirmed the penalties for three assessment years under consideration. Analysis: Fancy Diamonds India Pvt Ltd, engaged in the manufacturing and trading of diamon...