Case Law Details
Kamlesh Gupta Vs DCIT (ITAT Delhi)
In a landmark ruling, the Income Tax Appellate Tribunal (ITAT), Delhi, in the case of Kamlesh Gupta Vs DCIT, held that an addition made on the account of estimated profit applied to turnover does not constitute concealment. Therefore, no penalty should be imposed. The decision is likely to have significant implications for businesses, particularly in cases where profit estimation methods are used.
The case revolved around the assessment years from 2009 to 2015, where the appellant, Kamlesh Gupta, contested the penalties imposed by the Assessing Officer (AO) under section 271(1)(c) of the Act. The tribunal drew from earlier judgments, notably CIT vs. Aero Traders (P) Ltd, and others, to reaffirm the legal position that the imposition of penalty under section 271(1)(c) is not applicable when income is estimated.
The tribunal also contested the AO’s assertion that the appellant’s failure to appeal the addition implies concealment. It maintained that absence of appeal does not automatically validate a penalty, as the assessment and penalty proceedings are different.
The ITAT Delhi’s ruling in Kamlesh Gupta Vs DCIT is noteworthy, reinforcing the established legal standpoint that estimated profit-based additions do not constitute concealment, hence, no penalty can be imposed.
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