Rukmani Engineering Works Vs DCIT (ITAT Raipur)
ITAT Raipur held that penalty under section 271(1)(c) of the Income Tax Act justifiable since no plausible explanation provided for amount of understated/ suppressed net profit. Accordingly, appeal dismissed and penalty upheld.
Facts- The assessee firm which is engaged in the business of execution of works contracts. The case of the assessee firm was selected for scrutiny assessment u/s. 143(2) of the Act. Thereafter, assessment was framed by the A.O vide his order passed u/s.144 (sic), dated 31.12.2010, wherein the income of the assessee firm was determined at Rs.6,07,64,390/-, after, inter alia, making certain additions/disallowances, viz. (i) disallowance u/s. 40(a)(ia) of the Act : Rs.4,89,10,524/-; (ii) determination on an estimate basis the income of the assessee i.e. @ 8% of its turnover of Rs.13,69,18,308/- : Rs.1,09,53,864/-; and (iii) addition of the credits in capital accounts of the partners, viz. S/shri Raj Kishore Sahu (Rs.3.50 lacs) & Shri Uday Nath Sahu (Rs.5.50 lacs) : Rs.9 lacs. The A.O while culminating the assessment initiated penalty u/s. 271(1)(c) of the Act.
CIT(A) partly allowed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that as the assessee firm as per the mandate of “Explanation-1” of Section 271(1)(c) of the Act, had failed to come forth with any explanation as regards the aforesaid credits in its books of accounts, therefore, it was liable to be saddled with penalty under the aforesaid statutory provision. We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(Appeals) who had rightly saddled the assessee firm with penalty on the aforesaid addition of Rs.9 lacs made u/s. 68 of the Act, uphold the same.
