Asian Granito India Ltd Vs DCIT (ITAT Ahmedabad)
Conclusion: Penalty levied under Section 271AAA on addition made towards undisclosed investments was not justified as different estimates having been adopted at different stages and consequently the income determined purely on estimate basis in such cases penalty could not be leviable for filing concealment of income or furnishing inaccurate particulars of income by assessee.
Held: Assessee filed an appeal concerning the penalty of ₹20,29,394 levied under Section 271AAA for AY 2008-09. It had initially declared a total income of ₹23,62,74,550 in its Return of Income (ROI). Following a regular assessment under Section 143(3), the total income was determined at ₹42,55,74,550, which included an addition of ₹18,93,00,000 for alleged undisclosed investments. On appeal, CIT (Appeals) reduced the addition by adopting a net profit rate of 13.04% on the alleged suppressed sales. However, ITAT further scaled down the addition to 1% of the turnover as reported in the audited accounts. Following these adjustments, AO initiated penalty proceedings under Section 271AAA, asserting that a penalty was warranted due to the alleged concealed income. Assessee argued against the imposition of the penalty, emphasizing that the basis for the income addition had undergone significant changes during the appellate process. They contended that, in the absence of specific identification of assets related to any undisclosed income, the imposition of a penalty was unwarranted. However, AO levied a penalty of ₹20,29,394 under Section 271AAA. On appeal. It was held that different estimates had been adopted by different authorities while determining the income of assessee company which ranges from GP/NP as recorded in the books of accounts on the alleged suppressed turnover on the basis of SCN issued by Central Excise Authority and finally adoption of 1% net profit of the sales recorded in the regular books of accounts. Thereby the addition made towards undisclosed investments had been deleted. This order of the Tribunal was confirmed by Hon’ble Gujarat High Court in Revenue’s appeal. Thus there was no change not only in the profit estimated but also the alleged turnover from the fact that the addition on account of investments had been deleted. In view of different estimates having been adopted at different stages and consequently the income determined purely on estimate basis in such cases penalty could not be leviable for filing concealment of income or furnishing inaccurate particulars of income by assessee.
