Nikhil Kumar Bansal Vs ITO (ITAT Agra)
The ITAT Agra deleted a penalty of ₹1,10,240 levied under Section 270A(9) for alleged misreporting of income, holding that penalty cannot be sustained where the underlying addition is based purely on estimation. The assessee, engaged in trading of mustard cake, mustard oil, and related commodities, had faced an addition in assessment proceedings after the Assessing Officer treated certain purchases as non-genuine and estimated the profit element embedded therein at 12.5% of the disputed purchases. The assessee accepted the addition to avoid prolonged litigation. Subsequently, the Assessing Officer levied penalty for misreporting of income, which was upheld by the CIT(A). The Tribunal observed that the quantum addition itself was based on an estimated profit rate and not on any conclusive finding of concealed or misreported income. It emphasized that both judicial principles and the statutory scheme under Section 270A recognize that estimated income should not ordinarily attract penalty. Accordingly, the penalty was held unsustainable and deleted.
Core Issue: Whether penalty under section 270A(9) for misreporting of income can be levied when the underlying quantum addition itself is based on estimation of profit element on alleged non-genuine purchases and not on any conclusive finding of concealment or misreporting.
