Case Law Details
Laxmi Narayan Mittal Vs ITO (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, allowed the assessee’s appeal for Assessment Year 2016-17 and deleted the penalty imposed under Section 271(1)(c) of the Income-tax Act, 1961.
The appeal arose from the order of the Commissioner of Income Tax (Appeals), who had upheld the Assessing Officer’s order dated 28.08.2024 levying a penalty of Rs. 3,49,546 under Section 271(1)(c) for alleged concealment of income.
During the hearing, the Tribunal sought clarification regarding the quantum additions that formed the basis of the penalty. It was informed that the Assessing Officer had made additions by estimating the gross profit rate from 1.05% to 3% on alleged unaccounted sales. In addition, a further addition of Rs. 4.40 lakh had been made on the basis of certain loose sheets. The Tribunal noted that the alleged incriminating material in the form of loose sheets had not been substantiated. It was also noted that the underlying additions had attained finality because no appeal had been filed against them.
After considering the facts, the Tribunal held that the penalty under Section 271(1)(c) could not be sustained on either of the two grounds. The first addition was based on estimation of gross profit, while the second addition was based on unsubstantiated loose sheets. According to the Tribunal, concealment penalty was not justified in respect of estimated additions or additions founded on unsubstantiated alleged incriminating material.
The Tribunal rejected the Revenue’s submissions supporting the penalty and concluded that the penalty order could not survive. Accordingly, the penalty of Rs. 3,49,546 levied under Section 271(1)(c) was deleted and the appeal of the assessee was allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s appeal for assessment year 2016-17, arises against the Commissioner of Income Tax (Appeals)[in short, the “CIT(A)”], Delhi-26’s DIN and order No .ITBA/APL/S/250/2025-26/1081817061(1), dated 16.10.2025 involving proceedings under section 271(1)(c) of the Income-tax Act, 1961; hereinafter referred to as ‘the Act’.
Heard both the parties. Case file perused.
2. Coming to the assessee’s sole substantive grievance raised in the instant appeal herein, we note at the outset that he is aggrieved against both the learned lower authorities’ respective findings in the Assessing Officer’s order dated 28.08.2024, levying section 271(1)(c) penalty of Rs. 3,49,546/- which stands upheld in the lower appellate discussion.
3. That being the case, we sought to know the exact quantum addition(s) made in the assessee’s hands. We are fairly informed in light of the learned Assessing Officer’s penalty order that he had assessed/ rather estimated GP @ 1.05% to 3% on alleged unaccounted sales as well as Rs. 4.4 lakhs going by some loose sheets only which had not been substantiated although the same appears to have attained finality for want of appeal filed at his behest. We are of the considered view that the impugned section 271(1)(c) concealment penalty on both these issues i.e., estimation as well as unsubstantiated alleged incriminating material does not deserve to be sustained. The Revenue’s vehement submissions in support thereof stand rejected in very terms. The impugned penalty is hereby deleted.
4. This appeal of the assessee is allowed in above terms.
Order pronounced in the open court on 21. 05. 2026 .
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