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.
