Case Law Details
Sri Saibaba Swamigal Thirumana Mandapam Vs ITO (ITAT Chennai)
Facts- The assessee being resident firm is stated to be engaged in renting out marriage halls. It was assessed u/s. 143(3) of the Act on 28.02.2013. The assessee was subjected to survey action u/s. 133A on 16.09.2009 wherein a register containing the details of number of marriages and other small functions conducted during financial years 2006-07 to 200910 was found and impounded. Based on the same, it was alleged by AO that there was suppression of rental receipts to the extent of Rs.47.30 Lacs and accordingly, the same was added to the income of the assessee. Upon further appeal, CIT(A) allowed 50% of the amount as estimated expenditure thus sustaining addition of Rs.23.65 Lacs.
Consequently, penalty proceedings were initiated against the assessee in the assessment order. The assessee defended the same by submitting that the additions were estimated additions without reference to regularly maintained books of accounts. The penalty would not be automatically attracted merely because there were some estimated additions which were made solely on the basis of statement recorded during the course of survey action. However, disregarding the same, AO levied penalty of Rs.6.93 Lacs u/s 271(1)(c). The CIT(A) upheld the penalty on the ground that concealment was established with clear material found in the premises of the assessee. Aggrieved, the assessee is in further appeal before us.
Conclusion- Upon careful consideration of factual matrix, it could be seen that the additions as made by AO in the quantum order were estimated additions on the basis of a register containing the details of number of functions conducted at assessee’s premises. However, the same are mere estimated additions and there is no corroborative material on record to establish that the assessee actually received receipts of that magnitude. The same is further evident by the fact that CIT(A) has granted allowance of 50% for estimated expenditure and reduced the quantum addition. In our considered opinion, additions which are mere estimated additions do not attract penalty u/s 271(1)(c) and it is not a fit case of levy of penalty.
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