Penality u/s 271(1)(c)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 January 2013 Sir

My Client is a wine contractor,AO had made an addition of Rs.120000/- with following para
During the assessment proceedings assessee was asked to submit complete detail of sales.In response to that the assessee had stated that sales made during the year were in cash.Accordingly it was difficult to determine the GP,it was the will of the assessee whatever sales rate he wanted, can apply, therefore after discussion an addition of Rs.120000/- made on account of this G.P. Penality proceedingsU/s 271(1)(c) of the IT Act1961 are initiatly sepratly.

Is the action of AO is justified.

CA Himanshu Kansal

CA Himanshu Kansal (Expert)
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22 January 2013 The query is not much clear in respect of how AO has reached the figure of Rs. 120000, from the query I found that the assessee does not maintain books of accounts:
1) if the assessee does not maintain books of a/c's, then in that case such assessee has filed the return ITR 4S, in that case if the assessment proceedings have been opened then, AO should have adequate ground of making addition and penalty u/s 271(1)(c), merely unable to calculate the GP ratio is not a valid ground to impose any addition.

The action of AO is not justified, should go in appeal if the AO has passed an order.

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