Penalty cannot be imposed on the basis of estimation of net profit

IN THE INCOME TAX APPELLATE TRIBUNAL

AHMEDABAD BENCH “C” AHMEDABAD

Before Shri Mukul Kumar Shrawat, Judicial Member and

Shri A Mohon Alankamony, Accountant Member

ITA No.125/Ahd2010

Assessment Year: 2004-05

Dy. Commissioner of

Income-tax, Circle-1,

Room No.108, Aayakar

Bhavan, Majura Gate, Surat

Appellant

V/s.

M/s Krishna Art Silk

Cloth Pvt. Ltd., 261/A,

GIDC, Pandesara, Surat

PAN No.AABCK1458N

Respondent

By Appellant: Shri S.P. Talati, SR-DR

By Respondent: Shri Hardik Vora, AR

Date of Hearing: 21-02-2012

Date of Pronouncement: 24-02-2012

O R D E R

PER Mukul Kumar Shrawat, Judicial Member:-

This appeal has been filed by the Revenue arising from the order of Ld. Commissioner of Income-tax (Appeals)-I, Surat dated 12-11-2009 for the assessment year 2004-05 in respect of deletion of penalty levied u/s 271(1)(c) of the I.T. Act of Rs.2,92,261/-.

2. Vide a penalty order u/s 271(1)(c) dated 27-03-2009, it was held that the assessee has concealed the income of Rs.8,16,617/- which was taxed on account of estimation of profit. The First Appellate Authority has expressed that since the addition was in respect of Gross Profit and work-inprogress was based upon certain estimation, therefore, it was not a case of concealment, hence, deleted the penalty following the judgment of Hon’ble jurisdictional High Court in the case of CIT v. J.H. Parabia (Transport) P. Ltd. (2006) 284 ITR 361 (Guj). Now, the Revenue is before us.

3. As far as impugned quantum addition is concerned the same has now been deleted by ITAT “C” bench of Ahmedabad vide ITA No.4121/Ahd/2007, A.Y. 2004-05 order dated 21-01-2011, wherein vide para-8, it was concluded that no addition was justifiable on account of estimation of net profit. In short, once the quantum addition has already been deleted therefore there was no occasion left on the part of the Revenue to contest the concealment penalty. Therefore, the deletion of concealment penalty is hereby confirmed.

4. Ground of the Revenue is dismissed.

5. In the result, appeal of the Revenue is dismissed.

                                                     Sd/-                                    Sd/-

                                   (A.Mohan Alankamony)    (Mukul Kumar Shawart)

                                       (Accountant Member)        (Judicial Member)

24/ 02 /2012

DKP*

Copy of Order Forwarded to:-

1. Appellant

2. Respondent

3. Concerned CIT

4. CIT (A)

5. DR, ITAT, Ahmedabad

6. Guard file.

//True Copy//

                                                                                                                        By order

DR, ITAT, Ahmedabad