Penalty u/s 271(1)(c) is not applicable in case of estimated income

Last updated: 09 May 2023

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The Income Tax Appellate Tribunal (ITAT) Mumbai has ruled that penalties under Section 271(1)(c) of the Income Tax Act cannot be levied on income that has been estimated. This decision came after an assessee's purchases were disallowed on an ad-hoc basis. The Tribunal found that such disallowances do not constitute furnishing inaccurate particulars of income. Consequently, the penalty imposed by the Assessing Officer was deleted.

Court :
ITAT Mumbai Bench

Brief :
When the addition is on estimated basis, penalty u/s. 271(1)(c) of the Act cannot be levied on such ad hoc estimated income. The disallowance of purchases on ad-hoc basis does not tantamount to furnishing inaccurate particulars of income under the provisions of Section 271(1) (c) of the Act.

Citation :
DCIT, CIRCLE-1 VS.SHYAM KUNDANDAS GYANCHANDANI

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FCS Deepak Pratap Singh

Associate Vice President - Secretarial & Compliance (SBI General Insurance Co. Ltd.)

Dear Friends, MyselfFCSDeepak P. Singh ( B.Sc.. LLB, FCS. FIII, CIAFP, CRMP, ID) , A Fellow Member of ICSI, Law Graduate ,Fellow Member of Insurance Institute of India, Certified Independent Director ,Certified Insurance Anti Fraud Professional , Certified Risk Governance Professional ( ICSI-III) and cleared Limited I ... Read more

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