Penalty u/s 271(1)(c) merely because quantum was decided against assessee by ITAT. The assessment and penalty proceedings are independent

Penalty u/s 271(1)(c) not imposable merely because quantum was decided against assessee by ITAT. The assessment proceedings and penalty proceedings are independent proceedings. ITAT Amritsar, in a recent judgment, upheld the deletion of the peanlty when additions were made on estimation basis.

Case Law Details :
I.T.A No.148 (Asr)/2014 Assessment Year: 2004-05
ACIT vs M/s Star Constructions

Date of Order/Judgment: 06/05/2016

Brief Facts of the Case:
Present appeal related to penalty u/s 271(1)(c) imposed by the AO on the additions made in the assessment order dated 30.06.2008 by estimating the income of the appellant by applying net profit rate of 5%. Earlier, penalty order imposing penalty of 100% of tax sought to be evaded in respect of this income was already made on 30.12.2008 which was deleted by CIT(Appeals), Jammu. The order deleting the penalty was further upheld by the ITAT Amritsar vide order no. ITA 33(ASR)/2010 though the quantum was decided against the assessee.

However the AO again imposed the peanlty again.

Contentions of the Assessee:
It was submitted that various Courts and Tribunal had held that where the income of the assessee is assessed on the basis of estimation, no penalty u/s 271(1)(c) was imposable. Reliance was passed upon the following judgments.
(i) CIT vs. Sangrur Vanaspati Mills Ltd. 303 ITR 53 (P&H)
(ii) CIT vs. P Rojes 90 DTR 399 (Madras HC)
(ii) CIT vs. Shri Sindhuja Foods (P) Ltd. (Rajsthan High Court)


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