Penalty u/s. 270A not leviable as order and notice failed to specify applicable limb: Pune ITAT
Deputy Commissioner Of Income Tax, … vs Chakradhar Contractors And Engineers (ITA.No.1939/PUN./2024)
Facts:
1. The Assessing Officer completed the assessment determining the total income of the assessee at Rs.32,18,44,630/- by estimating the income from contract work at 10% of the turnover as against 7.37% declared by the assessee, which the assessee accepted and paid the due taxes.
2. Subsequently, the Assessing Officer initiated penalty proceedings u/sec.270A of the Act. Before the Assessing Officer assessee submitted that penalty u/sec.270A is not levaible as the case of the assessee company is covered by exclusion mentioned in sec.270A(6)(a) of the Income Tax Act.
3. It was submitted that during the course of assessment proceedings, statement of the Managing Director Shri Mahendra Murlidhar Patil was recorded u/s.131 wherein he has explained that total contract receipts for the impugned assessment year 20202021 is around Rs.317 crores and contract receipts for the year before i.e. assessment year 2019-2020 is around Rs.123 crores.
4. Due to exponential increase of more than 250% in total turnover of the company, the accounts department was overloaded and due to this reason, there can be some unintentional discrepancies in the books of accounts, for which, the Managing Director of the company had offered to estimate the profit @ 9% of the turnover.
5. It was further submitted that the assessee company has accepted the income determined by the Assessing Officer and paid the due taxes. Accordingly, it was requested to drop the penalty proceedings initiated u/sec.270A of the Act.
ITAT Pune held as below:
1. It is an admitted fact that the Assessing Officer in the assessment order has not specified as to under which limb of provisions of sec.270A(2) or 270A(9), the assessee has misreported or under-reported it’s income
2. it is an admitted fact that profit of the assessee has been estimated by resorting to the provisions of sec.145(3). It has been held in various decisions that penalty u/sec.271(1)(c) of the Act is not leviable when the profit is estimated. The same corollary in our opinion is also applicable to the provisions of sec.270A
3. The appeal of the revenue is dismissed.
The Copy Of the order is as under:
