INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - AO framed ex-parte assessment order under section 144 rejecting the books of account - No definite findings of fact have been given for concealment of income or furnishing of inaccurate particulars of income - Imposition of

During assessment, assessee was directed to produce books of account, bills and vouchers, etc., but not produced. Therefore, AO framed ex-parte assessment order under section 144, by rejecting the books of account of assessee under section 145(3). The net profit @ 12% on the gross contractual receipts was applied and income was taken at Rs. 19,85,207 from business and civil construction. AO accordingly initiated the penalty proceedings under section 271(1)(c). CIT(A) restricted the addition by applying net profit rate of 8% of gross receipts. Held: It is well settled law that provisions of section 271(1)(c) are not attracted to a case where income of assessee was assessed on estimate basis and additions were made therein on that basis. In the present case, for non-production of books of account and the details, AO rejected the books of account under section 145(3) and applied higher net profit rate at 12% against the contractual receipt to make the addition. However, CIT(A) reduced the application of the net profit rate to 8%. Thus, it was not a case of concealment of income or furnishing of inaccurate particulars. Since no definite findings of fact have been given for concealment of income or furnishing inaccurate particulars of income, therefore, penalty was not leviable

Relied:M/s. M.M. Industries v. ITO [ITA No. 1301/Del./2016, dt. 31-1-2019] Zamindara Timber Traders v. ITO [ITA No.2964/Del/2014, dt. 16-6-2016]

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

INCOME TAX ACT, 1961

Section 271(1)(c)

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