INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Non-specification of any limb in the notice issued to levy penalty - Income of assessee determined on basis of estimation

Assessee was engaged in the Civil Construction business and had shown the net profit at 2.87% of gross receipts from its business. Further, as the assessee had not maintained the record of expenses nor had recorded any of the expenses in its books of accounts therefore, AO rejected the books of account and considering the nature of the assessee's business estimated the profit at 8% of the total receipts. Accordingly, an addition was made to the income of assessee and penalty proceeding was also initiated under section 271(1)(c). Assessee contended that since the penalty notice nowhere speaks about specific limb to levy the penalty, the penalty levied by AO was not justifiable. Held: As the assessment order speaks about levying the penalty on account of furnishing the inaccurate particulars of income but the notice nowhere specify any limb to levy the penalty, thus the notice was not justifiable and consequently, the penalty under section 271(1)(c) was not liable to be leviable in accordance with law. Further, as in the instant case the assessee was engaged in construction business and its income was determined on estimation basis, penalty under section 271(1)(c) could not be levied.

Relied:Harigopal Singh v. CIT (2002) 258 ITR 85 (P&H) : 2002 TaxPub(DT) 1625 (P&H-HC), CIT v. Metal Products of India (1984) 150 ITR 714 (P&H) : 1984 TaxPub(DT) 1057 (P&H-HC),CIT v. Nawab and Brothers (1977) 107 ITR 681 (All-HC) : 1977 TaxPub(DT) 0261 (All-HC)

REFERRED : UOI and Ors. v. Dharmendra Textile Processors and Ors. (2008) 306 ITR 277 (SC) : 2008 TaxPub(DT) 2320 (SC),T Ashok Pai v. CIT (2007) 292 ITR 11 (SC) : 2007 TaxPub(DT) 1251 (SC),Dilip N. Shroff v. Jt. CIT & Anr. (2018) 161 taxman 218 (SC) : 2007 TaxPub(DT) 1247 (SC),Malabar Industrial Co. Ltd. v. CIT (2000) 2 SCC 718,CIT v. Samson Perinchery ITA No. 1154/M/2014 : 2017 TaxPub(DT) 0672 (Bom-HC),CIT v. Kaushalya & Ors. (1995) 216 ITR 660 (Bom.) : 1995 TaxPub(DT) 0109 (Bom-HC),N.N. Subramania Iyer v. UOI & Ors. (1974) 097 ITR 0228 (Ker) : 1974 TaxPub(DT) 0220 (Ker-HC),Meherjee Cassinath Holdings (P.) Ltd. v. ACIT [ITA No. 2555/M/2012 vide Order, dt. 28-4-2017] : 2017 TaxPub(DT) 1239 (Mum-Trib), and CIT & Anr. v. SSA'S Emerald Meadows (2016) 242 Taxman 0180 (SC) : 2016 TaxPub(DT) 4242 (SC)

FAVOUR : In assessee's favour

A.Y. : 2012-13

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