ITAT rules on a penalty order under the Income Tax Act
The bench observed that the assessing officer had made the additions merely on the basis of a register containing the details
ITAT rules on a penalty order under the Income Tax Act
The bench observed that the assessing officer had made the additions merely on the basis of a register containing the details
The Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that based on an estimated addition, the penalty order under the Income Tax Act, 1961 cannot be levied.
In an assessment order, penalty proceedings were initiated against the assessee, Saibaba Swamigal Thirumana Mandapam. The assessee challenged the order contending that the additions were made without referring to the regularly maintained books of accounts. It said that the penalty could not be automatically attracted merely because of estimated additions made solely on the basis of the statements recorded during the course of the survey.
The bench comprising Vice President Mahavir Singh and Accountant Member Manoj Kumar Aggarwal observed that the additions were made by the assessing officer (AO) on the basis of a register containing the details of a number of functions conducted at the premises of the assessee.
The tribunal held, "The additions are estimated and there is no corroborative material on record to establish that the assessee actually received receipts of that magnitude. The same is further evident by the fact that the Commissioner of Income Tax (Appeals) granted an allowance of 50 percent for the estimated expenditure and reduced the quantum addition."
"Therefore, these do not attract penalty under the IT Act and it is not a fit case of levy of penalty. Our view is duly fortified by the decision of the coordinate bench of the Chennai tribunal in a 2021 case, wherein the penalty on a similar factual matrix was canceled. Accordingly, we delete the impugned penalty and allow the appeal of the assessee," it added.