📌 Penalty under Section 271(1)(c) unsustainable when basis of levy altered — ITAT Mumbai deletes penalty on estimated addition.
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📰 Compliance Bulletin
Case: Amish Anantrai Modi vs DCIT [I.T.A No.6281/Mum/2025]
Forum: Hon’ble ITAT, Mumbai
Issue: Validity of penalty u/s 271(1)(c) when the foundation of addition changes
⚖️ Facts
• Addition made u/s 68 on credits in assessee’s account.
• Assessee explained he was only an accommodation entry provider earning commission.
• ITAT deleted the substantive addition; confirmed income only on percentage basis.
• AO levied penalty on the addition as modified by ITAT.
📑 Submissions
1. Basis of penalty changed — hence, penalty not sustainable.
2. AO levied penalty for concealment; CIT(A) confirmed for concealment and furnishing inaccurate particulars — inconsistent charges.
3. Notice u/s 274 did not specify the exact charge — defective notice.
🏛️ Findings
• ITAT held penalty cannot survive when the charge itself changes.
• Relied on Indermal Manaji vs CIT (2017) 88 taxmann.com 525 (Bom).
• Penalty on estimated additions is impermissible.
• Penalty deleted.