TOMAR & BROTHERS,ETAWAH V. INCOME TAX OFFICER 2(2)(5) ETAWAH, ETAWAH

ITA 440/AGR/2025

AI Insights

The case involves Tomar & Brothers, who appealed against the penalties imposed by the Income-tax Officer, Ward 2(2)(5), Etawah, which were confirmed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi. The penalties were related to disallowances made during the assessment year 2014-15. The Tribunal considered the arguments that penalties should not be levied for disallowances made on an estimated basis, for disallowances under section 40(a)(ia), and for additions made under section 41(1) concerning sundry creditors/debtors. The Tribunal's decision was influenced by precedents and interpretations of the relevant sections of the Income-tax Act, particularly focusing on the nature of the disallowances and the absence of concealment of income.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 829241 (ITAT-AGRA)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Agra
• Assessment Year: misc
• Appeal Filed On: 17-09-2025
• Other Referred Cases: ACIT vs. Shri Ramendra Singh Kushwah
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Assessee Lawyers: RAJENDRA SHARMA; MANUJ SHARMA
• Section: 271(1)(c); 68; 40(a)(ia)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 440/Agr/2025 Assessment Year: 2014-15 Tomar & Brothers, 843-A, Moti Jheel, Etawah. Vs. Income-tax Officer, Ward 2(2)(5), Etawah. PAN :AAAFT7729D (Appellant) (Respondent) Assessee by Sh. Rajendra Sharma, Advocate & Sh. Manuj Sharma, Advocate Department by Sh. Shailendra Srivastava, Sr. DR Date of hearing 17.12.2025 Date of pronouncement 15.01.2026 ORDER PER : S. RIFAUR RAHMAN, ACCOUNTANT MEMBER: The assessee has filed this appeal against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 22.07.2025 for the Assessment Year 2014-15. 2. At the time of hearing, learned AR of the assessee submitted that in the quantum appeal, preferred by the assessee before ITAT, it had reduced the estimation of expenditure disallowed by the Assessing Officer @ 5%. Following the same, learned CIT(A) in appeal preferred by the assessee against the penalty order u/s. 271(1)(c) of the Income-tax Printed from counselvise.com ITA No.440/Agr/2025 2 | P a g e Act, 1961 (“the Act” for short), deleted the penalty levied by the Assessing Officer on the basis of estimation and rest of the penalty levied by the Assessing Officer was remitted back to the Assessing Officer to modify the penalty levied. In this regard, he submitted that the Assessing Officer has made three disallowances – (A) adhoc disallowance of expenditure, which learned CIT(A) has deleted the addition, having been made on the basis of estimation. (B) Disallowance u/s. 40(a)(ia) of the Act. In this regard, he submitted that there are several decisions of coordinate benches, wherein it has been held that no penalty can be levied towards disallowance of expenses u/s. 40(a)(ia) of the Act. (C) Addition of Rs.10,54,363/- of sundry creditors/debtors. In this regard, he submitted that the addition was made u/s. 41(1) and not u/s. 68 of the Act to invoke the provisions of section 271(1)(c) of the Act to impose penalty. 3. On the other hand, learned DR relied on the findings of lower authorities. 4. Considered the rival submissions and the material placed on record. 5. We observe that various courts have held that penalty cannot be imposed u/s. 271(1)(c) of the Act for determination of income/expenditure on the basis of estimation. With regard to disallowance u/s. 40(a)(ia), we Printed from counselvise.com ITA No.440/Agr/2025 3 | P a g e observe that in view of decision of ITAT Agra Bench in the case of ACIT vs. Shri Ramendra Singh Kushwah, no penalty u/s. 271(1)(c) is attracted on disallowance of expenditure u/s. 40(a)(ia) of the Act. With regard to disallowance made by the Assessing Officer towards sundry creditors/debtors, we observe that the Assessing Officer has not quoted the relevant section, under which he has made the addition. We infer that the Assessing Officer has made addition u/s. 41(1) of the Act. Since the information have already been placed on record, it cannot be termed as concealment of income or inaccurate particulars of income. 6. In the result, the appeal preferred by the assessee is allowed. Order pronounced in the open court on 15.01.2026. Sd/- Sd/- (SUNIL KUMAR SINGH) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 15.01.2026 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra Printed from counselvise.com "