M.Radhakrishnan, Erode V. ACIT, Erode

CO 141/CHNY/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2068 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 03-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-12-2014
• Court: TRIBUNAL
• Department Lawyers: A B KOLI JCIT
• Assessee Lawyers: S SRIDHAR
• Keywords: Document seized; Retrospective amendment; Documents seized

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , ! ' #! ' $ . %& ' () BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.2112 /MDS./2014 ( / ASSESSMENT YEAR :2009-10) MR.M.RADHAKRISHNAN , 63,PERIAMANIAMPALAYM, KANDIKATTTUVALASU POST, AVALPOONDURAI(VIA), ERODE 638 115. VS. ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE II, ERODE. PAN AJLPR 2812 D ( *+ / APPELLANT ) ( ,-*+ / RESPONDENT ) ./ I.T.A.NO.2433 /MDS./2014 ( / ASSESSMENT YEAR :2009-10) & CO NO.141/MDS./2014 ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE II, ERODE. VS. MR.M.RADHAKRISHNAN , 63,PERIAMANIAMPALAYM, KANDIKATTTUVALASU POST, AVALPOONDURAI(VIA), ERODE 638 115. PAN PAN AJLPR 2812 D ( *+ / APPELLANT ) ( ,-*+ / RESPONDENT ) / CROSS OBJECTOR ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 2 ASSESSEE BY : MR.S.SRIDHAR,ADVOCATE REVENUE BY : MR.A.B.KOLI,JCIT, D.R / DATE OF HEARING : 03.02.2016 /DATE OF PRONOUNCEMENT : 26.02.2016 . / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE ARE CROSS APPEALS AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LEAR NED COMMISSIONER OF INCOME TAX(A)-I, COIMBATORE DATED 30.07.2014 PERTAINING TO THE ASSESSMENT YEAR 2009-10 PASSED U/ S.271(1)(C) OF THE ACT. 2.1 THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ADMITTING TOTAL INCOME OF RS.8,31,838/-. THE AO DURING THE COURSE OF ASSESSME NT PROCEEDINGS ISSUED A QUESTIONNAIRE TO THE ASSESSEE ON 13.06.201 1 SEEKING COMPANYS INFORMATION. IN RESPONSE, THE ASSESSEE F URNISHED REQUISITE INFORMATION IN ITS LETTER DATED 23.06.201 1. AFTER EXAMINING THE REPLY, THE AO OBSERVED THAT:- ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 3 1. ASSESSEES BUSINESS NATURE HAS CHANGED THIS YEAR AS SEEN FROM AUDIT REPORT. THE CELL TOWER ERECTION WAS CLAIMED A S ITS BUSINESS ACTIVITY. 2. THERE WERE NO BRANCHES TO OPERATE. 3. GROSS PROFIT OF THE CONCERN HAS FALLEN FROM 9.95 % IN ASSESSMENT YEAR 2008-09 TO 1.9% IN ASSESSMENT YEAR 2009-10. N ET PROFIT HAS FALLEN FROM 5.73%IN ASSESSMENT YEAR 2008-09 TO 0.40% IN THE ASSESSMENT YEAR 2009-10. BUT TURNOVER INCREASE D FROM ` 13,90,593/- IN ASSESSMENT YEAR 2008-09 TO ` 23,21,91,214/- IN THE ASSESSMENT YEAR 2009-10. 4. NO IMMOVABLE PROPERTY WAS PURCHASED IN EARLIER T HREE YEARS. THE LD. ASSESSING OFFICER NOTICED THAT THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS, SO SUMMON WAS ISSUED O THE A SSESSEE ON 23.06.2011 AND SWORN STATEMENT WAS RECORDED. FROM T HE SWORN STATEMENT, IT IS FOUND THAT ASSESSEE DID NOT HAVE A NY BOOKS OF ACCOUNT AND DID NOT GIVE ANY SUB-CONTRACT. IN ADDIT ION, ALL MATERIALS SUCH AS GENSET, ELECRICAL EQUIPMENTS, ANTENNA, CAB LES, FOUNDATION BOLTS WERE SUPPLIED FREE OF COST BY THE CONTRACTEE. IN AND AROUND ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 4 ERODE, THE ASSESSEE AND HIS FAMILY MEMBERS PURCHASE D IMMOVABLE PROPERTIES IN VARIOUS PLACES. THEREAFTER THE AO MAD E VERIFICATION VIDE LETTER DATED 14.01.2011 TO THE DEDUCTORS CALLING AC COUNT COPY OF THE ASSESSEE. NAME OF THE DEDUCTORS REMARKS RELIANCE INFOCOMM ENGINEE RING (P) LTD.MUMBAI RETUR NED AS UNSERVED HIMACHAL FUTURISTIC COMMUNICATIONS LTD.,GOA REPLY R ECEIVED. TVS INTERCONNECT SYSTEMS LTD.,MADURAI NO REPLY RELIANCE COMMUNICATIONS LTD., NAVI MUMBAI NO REPLY RELIANCE INFRATEL LTD., NAVI MUMBAI NO REPLY BHARTI INFRATEL LTD., CHENNAI NO REPLY INDUS TOWERS PRIVAE LTD.,DELHI NO REPLY KADAVI ENGINEERING CO., (P) LTD., HYDERABAD REPLY R ECEIVED. EXCEPT TWO COMPANIES, ALL OTHERS WERE NOT REPLIED / SERVED. AO MADE ANOTHER ATTEMPT TO VERIFY THE DETAILS VIDE LETTER D ATED 12.07.2011, BUT NO REPLY WAS RECEIVED FROM RELIANCE INFRATEL LTD., NAVI MUMBAI, INDUS TOWERS PRIVAE LTD.,DELHI, RELIANCE COMMUNICATIONS L TD., NAVI MUMBAI AND RELIANCE INFOCOMM ENGINEE RING (P) LTD. MUMBAI. THEREAFTER, THE AO ASKED THE ASSESSEE TO PRODUCE B LLS AND VOUCHERS ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 5 AND ACCOUNT COPIES FROM THE COMPANIES WHO WHOM THE ASSESSEE EXECUTED CONTRACT. THE ASSESSEE DID NOT RESPOND TO THE AOS LETTER. THE AO AFTER VERIFYING THE BANK ACCOUNT DETAILS OBT AINED FROM BANK, FOUND THAT THE ASSESSEE RECEIVED MAJORITY OF THE CO NTRACT RECEIPTS FROM JANUARY TO MARCH, 2009. THIS WAS PUT BEFORE T HE ASSESSEE AND ASKED HOW DID THE WORK EXECUTED THROUGHOUT YEAR WIT HOUT WORKING CAPITAL. ASSESSEE DID NOT FURNISH ANY REPLY. ASSESS EES AUTHORISED REPRESENTATIVE OF ASSESSEE EXPLAINED THAT THE ASSES SEE HAS NOT ABLE TO COLLECT THE STATEMENT OF ACCOUNTS. MOREOVER, TH E LD.A.R PLEADED ON COMPASSIONATE GROUNDS FOR LOWERING THE TAX EFFEC T. ASSESSEE DID NOT PRODUCE ANY EVIDENCE SUCH AS CONTRACT NOTE, COP Y OF DRAWING POWER OR BILLS RAISED, SALE OF WASTE ETC. FOR DOING CONTRACT WORK WITH CONTRACTORS. HENCE, THE AO MADE AN ESTIMATED ADDITI ON OF 30% ON TURNOVER WHICH AMOUNT TO ` 6,96,57,364/- AS ESTIMATED PROFIT. FINALLY THE ASSESSMENT WAS RESULTED IN DETERMINING OF INCO ME AT ` 1,39,31,472/-. LATER, THE AO INITIATED THE PENALTY PROCEEDINGS U/S271(1)(C) OF THE ACT. ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 6 2.2 IN THE PENALTY NOTICE, THE AO OBSERVED THAT AS SESSEE IS LIABLE FOR AUDIT U/S.44AB OF THE ACT AND NO AUDIT REPORT WAS FURNISHED BEFORE THE AO. THE NATURE OF BUSINESS STATED TO BE UNDERTAKEN DURING THE YEAR WAS THE WORK OF CELL PHONE TOWER ER ECTION. THE ASSESSEE, IN SPITE OF REMINDER ISSUED BY AO, FAILED TO PRODUCE ANY COGENT MATERIAL TO SUPPORT THE CLAIM OF EXPENDITURE . AO OBSERVED IN HIS ASSESSMENT ORDER THAT 87% OF THE GROSS RECEIPTS WERE CLAIMED TO BE INCURRED ON ACCOUNT OF SALARIES AND WAGES FOR WH ICH NOT EVEN AN IOTA OF EVIDENCE WAS MADE AVAILABLE. EVEN THE BASIS FOR RAISING THE BILLS ON CONTRACTEES, THE MEASUREMENT SHEETS ETC. W ERE ALSO NOT PRODUCED BEFORE THE AO. HENCE, THE AO WAS OF THE V IEW THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AN D ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, HE L EVIED PENALTY AT 200% OF THE TAX SOUGHT TO BE EVADED WORK OUT TO ` 89,05,096/-. THE ASSESSEE CARRIED THE APPEAL BEFORE THE CIT(A). THE CIT(A) CONCURRED WITH THE VIEW OF THE AO IN LEVYING PENALTY. HOWEVE R, HE REDUCED THE PENALTY AT 100% OF THE TAX SOUGHT TO BE EVADED. ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 7 2.3. AGAINST SUSTAINING THE PENALTY AT 100% OF TAX SOUGHT TO BE EVADED, THE ASSESSEE IS IN APPEAL BEFORE US. 2.4 FOR REDUCTION OF THE PENALTY FROM 200% TO 100% OF TAX SOUGHT TO BE EVADED, THE REVENUE IS IN APPEAL BEFORE US. THE ASSESSEE ALSO FILED A CROSS OBJECTIONS WITH REGARD TO DELETI ON OF PENALTY FROM 200% TO 100% OF TAX SOUGHT TO BE EVADED. 3. BEFORE US THE LD.A.R SUBMITTED THAT FINANCIAL R ESULT OF ASSESSMENT YEAR 2007-08 CANNOT BE CONSIDERED TO ES TIMATION OF PROFIT OF ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 AS THE NATURE OF BUSINESS FOR TWO ASSESSMENT YEARS WERE DIFFERENT. A CCORDING TO HIM, THE TRIBUNAL IN THE CASE OF ASSESSEE, WHEN THE REVE NUE FILED AN APPEAL AGAINST THE ORDER OF CIT(A) IN ITA NO.1551/M DS./2012 VIDE ORDER DATED 15.04.2013, DISMISSED THE APPEAL OF ASS ESSEE BY OBSERVING AS FOLLOWS:- IT IS TO BE FURTHER OBSERVED THAT AS NOTED BY T HE AO, EARLIER THE ASSESSEE WAS CARRYING ON THE BUSINESS OF CABLE- LAYING, WHEREAS IN THE PREVIOUS YEAR RELEVANT TO THE ASSESS MENT YEAR ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 8 UNDER APPEAL, THE ASSESSEE WAS CARRYING ON THE WORK OF CELL TOWER ERECTION. IT IS TO BE SEEN THEREFORE THAT TH E NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE FOR EARLIER ASS ESSMENT YEARS AND THE BUSINESS CARRIED ON IN THE PREVIOUS Y EAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL ARE DIFFERENT. THEREFORE, THE PROFIT FOR THE EARLIER ASSESSMENT YEARS CANNOT BE A SURE GUIDE OF COMPARISON FOR THE IMPUGNED ASSESSMENT YEA R. THUS, ACCORDING TO LD.A.R, THE NATURE OF BUSINESS C ARRIED ON BY THE ASSESSEE IN THIS ASSESSMENT YEAR WAS DIFFERENT FROM THE ONE CARRIED ON FROM THE EARLIER ASSESSMENT YEAR. FURTHER, HE SU BMITTED THAT VERY SATISFACTION, RESULTING ON THE INITIATION OF PENALT Y PROCEEDINGS, AS A RESULT OF ADDITION MADE BY THE AO AND THAT REDUCED BY THE CIT(A), DOES NOT SURVIVE, MORE PARTICULARLY DUE TO THE FIND ING BY THE ITAT REFERRED ABOVE WITH RESPECT TO THE NATURE OF BUSINE SS CARRIED ON BY THE ASSESSEE IN THIS YEAR. ACCORDING TO HIM, AS T HE SATISFACTION IS VERY MUCH ESSENTIAL FOR THE PURPOSE OF PENALTY PROC EEDINGS U/S271(1)(C) OF THE AC, THE PENALTY ORDER CANNOT ST AND ON ITS OWN LEG. HE RELIED ON THE JUDGMENT IN THE CASE OF I) CIT VS. SHRIRAM ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 9 PROPERTIES AND CONSTRUCTIONS(CHENNAI) LTD., IN [201 3] 356 ITR 700(MAD.), II) CIT VS. P.ROSES IN [2013] 356 ITR 7 03(MAD.) AND III) CIT VS. RELIANCE PETROPRODUCTS P. LTD., IN[2010] 32 2 ITR 158(SC). HE ALSO RELIED ON THE ORDER OF TRIBUNAL IN THE CASE OF SHRI NARAYANSINGH DEORA IN ITA NO.5895/MUM/2010 FOR ASS ESSMENT YEAR 2001-02 VIDE ORDER DATED 09.12.2011, IN THE CASE O F M/S.SHILP GRAVURES VS. ACIT FOR ASSESSMENT YEAR 2003-04 VIDE ORDER DATED 15.12.2010 AND IN THE CASE OF ACIT VS. PADMINI MIS HRA IN ITA NO.5046/DEL.2012 FOR ASSESSMENT YEAR 2006-07 VIDE O RDER DATED 10.05.2013 WHEREIN HELD THAT WHEN THE INCOME IS EST IMATED, IT IS NOT PROPER TO LEVY PENALTY U/S271(1)(C) OF THE ACT AS THERE IS NO CONCLUSIVE EVIDENCE TO SHOW THAT THE ASSESSEE HAS F URNISHED INACCURATE PARTICULARS OF INCOME. FURTHER, HE SUBM ITTED THAT PENALTY HAS BEEN REDUCED FROM 200% OF TAX SOUGHT TO BE EVAD ED BY CIT(A) TO 100%, AS SUCH THERE IS A VARIATION IN THE QUANTUM O F PENALTY BY THE ORDER OF CIT(A). AS SUCH INITIATION OF PENALTY SH OULD HAVE BEEN DONE BY CIT(A) RATHER THAN AO. FOR THIS PURPOSE HE RELIE D ON THE JUDGEMENT OF TRIBUNAL IN THE CASE OF ACIT VS.PARDE EP PUBLICATIONS REPORTED IN [2010] 130 TTJ 92(ASR)(UO). ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 10 4. ON THE OTHER HAND LD.D.R SUBMITTED THAT THERE I S A SERIOUS DISCREPANCIES WERE FOUND IN THE RETURN OF INCOME FI LED BY THE ASSESSEE AND THE AO CALLED FOR THE CLARIFICATIONS F ROM THE ASSESSEE. THE ASSESSEE IN THIS CASE, OPTED NOT O GIVE REQUIR ED PARTICULARS SO AS TO FACILITATE THE CORRECT ASSESSMENT . THE AO, HAVING NO OTHER OPTION TO ESTIMATE THE INCOME OF ASSESSEE AND IT WA S THRUST UPON THE AO. THE REAL PROFIT OF ASSESSEE COULD NOT BE ASCER TAINED AND THE AO ON THE BASIS OF THE TURNOVER DECLARED BY THE ASSESS EE ONLY CONSIDERED THE PROFIT OF ASSESSEE AT 30% OF IT. T HIS PROFIT WAS ALSO ESTIMATED BASED ON THE MAKING PROPER LOCAL ENQUIRY, INTERNET SEARCH WITH SIMILAR COMPANIES. THERE IS NO EVIDENCE FURNI SHED BY THE ASSESSEE FOR INCORPORATING HUGE EXPENDITURE, WHICH WAS NOT SUBSTANTIATED BY THE ASSESSEE. HE SUPPORTED THE ORD ER OF AO AND SUBMITTED THAT THE MAXIMUM PENALTY LEVIED BY THE AO SHOULD BE SUSTAINED AND THE ASSESSEE IS NOT ENTITLED FOR ANY RELIEF AS THE CIT(A) HAS NOT GIVEN ANY REASON FOR REDUCTION OF PENALTY. FURTHER, HE SUBMITTED THAT THE PENALTY PROCEEDINGS CANNOT BE SA ID TO BE VOID ON THE REASON THAT PROCEEDINGS WERE NOT INITIATED BY T HE CIT(A). IN VIEW OF PROVISIONS OF THE SECTION 271(1B) OF THE ACT, WH ICH IS INSERTED BY ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 11 THE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT 01. 04.1989, HE SUBMITTED THAT THE ORDER OF THE TRIBUNAL IN THE CAS E OF PADMINI MISHRA HAVE NO APPLICATION TO THE PRESENT CASE. IN THAT C ASE, THERE WAS ENHANCEMENT OF INCOME BY THE CIT(A), THEREFORE THE PENALTY WAS TO BE IMPOSED ON THE BASIS OF ENHANCED INCOME. IT WAS THE CIT(A) WHO WAS TO RECORD SATISFACTION FOR INITIATING THE PENAL TY AGAINST THE ASSESSEE WHEN THE INCOME WAS ENHANCED. HOWEVER, TH ERE IS NO ENHANCEMENT OF INCOME IN THE PRESENT CASE OF THE AS SESSEE BY THE CIT(A). FINALLY HE RELIED ON THE FOLLOWING JUDGMENT S IN THE CASE OF CIT VS.S.KRISHNASWAMY & SONE IN [1996] 219 ITR 157(MAD. ), CIT VS.KALINDI RAIL NIRMAN ENGG. LTD., IN [2014]365 ITR 304 AND A.M.SHAH AND ACOMPNAY VS. CIT IN [1999] 238 ITR 41 5(GUJ.). 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE MAIN CONTENTION OF THE A SSESSEE IS THAT AS THE INCOME OF THE ASSESSEE IS ESTIMATED, THERE IS N O CONCLUSIVE EVIDENCE TO SHOW THAT THE ASSESSEE HAS CONCEALED PA RTICULARS OF INCOME OR THERE WERE INACCURATE PARTICULARS OF INCO ME. IT IS AN ADMITTED FACT THAT THE ASSESSEE IS LIABLE FOR AUDIT U/S.44AB OF THE ACT. ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 12 FURTHER, IT IS MANDATORY THAT THE ASSESSEE HAS TO F ILE THE TAX AUDIT REPORT ALONG WITH NECESSARY PARTICULARS AT THAT TIM E OF FILING OF RETURN OF INCOME WITHIN STIPULATED TIME U/S.139(1) OF THE ACT. THERE IS NO DISPUTE IN THIS CASE REGARDING QUANTUM OF TURNOVER, WHICH IS AT ` 6,96,57,364/-. THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS, CALLED FOR VARIOUS DETAILS AS DISCUSSED ABOVE IN T HE FACTS OF THE CASE. THE ASSESSEE FAILED TO FURNISH THE DETAILS CALLED F OR. THE AO HAVING NO OPTION, HE ESTIMATED THE INCOME OF THE ASSESSEE AT 30% OF THE GROSS RECEIPT AND LEVIED PENALTY AT 200% OF TAX SOU GHT TO BE EVADED. HOWEVER, CIT(A) REDUCED THE PENALTY TO 100% OF TAX SOUGHT TO BE EVADED. THE AO NOWHERE MENTIONED IN THE ASSESSMENT ORDER THAT HE IS CONSIDERING THE PROFIT OF THE ASSESSEE ON THE BASIS OF PROFIT OF EARLIER YEARS. HE BASED HIS ESTIMATION AFTER MAKIN G LOCAL ENQUIRY, INTERNET SEARCH WITH SIMILAR COMPANIES. HOWEVER, T HE CIT(A) WHILE DECIDING THE QUANTUM ADDITION OBSERVED THAT SINCE NET PROFIT FOR THE ASSESSMENT YEAR 2007-08 WAS AT 5.73%. HENCE, HE FO UND THAT IT IS REASONABLE TO ESTIMATE THE INCOME OF THE ASSESSEE A T 6% OF THE GROSS RECEIPTS. THE SAME AMOUNT OF INCOME WAS CONS IDERED FOR LEVY OF PENALTY. NOW THE CONTENTION OF THE ASSESSEE IS T HAT FINANCIAL RESULT ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 13 PERTAINING TO ASSESSMENT YEAR 2007-08 CANNOT BE COM PARED WITH ASSESSMENT YEAR 2009-10, BECAUSE THERE IS CHANGE IN NATURE OF BUSINESS. HOWEVER, THE ASSESSEE IS NOT ABLE TO SH OW WHAT IS THE EXACT PERCENTAGE OF INCOME ON ITS BUSINESS AND THE ASSESSEE IS NOT AT ALL BROUGHT ON RECORD THE TAX AUDIT REPOT. FURTH ER, THE ASSESSEE FAILED TO COMPLY WITH THE NOTICE ISSUED U/S.142(1) OF THE ACT AND ALSO FAILED TO PRODUCE ANY DOCUMENTS, BOOKS OF ACCOUNTS TO DEMONSTRATE THE CORRECT STATE OF AFFAIRS OF ASSESSEE. THE AO AF TER HEARING AND RECORDING THE NON-COMPLIANCE OF NOTICE BY ASSESSEE RESORTED TO ESTIMATE THE INCOME OF ASSESSEE. BEING SO, THE ESTI MATION OF INCOME OF ASSESSEE AT 6% OF GROSS RECEIPTS BY THE CIT(A), CONFIRMED BY THE TRIBUNAL VIDE ITS ORDER DATED 15 TH APRIL, 2013 IN ITA NO.1551/MDS./2012 & CO NO.153/MDS./2012. IN OUR OP INION, THE BURDEN CAST UPON THE ASSESSEE TO PRODUCE THE NECESS ARY BOOKS OF ACCOUNTS BEFORE THE AO IS NOT DISCHARGED. IN THIS C ASE, THE ASSESSMENT HIMSELF IS SADDLED WITH THE KNOWLEDGE OF ALL FACTS IN REGARD TO THE MAINTENANCE OF ACCOUNTS. IN THE FIRS T INSTANCE, IT IS ALWAYS ON ASSESSEE TO ESTABLISH THAT ACCOUNTS CALLE D FOR ARE NOT MAINTAINED, AND HIS ATTEMPT TO ESTABLISH THAT POINT MAY ALWAYS BE MET ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 14 BY RELIANCE ON THE CIRCUMSTANCES INDICATING THAT T HE EVIDENCE GIVEN OR LED BY HIM CANNOT BE RELIED UPON. THE AO IS ENT ITLED TO DISBELIEVE IN PROBABLE STATEMENT AND ASK FOR SOMETHING MORE TO BE PRODUCED BY THE ASSESSEE, WHICH WILL SATISFY THE AO THAT SUCH ACCOUNTS ARE, IN FACT, MAINTAINED. AS SUCH, WHERE THERE IS REASON T O BELIEVE THAT ASSESSEE HAD BOOKS OF ACCOUNTS, BUT HAD FAILED TO P RODUCE THE SAME IN RESPONSE TO NOTICE ISSUED BY THE AO, ESTIMATION SHOULD BE JUSTIFIED. THE ESTIMATION OF INCOME CANNOT BE SAID TO BE ARBIT RARY AND UNREASONABLE. THE ASSESSEE MADE NO EFFORTS TO PROD UCE THE BOOKS OF ACCOUNTS. IN THE ABSENCE OF MATERIAL, AO HAD NO ALTERNATE BUT TO MAKE ESTIMATION OF INCOME AND ESTIMATED THE INCOME AT 30% OF THE GROSS RECEIPTS. HOWEVER, THE CIT(A) IS VERY REASON ABLE IN ESTIMATING THE INCOME OF THE ASSESSEE AT 6% OF GROSS RECEIPTS AND THE SAME WAS CONSIDERED FOR LEVY OF PENALTY U/S271(1)(C) OF THE ACT. THE ESTIMATION OF INCOME AT 6% OF THE GROSS RECEIPTS HA S BEEN REACHED FINALITY BY THE ORDER OF THE TRIBUNAL CITED SUPRA. NOW, THE ASSESSEE CANNOT SAY THAT ESTIMATION OF INCOME IS NOT CORRECT . BEING SO, WE ARE NOT IN A POSITION TO HOLD THAT THE ESTIMATION OF IN COME IS NOT CORRECT AND IT COULD BE FIT FOR LEVY OF PENALTY AS HELD BY THE HONBLE GUJARAT ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 15 HIGH COURT IN THE CASE OF A.M.SHAH VS. CIT REPORTE D IN [1999] 238 ITR 415(GUJ.) WHEREIN IT WAS HELD THAT INCOME WAS E STIMATED ON THE BASIS OF GROSS PROFIT, THE PENALTY COULD NOT BE DEL ETED. FURTHER MADRAS HIGH COURT IN THE CASE OF CIT VS. S.KRISHNASWAMY & SONS REPORTED IN [1996] 219 ITR 157 (MDS.) WHEREIN HELD THAT IT C ANNOT BE SAID THAT WHENEVER THERE IS AN ESTIMATED INCOME, THERE IS NO SCOPE FOR HOLDING THAT THE ASSESSEE HAS CONCEALED INCOME. THEREFORE, THE TRIBUNAL COMMITTED AN ERROR OF LAW IN HOLDING THAT IF THE AD DITION IS BASED ON ESTIMATION, SECTION 271(1)(C) OF THE ACT WILL NOT B E ATTRACTED. FURTHER, HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAL INDI RAIL NIRMAN ENGG. LTD. REPORTED IN [2014] 365 ITR 304 (DELHI) H ELD THAT THE NUMBER OF DISCREPANCIES AND IRREGULARITIES LISTED B Y THE SPECIAL AUDITOR IN HIS REPORT WHICH WERE REPRODUCED IN THE ASSESSMENT ORDER BORE TESTIMONY TO THE FACT THAT THE BOOKS OF ACCOUN T MAINTAINED BY THE ASSESSEE WERE WHOLLY UNRELIABLE. THE ASSESSING OFFI CER GAVE DUE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE DISCREPA NCIES AND ALSO TO SHOW WHY THE PROFIT RATE OF 11 PER CENT COULD NOT B E ADOPTED BUT THESE OPPORTUNITIES WERE NOT AVAILED OF BY THE ASSE SSEE. HE ALSO HAD RECORDED IN THE ASSESSMENT ORDER THAT THE ASSESSEE WAS PERMITTED TO ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 16 INSPECT THE SEIZED DOCUMENTS AND WAS GIVEN PHOTOCOP IES OF THE DESIRED DOCUMENTS. THIS WAS NOT DENIED BY THE ASSES SEE. IN THESE CIRCUMSTANCES, THE MERE FACT THAT THE ESTIMATE WAS REDUCED BY THE TRIBUNAL TO 8 PER CENT WOULD IN NO WAY TAKE AWAY TH E GUILT OF THE ASSESSEE OR EXPLAIN ITS FAILURE TO PROVE THAT THE F AILURE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR ANY GROSS OR WILLFUL NEGLECT ON ITS PART. THE IMPOSITION OF PENALTY WAS JUSTIFIED. FURTHER, THE HONBLE KERALA HIGH COURT IN THE CASE OF C.T.CH OCKO VS. CIT REPORTED IN 99 DTR 59(KEARLA) AND THE HONBLE MADRA S HIGH COURT IN THE CASE OF M/S.SHARMA ALLOYS (INDIA) PVT. LTD., RE PORTED IN [2013] 357 ITR 379 (MAD) WHEREIN HELD THAT PENALTY WAS LEV IED ON THE BASIS OF ADDITION WHICH WAS MADE TOWARDS GROSS PROFIT O NLY ON ACCOUNT OF NON-RELIABILITY OF THE BOOKS OF ACCOUNT. IN THAT C ASE JURISDICTIONAL HIGH COURT OBSERVED THAT IN THE GARB OF THE BONA FIDE CL AIM, THE ASSESSEE CANNOT ESCAPE LEVY OF PENALTY. IN VIEW OF THE ABO VE, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF THE CIT(A) IN LEVYING OF PENALTY AT 100% OF TAX SOUGHT TO BE EVADED. FURTHER, WE MAKE IT CLEAR THAT IS THE DISCRETIONAL POWER OF THE CIT(A) TO REDUCE OR I NCREASE THE PENALTY DURING THE PROCEEDINGS BEFORE HIM AND HE HAS EXERCI SED JURISDICTION ITA NOS.2112, 2433/MDS/2014 CO NO.141/MDS./14 MR.M.RADHAKRISHNAN 17 JUDICIALLY IN REDUCING 100% OF TAX SOUGHT TO BE EV ADED. WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF LD.D.R THAT IT IS TO BE INCREASED AT 200% OF THE TAX SOUGHT TO BE EVADED AS THERE IS NO SPECIAL CIRCUMSTANCE TO INCREASE THE PENALTY. FURTHER, THE INITIATION OF PENALTY IS ALSO VALID IN VIEW OF PROVISIONS OF SECTION 271( 1B) OF THE ACT, AS THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. 6. IN THE RESULT, THE REVENUES APPEAL, THE ASSESSE ES APPEAL AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE STAND DI SMISSED. ORDER PRONOUNCED ON FRIDAY, THE 26 TH OF FEBRUARY,2016 AT CHENNAI. SD/- SD/- ( . !' ) ( DUVVURU RL REDDY ) ) ( ( $ % & ' ) ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 26 TH FEBRUARY,2016 . K S SUNDARAM. ) * + ,- . - /COPY TO: 1. /0 /APPELLANT 2. +1/0 /RESPONDENT 3. 2 () /CIT(A) 4. 2 /CIT 5. -34 + 5 /DR 6. 4' 6 /G