R. V. Enterprises, Kolkata V. ITO, WD-36(1), KOLKATA, Kolkata

ITA 1336/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1782 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 11-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMITAVA BHATTACHARYA JCITSRDR
• Assessee Lawyers: MANISH TIWARI
• Keywords: Gross profit estimation; Principle of natural justice; Initiation of penalty proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHOWDHURY, JUDICIAL MEMBER ITA NO.1336-1337/KOL/2014 ASSESSMENT YEARS:2005-06 TO 2006-07 R.V.ENTERPRISES C/O JAYKISHAN, 12, HO- CHI-MINH SARANI, 2 ND FLOOR, SUITE NO. 2D, E & F, KOLKATA-700 071 / V/S . INCOME TAX OFFICER, WARD-36(1), AAYKAR BHAWAN, POORVA 110, SHANTI PALLLY, KOLKATA-107 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI MANISH TIWARI, FCA /BY REVENUE SHRI AMITAVA BHATTACHARYA, JCIT-SR-DR /DATE OF HEARING 07-03-2017 /DATE OF PRONOUNCEMENT 26-05-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- BOTH APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST T HE DIFFERENT ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-XX, KOLKATA WI TH EVEN DATES I.E. 05.03.2014. ASSESSMENTS WERE FRAMED BY ITO/TAX RECOVERY OFFICER WARD-36(1), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) VIDE THEIR ORDERS DATED 26.12.2007 & 30.12.2008 FOR ASSESSMENT YEARS 2005-06 & 2006-08 RESPECTIVELY. THE PENALTY LEVIED BY THE ASSESSING O FFICER VIDE HIS ORDERS DATED 25.06.2010 AND 21.05.2010 U/S 271(1)(C) OF THE ACT SHRI MANISH TIWARI, LD. AUTHORIZED REPRESENTATIVE A PPEARED ON BEHALF OF ASSESSEE AND SHRI AMITAVA BHATTACHARYA, LD. DEPARTMENTAL REP RESENTATIVE REPRESENTED ON BEHALF OF REVENUE. ITA NO.1336-37/KOL/2014 A.Y S. 05-06 TO 06-07 R.V.ENTERPRISES VS. ITO WD-36(1) KOL. PAGE 2 FIRST WE TAKE UP ASSESSEES APPEAL IN ITA NO.1336/K OL/2014 FOR A.Y. 05-06 . 2. GROUNDS NO. 1 TO 6 ARE INTER-RELATED AND THEREFO RE BEING TAKEN UP TOGETHER. SOLE ISSUE RAISED BY ASSESSEE IN HIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY IMPOSING PENALTY OF 1,04,593/- U/S 271(1)(C) OF THE ACT. FOR THIS, THE GROUNDS RAISED BY ASSESSEE PER ITS APPEAL AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) IS UNJUSTIFIED IN CONFIRMING THE ORDER OF ASSESSING OFFICER TO IMPOSE PENALTY OF RS.1,04,593/- U/S 271(1)(C) OF IT ACT, 1961. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) HAS ERRED IN CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) BY ENTERT AINING IRRELEVANT AND EXTRANEOUS CONSIDERATIONS WHICH READ THERE WAS NON-COMPLIANCE DURING THE ASSESSMENT PROCEEDS AND/OR THE APPELLANT HAD BEEN NON-COOPERATIVE SINCE THE VE RY BEGINNING . 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) HAS ERRED IN DISMISSING ASSESSEES APPEAL AGAINST ORDER U/S. 271 (1)(C) WITHOUT APPRECIATING THAT PROFIT WAS ESTIMATED BECAUSE OF FAILURE TO PRODUCE BOOKS OF ACCOUNT. 4. THAT ON THE FACTS AND N THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN DISMISSING ASSESSEES APPEAL AGAINST ORDER U/S. 271(1)(C) WITHOUT DEALING WITH JUDICIAL DECISIONS RELIED BY THE APPEL LANT AS UNDER:- (A) CIT VS- P.K. NARAYANAN 238 ITR 905(KAR) (B)CIT-VS-BABU RAM RAMKISHAN 116 ITR 410 (ALL) (C) HARIGOPAL SINGH VS- CIT 258 ITR 85 (PUNJ & HAR ) (D) CIT-VS-RELIANCE PETRO PRODUCTS (P) LTD. 3212 IT R 158 (SC) 5. THAT ON THE FATS AND IN THE CIRCUMSTANCES OF THE CASE, THE ACTION OF LD. CIT(A) TO DISMISS APPEAL WITHOUT ADJUDICATING THE ISSUE THAT TAX SOUGHT TO BE EVADED WAS EXCESSIVE, IS ERRONEOUS, ARBITRARY AND BAD. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A DDUCE OR AMEND ANY GROUND ON OR AT THE TIME OF HEARING OF THE APPEAL. 3. BEFORE US LD AR SUBMITTED THE COPY OF NOTICE ISS UED U/S. 274 R.W.S 271(1)(C) OF THE ACT IS DEFECTIVE AS IT DOES NOT CLEARLY STRI KE OUT THE CHARGE OF PENALTY WHETHER IT HAS BEEN INITIATED EITHER FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. ITA NO.1336-37/KOL/2014 A.Y S. 05-06 TO 06-07 R.V.ENTERPRISES VS. ITO WD-36(1) KOL. PAGE 3 ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE RE CORDING OF INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IS SUFFICIENT ENOUGH TO SATISFY THE REQUIREMENT OF THE COMPLIANCE OF LAW. HE VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW. 4. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE NOTICE ISSUED U/S 274 OF THE ACT BY THE AO FOR LEVYING OF THE PENALTY IS DEFECTIVE IN SO FAR IT DO ES NOT SPELL OUT THE SPECIFIC CHARGE FOR PENALTY. THE SPECIFIC CHARGE FOR THE PENALTY WHETHE R IT IS LEVIED FOR THE CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME MUST EMANATE FROM THE PENALTY NOTICE. IN THE ABSENCE OF SPECIFIC CHARGE IN THE NOTICE, TH E SEVERAL COURTS HAVE DECIDED THE ISSUE IN FAVOUR OF ASSESSEE INCLUDING THE JURISDICT IONAL HIGH COURT WHICH IS BINDING ON US. IN THIS REGARD WE GUIDANCE & SUPPORT FROM THE J UDGMENT OF HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY REPORTED IN 359 ITR 565. THE RELEVANT IS OF THE JUDGMENT IS REP RODUCED BELOW:- PENALTY U/S 271(1)(C) IS A CIVIL LIABILITY, MENS R EA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSING PENALTY FOR BREACH OF CIVIL OBLIGATIONS OR LIABILITIES, WILFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LI ABILITY. EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(1)(C) IS A SINE QUA NON F OR INITIATION OF PENALTY PROCEEDINGS U/S 271. THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERNIBLE FROM THE ASSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVISI ONAL AUTHORITY. EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CORRECTIONS MENTIONED IN SECTION 271(1)(C), AT LEAST THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FROM THE SAID ORDER WHICH WOU LD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BECAUSE OF DEEMING PROVISION. EVEN IF T HESE CONDITIONS DO NOT EXIST IN THE ASSESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO I NITIATE PROCEEDINGS U/S 271(L)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). THE SA ID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMISSIONER. THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. IMPOSIT ION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMATIC. EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDER OF ASSESSMENT LEVYING TAX AND INTEREST AND HA S PAID TAX AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM TH E ASSESSMENT ORDER THAT, IT IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT HAS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO B E ADMITTED AND IF NOT IT WOULD HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE AO IN THE ASSESSMENT ORDER. ITA NO.1336-37/KOL/2014 A.Y S. 05-06 TO 06-07 R.V.ENTERPRISES VS. ITO WD-36(1) KOL. PAGE 4 ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPLANAT ION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PROVE THAT THE EXPLANATI ON OFFERED IS NOT BONA FIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. IF THE EXPLANATIO N OFFERED, EVEN THOUGH NOT SUBSTANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE B ONA FIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL I NCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. THE DIRECTION REFERRED TO IN EXPLANATION IB TO SECT ION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. IF THE AO HAS NOT RECORD ED ANY SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDING S, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PR OCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY . NOTICE U/S 274 OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN SECTION 271(1)(C), I.E., WHETHER IT IS FOR CONCEALMENT OF I NCOME OR FOR FURNISHING OF INCORRECT PARTICULARS OF INCOME. SENDING PRINTED FORM WHERE A LL THE GROUND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY REQUIRE MENT OF LAW. THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS T O MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED. ON THE B ASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. TAKING UP OF PENA LTY PROCEEDINGS ON ONE LIMB AND FINDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS. THE PROCE EDINGS FOR IMPOSITION OF PENALTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSMENT, IT I S INDEPENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDINGS IN SO FAR AS CONCEALMENT OF INCOME AND FURNISHING OF INCORRECT PARTICULARS W OULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDINGS. IT IS OPEN TO THE ASSES SEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF WHICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATT ER OF PENALTY PROCEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED AS IN VALID IN THE PENALTY PROCEEDINGS. IN THE LIGHT OF WHAT WE HAVE STATED ABOVE, IT IS CL EAR THAT MERELY BECAUSE THE ASSESSEE AGREED FOR ADDITION AND ACCORDINGLY ASSESSMENT ORDE R WAS PASSED ON THE BASIS OF THIS ADDITION AND WHEN THE ASSESSEE HAS PAID THE TAX AND THE INTEREST THEREON IN THE ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THE CONCE ALMENT OF INCOME, IT CANNOT BE INFERRED THAT THE SAID ADDITION IS ON ACCOUNT OF CO NCEALMENT. MOREOVER, THE ASSESSEE HAS OFFERED THE EXPLANATION. THE SAID EXPLANATION I S NOT FOUND TO BE FALSE. ON THE CONTRARY, IT IS HELD TO BE BONA FIDE. IN FACT IN TH E ASSESSMENT PROCEEDINGS THERE IS NO WHISPER ABOUT THESE CONCEALMENT. THE VERY FACT THAT THE ASSESSEE AGREED TO PAY TAX AND DID NOT CHALLENGE THE ASSESSMENT ORDER, IT IS C LEAR THE CONDUCT OF THE ASSESSEE CANNOT BE CONSTRUED AS MALA FIDE. THEREFORE, THE TR IBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDERS PASSED BY THE APPELLATE AUTHORITY AS WELL AS THE ASSESSING AUTHORITY. IN SO FAR AS THE IMPOSITION OF PENALTY IS CONCERNED , IT IS NOT IN ACCORDANCE WITH LAW. NO FAULT COULD BE FOUND WITH THE TRIBUNAL FOR DELET ING THE PENALTY. MERELY BECAUSE THE ASSESSEE AGREED FOR ADDITION AND ACCORDINGLY ASSESSMENT ORDER WAS PASSED ON THE BASIS OF ADDITION AND WHEN THE AS SESSEE HAS PAID THE TAX AND THE INTEREST THEREON IN THE ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THE CONCEALMENT OF ITA NO.1336-37/KOL/2014 A.Y S. 05-06 TO 06-07 R.V.ENTERPRISES VS. ITO WD-36(1) KOL. PAGE 5 INCOME, IT CANNOT BE INFERRED THAT THE SAID ADDITIO N IS ON ACCOUNT OF CONCEALMENT SO AS TO LEVY PENALTY U/S 271(1)(C). SIMILARLY WE RELY IN THE ORDER OF HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF SMT. PARAMA BASAK VS. CIT IN ITA 155 OF 2003 DATED 19.03.2015 WHERE IT WAS H ELD AS UNDER: - THE PENALTY PROCEEDINGS WERE STARTED AND APPROVED BY THE IMPUGNED JUDGMENT AND ORDER ON THE BASIS THAT THE CLAIM MADE BY THE ASSES SEE ON ACCOUNT OF BAD DEBT WAS NOT ALLOWED. IT IS NOT IN DISPUTE THAT THE AMOUNT OF DE BT HAD DULY BEEN WRITTEN OFF BY THE ASSESSEE; WHY WAS THE SAME NOT ALLOWED IS HOWEVER A MYSTERY TO US BUT BE THAT AS IT MAY, THE FACT REMAINS THAT THE CLAIM FOR BAD DEBT A FTER THE DEBT HAD BEEN WRITTEN OFF COULD NEVER BE A GROUND FOR INITIATING PENAL PROCEE DINGS. BEFORE INITIATING THE PENAL PROCEEDINGS THE ASSESSING OFFICER IS REQUIRED TO BE SATISFIED AS TO WHETHER ANY INCOME HAS BEEN CONCEALED OR ANY INADEQUATE PARTICULARS HA VE BEEN FURNISHED. SIMILARLY WE RELY IN THE ORDER OF HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF CIT VS. ARTI & SONS , IN GA. NO. 2682 OF 2014 , ITAT 129 OF 2014 DATED 10.09.2014 WHERE IT WAS HELD AS UNDER : HEARD MD. DHUDHORIA, LEARNED ADVOCATE FOR THE APPE LLANT. SINCE WE FIN D FROM THE ORDERS OF THE ASSESSING OFFICER OR THE CIT THAT THE RE IS NO ALLEGATION AGAINST THE ASSESSEE FOR CONCEALMENT OF PARTICULARS OF INCOME O R HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, WE ARE OF THE VIEW THAT THE LEARNED TRIBUNAL WAS JUSTIFIED IN PASSING THE ORDER UNDER CHALLENGE. THEREFORE, TH E APPLICATION AND APPEAL ARE DISMISSED. WE ALSO FIND THAT THE REVENUE HAS FILED THE SLP NO. 5281/2016 BEFORE THE HONBLE SUPREME COURT AGAINST THE JUDGMENT OF THE HONBLE H IGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (SC) WHICH WAS DISMISSED AS UNDER : WE DO NOT FIND ANY MERIT IN THESE PETITIONS. THE SP ECIAL LEAVE PETITIONS ARE, ACCORDINGLY, DISMISSED. PENDING APPLICATIONS, IF ANY, STAND DISPOSED OF. IN VIEW OF ABOVE PROPOSITION, WE HAVE NO HESITATION IN HOLDING THAT THE PENALTY PROCEEDINGS ARE INVALID IN VIEW OF THE AFORESAID DI SCUSSIONS AS THE NOTICE ISSUED U/S 274 OF THE ACT FOUND DEFECTIVE. FOLLOWING THE ABOVE PRINCIPLE LAID DOWN BY VARIOUS COURT WE REVERSE THE ORDER OF LD. CIT(A) IN THIS RE GARD AND DIRECT THE AO TO DELETE THE PENALTY. HENCE THIS GROUND OF APPEAL OF THE ASSESSE E IS ALLOWED. ITA NO.1336-37/KOL/2014 A.Y S. 05-06 TO 06-07 R.V.ENTERPRISES VS. ITO WD-36(1) KOL. PAGE 6 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. NOW COMING TO ASSESSEES APPEAL IN ITA NO.1336/KOL/ 2014 FOR A.Y.06-07 . 6. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAI NST LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE GROUNDS RAISED BY THE ASS ESSEE PER ITS APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE LD. CIT(A) IS WRONG AND UNJUSTIFIED IN CONFIRMING THE ORDER OF ASSESSING OF FICER IMPOSE PENALTY OF RS.2,93,627/- U/S. 271(1)(C) OF IT ACT, 1961. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) HAS ERRED IN CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) BY ENTERT AINING IRRELEVANT AND EXTRANEOUS FACTS. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) HAS ERRED IN DISMISSING ASSESSEES APPEAL AGAINST ORDER U/S. 271 (1)C) WITHOUT APPRECIATING THAT PROFIT WAS ESTIMATED BECAUSE OF FAILURE TO PRODUCE BOOKS OF ACCOUNT. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN DISMISSING ASSESSEES APPEAL AGAINST ORDER U/S. 271(10(C) WITHOUT DEALING WITH JUDICIAL DECISIONS RELIED BY THE APE A S UNDER:- A) CIT-VS- .K. NARAYANAN 238 ITR 905 ((KAR) B) CIT-VS-BABU RAM RAMKISHAN 116 ITR 410 (ALL) C) HARIGOPAL SINGH-VS- CIT 258 ITR 85 (PUNJ & HAR) D) CIT-VS-RELIANCE PETRO PRODUCTS (P) LTD. 322 ITR 158 (SC) 5. THAT THE APPELLANT CRAVES LEAVE TO AD, ALTER, AD DUCE OR AMEND ANY GROUND ON OR AT THE TIME OF HEARING OF THE APPEAL. 7. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT A SSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED AT A TOTAL INCOME OF RS.38,3 3,370/- AS AGAINST RETURNED INCOME OF RS.2,45,370/-. THE ASSESSING OFFICER VIDE ORDER PASSED U/S 143(3) OF THE ACT DATED 26.12.2007, MADE THE ADDITIONS ON ACCOUNT OF LOW GP RATIO. THE AO DETERMINED THE TAXABLE PROFIT BY APPLYING @ 2.8% OF THE TOTAL TURN OVER AFTER REJECTING THE BOOKS OF ACCOUNTS WHICH WAS REDUCED BY THE LD CIT(A). PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT. AFTER THE APPEAL OF THE ASSESSEE WAS DECIDED BY THE LD. CIT(A) WHERE THE AS SESSING OFFICER HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME AND ACCORDINGLY LEVIED PENALTY U/S 271(1)(C) OF THE ACT AT RS.1,04,593/- I.E. @ 10 0% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED. THE LD. CIT(A) CONFIRMED THE SAME AS THE ASSESSEE FAILED TO APPEAR BEFORE HIM. ITA NO.1336-37/KOL/2014 A.Y S. 05-06 TO 06-07 R.V.ENTERPRISES VS. ITO WD-36(1) KOL. PAGE 7 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE INSTANT CASE THE PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE IN CASES WHERE THE ASSESSEE HAD EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE PENALTY U/S 271(1)(C) O F THE ACT HAS BEEN LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON A CCOUNT OF LOW GP RATIO DECLARED BY THE ASSESSEE WHICH WAS SUBSEQUENTLY REDUCED BY THE LD. CIT(A). THE ISSUE ARISING IN THE PRESENT APPEAL BEFORE US IS WHETHER IN SUCH CIR CUMSTANCES THE ASSESSEE IS LIABLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSES SEE HAD FURNISHED COMPLETE PARTICULARS BEFORE THE AUTHORITIES BELOW. HOWEVER, THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE BY ESTIMATING THE GP PROFIT ON TH E TURNOVER. IN SUCH CIRCUMSTANCES, WHERE NO CONCRETE EVIDENCE WAS FOUND AGAINST THE AS SESSEE AND THE ADDITION BEING BASED ON ESTIMATION, THERE IS NO MERIT IN THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE PENALTY LEVIED FOR CONCEALMENT U/S 271(1)(C) OF THE ACT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 10. IN COMBINE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26/05/2017 SD/- SD/- (PARTHA SARATHI CHOWDHURY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S '#$ - 26/05/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-R.V.ENTERPRISES, C/O. S. JAYKISHAN, 12, HO- CHI-MINH SARANI, 2 ND FLOOR, SUITE NO. 2D, E & F, KOLKATA-71 2. /REVENUE-ITO, WARD-36(1),AAYKAR BHAWAN, POORVA110, SH ANTIPALLY, KOL-107 3. ##%& ' / CONCERNED CIT 4. ' - / CIT (A) 5. ()* ++%& , %& / DR, ITAT, KOLKATA 6. *,- / GUARD FILE. BY ORDE R/ , SR.PRIVATE SECRETARY HEAD OF OFFICE/DDO 1 1%&,