Dy. CIT Cir. 2, Kolhapur, V. Jikhapur Ice & Cold Storage Company,

ITA 175/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3148 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 19-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Loose papers; Peak credit
• Section: 133A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER I.T.A. NO. 175 AND 176/PN/2009 : A.Y. 1999-00 & 200 0-01 DY. CIT CIR. 2, KOLHAPUR APPELLANT VS. KOLHAPUR ICE & COLD STORAGE COMPANY B-6/7 MIDC SHIROLI, KOLHAPUR PAN AADFK 0523 B RESPONDENT I.T.A. NO. 57 AND 51/PN/2009 : A.Y. 1999-00 & 2000- 01 KOLHAPUR ICE & COLD STORAGE COMPANY B-6/7 MIDC SHIROLI, KOLHAPUR PAN AADFK 0523 B APPELLANT VS. DY. CIT CIR. 2, KOLHAPUR RESPONDENT ASSESSEE BY: SHRI SUNIL PATHAK DEPARTMENT BY: SHRI ABHAY DAMLE ORDER PER SHALENDRA KUMAR YADAV, JM THESE ARE TWO SETS OF CROSS APPEALS ARISING OUT OF CONSOLIDATED ORDER OF THE CIT(A) KOLHAPUR DATED 22- 10- 2008 FOR A.Y. 1999-00 AND 2000-01 RAISING COMMON ISSUES. SO THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. PAGE 2 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 2. IN ITA NO. 175/PN/2009 FOR A.Y. 1999-00 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1) ON THE FACTS AND IN HE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DISPOSING THE APPEAL WITHOUT AWAITING THE DECISION OF THE APPEAL BEFORE THE HIGH COURT, MUMBAI IN THE ASSESSEES OWN CASE FOR A.Y. 2001-02 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN NOT APPRECIATING THAT THE ENTIRE ADDITION OF RS. 80,69,200/- MADE BY THE A.O WAS IN FACT ONLY A SUBSTANTIVE ADDITION AND THE DISTINCTION MADE IN TERMS OF SUBSTANTIVE AND PROTECTIVE WAS ONLY TO DISTINGUISH WHAT HAS ALREADY BEEN CONFIRMED AND REJECTED RESPECTIVELY BY THE HONBLE ITAT ON THE BASIS OF ASSESSEES OWN CASE FOR A.Y. 2001-02. 3. IN ITA NO. 57/PN/2009 FOR A.Y. 200-01 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE PENALTY U/S 271(1)(C) ON THE SUBSTANTIVE ADDITION MADE BY THE A.O U/S 69 OF THE ACT. 2) BOTH THE LEARNED ASSESSING OFFICER AND LEARNED CIT(A) HAVE ERRED IN NOT CONSIDERING CORRECTLY FACTS OF THE CASE AND THE FINDINGS OF HONBLE ITAT PUNE GIVEN IN THE QUANTUM APPEAL FOR A.Y. 2001-02 IN THE CASE OF APPELLANT. 3) ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BOTH THE LEARNED A.O AND LEARNED CIT(A) HAVE ERRED IN NOT CONSIDERING THE LETTER DATED 15-3-2004 OF THE SISTER CONCERN SHREE BALAJI LPG AND PETRO PVT. LTD., OWNING THE TRANSACTIONS OF KEROSENE PURCHASES 4. IN SURVEY OPERATION U/S 133A OF THE ACT AT THE MUMBAI OFFICE OF THE ASSESSEE, CERTAIN PAPERS WERE FOUND WHICH INDICATED CERTAIN PAYMENTS WHICH WERE PAGE 3 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 NOT FOUND TO HAVE NOT BEEN DEBITED TO THE BOOKS. THE PAYMENTS WERE SPREAD OVER THREE YEARS I.E. 1999-00, 2000-01 AND 2001-02. THE ASSESSMENT FOR A.Y. 2001- 02 WAS COMPLETED BEFORE THE OTHER YEARS. THE MATTER WENT UPTO THE TRIBUNAL WHICH DIRECTED THAT PEAK CRE DIT SHOULD BE COMPUTED TAKING A CYCLE OF 15 DAYS AND TH E INCREMENTAL PEAK SHOULD BE TAXED IN THE HANDS OF TH E ASSESSEE. 5. CONSEQUENTLY PENALTY PROCEEDINGS WERE INITIATED. IN RESPONSE TO THE NOTICE FOR LEVY OF PENALTY THE ASSESSEE STATED THAT PAYMENTS ARE RELATED TO THE KEROSENE BUSINESS CARRIED ON BY SHRI BALAJI LPG PET RO P. LTD., AND IT HAD NOTHING TO DO WITH THE ASSESSEE S BUSINESS. PURCHASES BY THE ASSESSEE IN MUMBAI HAD BEEN MADE FROM FUNDS OUT OF THE SALE OF MILK. SOME FUNDS WERE USED BY BALAJI PETRO IN MUMBAI WHICH WER E REIMBURSED AT THE KOLHAPUR OFFICE. THE A.O OBSERVE D THAT THE PAYMENTS MADE TO THE COMPANY CONCERN AND THE SUBSEQUENT REIMBURSEMENT HAD NOT BEEN REFLECTED IN THE BOOKS OF THE ASSESSEE, ALTHOUGH THE SAME MIG HT BE REFLECTED N THE BOOKS OF THE COMPANY. IF THE SU RVEY WOULD NOT HAVE BEEN CONDUCTED THE TRANSACTION WOULD NOT HAVE COME TO LIGHT. THUS, THE ASSESSEE HAD CONCEALED INCOME. THE A.O WAS OF THE FURTHER OPINI ON PAGE 4 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 THAT THE DECISION OF THE TRIBUNAL PERTAINED TO A.Y. 2001-02 AND HAD NO BEARING ON THE A.Y. 1999-00 AND 2000-01. HOWEVER, IN THE ASSESSMENT, THE A.O MADE ADDITIONS GOING BY THE METHOD OF PEAK CREDIT. IN APPEAL AGAINST THE ABOVE ADDITIONS, THE CIT(A) KOLHAPUR HELD THAT THE ADDITION ON PROTECTIVE BASIS IS NORMALLY MADE WHEN THERE IS DISPUTE AS TO WHO IS TH E ACTUAL RECIPIENT OF THE INCOME ON WHOSE HANDS IT SHOULD BE TAXED. A PROTECTIVE ADDITION IS DIFFERENT FROM THE SUBSTANTIVE ADDITION. THE APPEAL THEREFORE, DI D NOT LIE AGAINST SUCH PROTECTIVE ADDITION. THEREFOR E, THE APPEAL WAS NOT MAINTAINABLE. IN THIS BACKGROUN D, THE A.O WAS OF THE OPINION THAT THE FACTUM OF CONCEALMENT HAD BEEN PROVED. THE CONCEALED INCOME AMOUNTED TO RS. 80,69,200/-. PENALTY WAS THEREFORE , LEVIED ON THIS AMOUNT. 6. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLAT E AUTHORITY WHO AFTER CONSIDERING VARIOUS CONTENTIONS OBSERVED THAT THE TOTAL PAYMENT MADE DURING THE YEA R 1999-00 WAS RS. 80,69,200/- AND FOR 2000-01 WAS RS. 68,82,200/-. BY ADOPTING THE METHOD OF PEAK CREDIT WITH A CYCLE OF 15 DAYS, THE AMOUNT PEAK WORKED OUT TO RS 17,16,600/- IN 1999-00 AND RS. 15,62,000/- IN 2000-01. THE BALANCE AMOUNT I.E. RS. 63,53,600/- I N PAGE 5 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 1999-00 AND RS. 53,19,600/- IN 2000-01 RESPECTIVELY HAVE BEEN ADDED U/S 69-A ON PROTECTIVE BASIS. THE A.O ON ONE HAND HAS FOLLOWED ORDER OF THE TRIBUNAL AND ADOPTED THE PEAK CREDIT METHOD IN EACH YEAR. O N THE OTHER HAND, HE HAS ALSO STRUCK TO THE ORIGINAL ADDITION MADE IN THE ASSESSMENT OF THE PARTICULAR YEAR. THE AMOUNT WHICH HAS BEEN ADDED PROTECTIVELY IS THE BALANCE AFTER REDUCING PEAK CREDIT AMOUNT FR OM THE TOTAL AMOUNT. THE MAIN ISSUE INVOLVED IN THIS CASE IS OF TECHNICAL NATURE AS TO WHETHER PENALTY CAN BE LEVIED AGAINST ADDITION MADE PROTECTIVELY TO THE IN COME OF THE ASSESSEE. HONBLE GUWAHATI HIGH COURT IN THE CASE OF MEAL STORES VS. CIT HELD THAT PROTECTIVE PENALTY IS CONCEPTUALLY WRONG. THIS WAS FOLLOWED B Y THE PUNJAB AND HARYANA HIGH COURT IN BIHARILAL PYARELAL 142 ITR 132 WHEREIN IT WAS HELD THAT PENAL TY IS NOT IMPOSED BASED ON PROTECTIVE ADDITION. IN VIE W OF THIS, THE PENALTY IMPOSED ON THE AMOUNT ADDED PROTECTIVELY IN THE HANDS OF THE ASSESSEE WAS DELET ED. 7. AS REGARDS THE REMAINING AMOUNT WHICH HAS BEEN ADDED SUBSTANTIVELY IN THE HANDS OF THE ASSESSEE US ING THE PEAK CREDIT METHOD, THE ASSESSEES CONTENTION W AS NOT ACCEPTED BY THE CIT(A) WHO OBSERVED THAT TRANSACTION HAD NOT BEEN RECORDED IN THE BOOKS OF T HE PAGE 6 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 ASSESSEE IRRESPECTIVE OF WHETHER SUCH TRANSACTIONS WERE RECORDED IN THE BOOKS OF ANOTHER PERSON OR COMPANY. IT IS ALSO NOT BEYOND DOUBT THAT THE RELE VANT ENTRIES HAVE BEEN PASSED IN THE COURSE OF THE TRANSACTION AND NOT AT A LATER STAGE WHEN INCRIMINATING DOCUMENTS WERE FOUND DURING THE SURVEY. THE A.O WAS THEREFORE, DIRECTED TO RECOMPU TE PENALTY ONLY ON THE BASIS OF SUBSTANTIVE ADDITION M ADE IN THE HANDS OF THE ASSESSEE IN THE ABOVE TWO YEARS AMOUNTING TO RS. 17,16,600/- IN 1999-00 AND RS. 15,62,400/- IN 2000-01. AGGRIEVED, BOTH THE PARTIE S ARE IN APPEAL. 8. THE LEARNED DR SUBMITTED THAT THE CIT(A) ERRED I N DISPOSING THE APPEAL WITHOUT AWAITING FOR DECISION OF THE APPEAL BEFORE THE HIGH COURT, MUMBAI IN ASSESSEES OWN CASE FOR A.Y. 2001-02. THIS GROUND IS NOT JUSTIFIED. THE OTHER CONTENTION RAISED ON BEHA LF OF THE REVENUE IS THAT THE CIT(A) ERRED IN NOT APPRECI ATING THAT THE ENTIRE AMOUNT OF RS. 80,69,200/- MADE BY T HE A.O IN A.Y 1999-00 WAS IN FACT ONLY A SUBSTANTIVE ADDITION AND THE DISTINCTION MADE IN TERMS OF SUBSTANTIVE AND PROTECTIVE WAS ONLY TO DISTINGUISH WHAT HAS ALREADY BEEN CONFIRMED AND REJECTED RESPECTIVELY BY THE ITAT ON THE BASIS OF ASSESSEES OWN PAGE 7 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 CASE FOR A.Y. 2001-02. IN THIS BACKGROUND, THE LEARNED DR SUPPORTED THE ORDER OF THE A.O. THE CIT (A) HAS DELETED THE ADDITION TO THE EXTENT RELIEF GRANT ED BY THE ASSESSEE AND THE PENALTY IMPOSED TO THE EXTENT SUSTAINED BY THE CIT(A). BOTH PARTIES ARE BEFORE US WITH RESPECT TO THEIR GRIEVANCES. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE A .O HAS LEVIED THE PENALTY U/S 271(1)(C) FOR ABOVE TWO YEARS AMOUNTING TO RS. 28,24,220/- AND RS. 26,49,570/-. THE CIT(A) PARTLY DELETED THE PENALTY FOR THE ABOVE TWO YEARS AND DIRECTED THE A.O TO RECOMPUTED THE PENALTY ONLY ON THE BASIS OF SUBSTANTIVE ADDITION MADE IN THE HANDS OF THE ASSESSEE AMOUNTING TO RS. 17,16,600/- IN 1999-00 AND RS. 15,62,400/- IN 2000-01. AS MENTIONED ABOVE , THERE WAS A SURVEY ON THE ASSESSEE AND ITS SISTER CONCERN M/S. BALAJI LPG PETRO PVT. LTD. IN THE COU RSE OF SURVEY IT WAS FOUND THAT THE CASH OF THE FIRM HA S BEEN UTILIZED IN MUMBAI FOR PURCHASE OF KEROSENE FR OM ALFA TEXTILES & PROGRESSIVE ENERGY PVT. LTD. THE PURCHASE OF KEROSENE WAS FOUND FROM 1999-00 TO 2001-02. THE STAND OF THE ASSESSEE WAS THAT IT IS ENGAGED IN SALE OF MILK. THE CASH GENERATED ON MIL K PAGE 8 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 WAS RECORDED IN THE BOOKS OF THE ASSESSEE AND THE S AID CASH WAS REIMBURSED BY BALAJI LPG PETRO PVT. LTD. FROM THE ABOVE TWO PARTIES. IT WAS ALSO CLARIFIED THAT M/S. BALAJI LPG PETRO PVT. LTD. USED TO RETURN THE ENTIRE AMOUNT OF CASH TAKEN BY IT ON THE SAME DAY. THE A.O HOWEVER, DID NOT ACCEPT THE CONTENTION OF T HE ASSESSEE AND MADE THE ADDITION OF RS. 1.35 CRORES I N THE HANDS OF THE ASSESSEE FOR A.Y. 2001-02. MATTER TRAVELED UPTO ITAT WHEREIN IT WAS HELD THAT THE ADDITION OF RS. 1.35 CRORES MADE BY THE A.O IS NOT JUSTIFIED. THE TRIBUNAL ACCEPTED THE CLAIM OF THE ASSESSEE. HOWEVER, IN PARA 6.2 OF ITS ORDER THE TRIBUNAL HELD THE CASH WAS GIVEN TO SHRI BALAJI FOR ITS UTILIZATION FOR THE PURCHASE OF KEROSENE. THE TRIBU NAL HAS HELD THAT THE KEROSENE IS A FAST SELLING COMMOD ITY. THE TRIBUNAL STATED THAT AROUND 15 DAYS TIME WAS TAKEN TO RETURN THE CASH FOR PURCHASE OF KEROSENE. THE TRIBUNAL ACCORDINGLY DIRECTED THE A.O TO COMPUT E THE PEAK BY CONSIDERING 15 DAYS TAKEN BY BALAJI LPG PETRO PVT. LTD. FOR RETURN OF CASH TO THE ASSESSEE . ON THE BASIS OF DIRECTION OF ITAT FOR A.Y. 2001-02 THE A.O COMPLETED THE ASSESSMENT FOR A.Y. 1999-00 AND 2001- 02. FOR A.Y 1999-00 THE A.O MADE AN ADDITION OF RS . 17,16,600/- ON SUBSTANTIVE BASIS ON THE BASIS OF PE AK PAGE 9 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 WORKED OUT FOR 15 DAYS. HE FURTHER MADE AN ADDITIO N OF RS. 63,52,600/- ON PROTECTIVE BASIS ON THE GROUN D THAT THE DECISION OF I.T.A.T. WAS NOT ACCEPTED BY T HE DEPARTMENT AND THE APPEAL HAS BEEN FILED BEFORE HONBLE JURISDICTIONAL HIGH COURT. SIMILARLY FOR A .Y. 2000-01 THE ADDITION OF RS. 32,76,00/- WAS MADE ON SUBSTANTIVE BASIS AND RS. 53,19,600/- WAS MADE ON PROTECTIVE BASIS ON THE REASONING THAT THE DECISION OF I.T.A.T. WAS NOT ACCEPTED BY THE DEPARTMENT. SUBSEQUENTLY, THE A.O LEVIED PENALTY OF RS. 28,24,220/- AND RS. 26,49,570/- FOR A.Y. 1999-00 AN D 2000-01 RESPECTIVELY ON BOTH ACCOUNTS. IN APPEAL, T HE CIT(A) HELD THAT THE PENALTY LEVIED IN RESPECT OF ADDITION MADE ON PROTECTIVE BASIS IS NOT JUSTIFIED SINCE THE ADDITION HAS BEEN DELETED BY THE ITAT. THEREFO RE, THE CIT(A) DELETED THE PENALTY IN RESPECT OF PROTEC TIVE BASIS MADE FOR TWO YEARS. THIS REASONED FINDING NE EDS NO INTERFERENCE FROM OUR SIDE BECAUSE PROTECTIVE ADDITION CANNOT BE SOUND BASIS FOR PENALTY. SAME HA S RIGHTLY BEEN DELETED. 10. AS REGARDS SUSTAINED PENALTY, THE STAND OF THE ASSESSEE IS THAT THE ADDITION WAS ON ESTIMATED BASI S. AS STATED EARLIER THE TRIBUNAL HAS ACCEPTED THAT TH E CASH OF THE ASSESSEE WAS BEING UTILIZED BY BALAJI L PG PAGE 10 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 PETRO PVT. LTD. FOR MAKING KEROSENE PURCHASE. IT W AS THE CONTENTION OF THE ASSESSEE M/S. BALAJI USED TO RETURN THE AMOUNT ON THE SAME DATE. THE TRIBUNAL HAS BASICALLY ACCEPTED THE STAND OF THE ASSESSEE AN D OBSERVED THAT M/S. BALAJI HAS TAKEN 15 DAYS TIME TO RETURN THE SAME. IT WAS SUBMITTED THAT THOUGH ADDITION WAS CONFIRMED BY THE ITAT BUT HENCE PENALT Y CANNOT BE IMPOSED ON THE BASIS OF ESTIMATED ADDITIO N. IN THIS REGARD, SPECIAL ATTENTION WAS DRAWN TO PARA 6.2 OF THE ORDER OF THE TRIBUNAL WHEREIN INTER ALIA IT WAS HELD THAT 15 DAYS TIME WAS SUFFICIENT TO RETURN THE CASH OF THE ASSESSEE FOR PURCHASE OF KEROSENE. IT WAS SUBMITTED THAT IN VIEW OF CATEGORICAL FINDING OF IT AT NO EXCESS STOCK WAS FOUND. WE FIND THE ITAT IN THE C ASE OF SHRI SANTOSHKUMAR VASANT SHETTY IN ITA NO. 1561/PN/2007 FOR BLOCK PERIOD 1997-98 TO 2003-04 VIDE ORDER DATED 24-9-2010 HAS HELD AS UNDER : WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE. ON PERUSAL OF THE SAME, WE ARE OF THE VIEW THAT THE SEIZED LOOSE PAPERS AT PAGE NO. 88 TO 94 OF THE BUNDLE NO. 5 OF PANCHANAMA DATED 27-6-2002 ARE THE DIRECT EVIDENCES IN SUPPORT OF THE ALLEGATION OF SUPPRESSED CASH SALES. PAGES 88 TO 94 ARE THE COMPUTERIZED SHEETS OF CASH SALES OF HOTEL SUDAMA REFLECTED FOR 24-6-2002 AND 25-6-2002 AMOUNTING TO RS. 60,172/- AND RS. 52,444/- RESPECTIVELY. THE ADDITIONS ATTRIBUTABLE TO THESE ADDITIONS CERTAINLY ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT AS THE SUPPRESSION OF THESE CASH SALES IS THE CASE OF CONCEALMENT OF INCOME AND THERE IS NO PAGE 11 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 ESTIMATION OF CONCEALED INCOME INVOLVED HERE. WHEN COMES TO THE REST OF THE ADDITIONS, THEY ARE BASED ON EITHER ESTIMATIONS AND BASED ON THE UN- CORROBORATED STATEMENTS AND PROJECTIONS. THESE PROJECTIONS AND ESTIMATIONS MAY BE GOOD FOR MAKING ADDITIONS AS CONFIRMED BY THE TRIBUNAL DURING THE PROCEEDINGS ON MERITS. BUT, FOR THE PURPOSE OF PENALTY PROCEEDINGS, THERE IS NEED FOR DIRECT EVIDENCES WORTH THAT OF THE IMPUGNED SEIZED LOOSE PAPERS SUCH AS PAGE NO. 88 TO 94 OF THE BUNDLE NO. 5. IT IS WELL SETTLED ISSUE THAT TH E PENALTY IS NOT LEVIED IN CASES OF ESTIMATIONS AND PROJECTIONS. THEREFORE, WE ARE OF THE OPINION THE PENALTY MUST BE RESTRICTED TO THE CONCEALED INCOME ATTRIBUTABLE TO THE CONTENTS OF THE SUPPRESSED SALES UNEARTHED BY THE REVENUE VIDE THE PAGE NO. 88 TO 94 OF THE BUNDLE NO. 5 ONLY. ASSESSING OFFICER IS DIRECTED ACCORDINGLY. ASSESSEE IS ENTITLED TO RELIEF IN RESPECT OF THE RE ST OF THE INCOME CONFIRMED BY THE TRIBUNAL AS THE SAME IS DIRECTLY RELATABLE TO THE PAGE NO. 88 TO 94 OF THE BUNDLE NO. 5, BUT THE SAME IS ATTRIBUTABLE TO THE INFERENCES AND PROJECTION BASED ON THE STRENGTH OF THE CONTENTS OF SAID PAGE NO. 88 TO 94 OF THE BUNDLE NO. 5 I.E. SECOND GENERATION NEXUS. ACCORDINGLY, THE GROUNDS 1 AND 2 ARE PARTLY ALLOWED. THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECISION OF MUMBAI BENCH OF ITAT IN THE CASE OF HARNISH B SHAH VS. ITO 126 TTJ (MUMBAI) 283 WHEREIN THE TRIBUNAL HELD THAT PENALTY U/S 271(1)(C ) IS NOT LEVIABLE ON THE ESTIMATED INCOME. BASICALLY, T HE PENALTY HAS BEEN SUSTAINED ON THE BASIS OF PEAK ADDITIONS FOR THE REASONS DISCUSSED ABOVE BUT THERE IS NO CATEGORICAL FINDING OF ITAT WITH REGARDS TO EXCE SS STOCK FOUND AT THE RELEVANT POINT OF TIME DURING TH E SURVEY. THE TRIBUNAL HAS SUSTAINED THE ADDITION ON PAGE 12 OF 12 ITA NO. 175, 176, 57 AND 51/PN/2009 KOLHAPUR ICE & COLD STORAGE A.Y. 1999-00 AND 2000-01 THE BASIS THAT 15 DAYS TIME WAS SUFFICIENT TO RETAI N CASH OF THE ASSESSEE FOR PURCHASE OF KEROSENE. IT I S SETTLED LEGAL POSITION THAT THE PENALTY PROCEEDINGS IN QUANTUM ADDITION ARE INDEPENDENT OF EACH OTHER. IN OUR VIEW, THE ADDITION BASED ON ESTIMATED BASIS AS DISCUSSED ABOVE CANNOT BE THE SOUND BASIS FOR LEVYI NG PENALTY. SO, IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE NOT INCLINED TO CONCUR WITH THE FINDING OF THE CIT( A) WHO HAS SUSTAINED THE PENALTY TO THE EXTENT OF ESTIMATED ADDITION. THE SAME IS DIRECTED TO BE DELETED. 11. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED AND THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THE 19 TH NOVEMBER 2010. SD/- SD/- (D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 19 TH NOVEMBER 2010 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)- KOLHAPUR 4. THE CIT- KOLHAPUR 5. THE D.R, A BENCH, PUNE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE