NSP Straw & Paper Products Pvt.Ltd., Bilimora V. The Dy.CIT.,Navsari Circle, Navsari

ITA 1819/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6874 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-03-2011
• Assessment Year: 1995-1996
• Appeal Filed On: 01-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS R K TOPIWALA
• Assessee Lawyers: R N VEPARI
• Keywords: Bogus purchase; Opportunity of being heard; Question of law; Wrong claim
• Section: 131; 145

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI D. K. TYAGI, JM AND D.C.AGRAWAL, AM NSP STRAW & PAPER PRODUCTS P. LTD., PRAFULBHAI JETHABHAI PATEL, SATYAM, TRIVENI PARK, COLLEGE ROAD, BILLIMORA. VS. DY. CIT, NAVSARI CIRCLE, NAVSARI. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI R. N. VEPARI, AR RESPONDENT BY:- MRS. R. K. TOPIWALA, DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THESE ARE THE TWO APPEALS FILED BY THE ASSESSEE FO R ASST. YEARS 1995-96 & 96-97 AGAINST THE ORDERS DATED 26.3.2009 PASSED BY LD. CIT(A) WHEREIN HE HAS CONFIRMED THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF RS.3,31,250/- IN ASST. YEAR 1995-96 AND OF RS.4,63, 330/- IN ASST. YEAR 1996-97. THE GROUNDS RAISED BY THE ASSESSEE IN BOTH THE YEARS ARE SIMILAR. FOR THE SAKE OF CONVENIENCE THE GROUND RAISED IN AS ST. YEAR 1995-96 ARE REPRODUCED AS UNDER :- (1) THE LD. CIT(A)ERRED IN CONFIRMING PENALTY U/S 271(1 )(C) OF THE ACT, WHEN THERE WAS NO CONCEALMENT OF INCOME AND TH E ADDITION WAS BASED ONLY ON ESTIMATED ADDITION TO YIELD. (2) THE APPELLANT SUBMITS THAT THE LD. CIT(A) HAS NOT A T ALL DEALT WITH LARGE NUMBER OF JUDGMENTS HOLDING THAT PENALTY CANNOT BE ITA NOS.1819 & 1820/AHD/2009 ASST. YEARS 1995-96 & 96-97 ITA NOS.1819 & 1820/AHD/2009 ASST. YEARS 1995-96 & 1996-97 2 LEVIED WHERE ESTIMATED ADDITIONS ARE MADE AND PARTI CULARLY THE JUDGMENT OF PUNJAB & HARYANA HIGH COURT IN CASE OF SANGRUR VANASPATI MILLS LTD. 216 CTR 92 WHERE PENALTY WAS D ELETED ON ESTIMATED ADDITION ON ACCOUNT OF YIELD. 2. THE FACTS COMMON TO BOTH THE YEARS ARE THAT ASSE SSEE IS DOING BUSINESS OF MANUFACTURING OF STRAW BOARD AND CRAFT PAPERS. THE ASSESSMENT FOR ASST. YEAR 1995-96 WAS PASSED U/S 14 3(3) ON 31.3.1995 AS AGAINST RETURNED INCOME OF RS.24,75,640/- (THEREAFT ER REVISED TO RS.24,49,340/-) ASSESSMENT WAS COMPLETED ON AN INCO ME OF RS.41,33,751/- MAKING VARIOUS ADDITIONS. 3. ONE OF THE ADDITIONS OF RS.13,469/- RELATED TO T RANSPORTATION CHARGES CLAIMED TO HAVE BEEN PAID TO M/S HUSENBHAI & COMPANY. HOWEVER, THE PARTNER OF THAT FIRM NAMELY MRS. SHAHI DA HUSSEIN GALIYARA STATED IN HER STATEMENT RECORDED ON OATH U/S 131 OF THE ACT THAT THE CONFIRMATION LETTER FILED BY HER WAS NOT SIGNED BY HER AND SHE DOES NOT KNOW ENGLISH AND SHE DENIED TO HAVE EXTENDED ANY TR ANSPORT FACILITIES TO THE ASSESSEE COMPANY. SINCE ALLEGED PARTNER DENIED TO HAVE EXTENDED THE TRANSPORT FACILITY TO THE ASSESSEE, THE AO DENIED T HE CLAIM AND MADE THE ADDITION. 4. ANOTHER ADDITION MADE THIS YEAR WAS WITH RESPECT TO BOGUS PURCHASES AMOUNTING TO RS.7,20,123/-. THE AO HAD FO UND FROM THE RECORD THAT ASSESSEE HAD MADE PURCHASES OF RICE-STRAW FROM MIYAMOHMED AKURI MAYAT AND YUSUF MIYAMOMED MAYAT FOR RS.2,68,071/- A ND RS.4,52,052/- RESPECTIVELY. HE CALLED BOTH THE PARTIES AND EXAMIN ED THEM ON OATH AND FOUND THAT THEY DID NOT SUPPLY ANY RICE-STRAW TO TH E ASSESSEE COMPANY ON 31.3.1995. HE ALSO FOUND THAT SIGNATURES ALLEGEDLY DONE ON LETTERS WERE NOT ACTUALLY DONE BY THESE TWO PERSONS. THE AO ACCO RDINGLY DISALLOWED THE PURCHASES HOLDING THAT THEY WERE MADE TO INFLAT E THE EXPENDITURE ITA NOS.1819 & 1820/AHD/2009 ASST. YEARS 1995-96 & 1996-97 3 RESULTING LOW YIELD FROM 55.43% IN ASST. YEAR 1994- 95 TO 51.42% IN ASST. YEAR 1995-96. IN ASST. YEAR 1996-97 AS AGAINS T RETURNED INCOME OF RS.19,61,340/- ASSESSMENT WAS MADE ON AN INCOME OF RS.57,68,558/-. IN THIS YEAR ALSO THE AO FOUND THAT PURCHASES FROM MIY A MOD AKUJI MAYAT AND YUSUF MIYA MOHD AKUJI MAYAT AMOUNTING TO RS.2,3 8,182/- AND RS.7,68,438/- WERE BOGUS. INITIALLY IT WAS INFORMED TO THE AO THAT PAYMENTS TO THESE PERSONS WERE MADE BY ACCOUNT PAYE E CHEQUES BUT LATER FOUND THAT PAYMENTS WERE MADE BY BEARER CHEQUES AND PAYMENTS WERE WITHDRAWN WITHOUT REACHING TO THESE TWO PERSONS. CO NSIDERING THE EVIDENCES, THE AO DISALLOWED PURCHASE OF RS.10,07,2 44/-. 5. THE MATTER CAME UP BEFORE THE TRIBUNAL FOR THESE TWO ASST. YEARS. THE TRIBUNAL DIRECTED TO ESTIMATE THE INCOME ON ACC OUNT OF LOW YIELD IN PLACE OF MAKING SPECIFIC ADDITION FOR BOGUS PURCHAS ES. IN ASST. YEAR 1995-96 THE TRIBUNAL HAD OBSERVED AS UNDER :- 3.2 HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN PARA -3 OF THE IMPUGNED ORDER OF THE CIT(A) HE HAS CLEARLY STATED THAT THE YIELD OF STRA W HAS COME DOWN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO RECORDED THE STATEMENT ON OATH U/S 131 OF THE TWO VENDORS OF RIC E-STRAW. ONE OF THEM SHRI MIYA MOHMED AKUJI MAYAT STATED THAT HE HAS BEE N SUFFERING FROM DIABETES, BLOOD PRESSURE, PARALYSIS ETC. AND THAT H E IS UNABLE TO SEE ANYTHING BECAUSE OF DAMAGE IN HIS EYES. HE ALSO STA TED THAT THE SIGNATURE ALLEGEDLY SIGNED BY HIM ON THE LETTER DID NOT BELON G TO HIM. HE DID NOT SUPPLY ANY RICE STRAW. SIMILAR DISALLOWANCE HAS BEE N MADE IN ASST. YEAR 1996-97. DURING THE ASST. YEAR 1996-97 THE AO HAD G IVEN LIMITED OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO PRODU CE THESE TWO PERSONS. IT WAS CLAIMED THAT ONE OF THE PERSONS WAS SICK AND OTHER PERSON GONE ABROAD. THE ASSESSEE DID NOT PRODUCE THESE TWO PART IES BEFORE THE AO. IN ASST. YEAR 1996-97 THE AO HAS REJECTED THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS CONTAINED IN SECTION 145 OF THE ACT. LOOKING TO THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND AFTE R CAREFULLY GOING THROUGH THE STATEMENTS OF THESE TWO PERSONS RECORDE D BY THE AO, WE ARE OF THE VIEW THAT INSTEAD OF MAKING AN ADDITION ON A CCOUNT OF BOGUS PURCHASES, THE AO SHOULD HAVE REJECTED THE BOOKS OF ACCOUNT U/S 145 AND ITA NOS.1819 & 1820/AHD/2009 ASST. YEARS 1995-96 & 1996-97 4 ESTIMATED THE INCOME. ADMITTEDLY THE YIELD OF STRAW BOARD HAS COME DOWN FROM 55.43% IN FY 1994-95 TO 51.42% IN FY 1995-96. WE ARE ALSO OF THE VIEW THAT THE YIELD CANNOT BE SAME IN EACH YEAR AND THE POSSIBILITY OF SMALL VARIATION CANNOT BE RULED OUT. LOOKING TO THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE DIRECT THE AO TO E STIMATE THE INCOME ON ACCOUNT OF LOW YIELD BY APPLYING APPROPRIATE RATE O F YIELD KEEPING IN VIEW THE PAST HISTORY OF CASE OR YIELD SHOWN IN OTHER CO MPARABLE CASES. THE AO IS DIRECTED TO REWORK OUT THE ADDITION ACCORDING LY, AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. IN ASST. YEAR 1996-97 IT OBSERVED AS UNDER :- 6.1 HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ADMITTEDLY THE PAR TIES FROM WHOM THE PURCHASES WERE MADE WERE NOT PRODUCED BEFORE THE AO . MOREOVER, THE PAYMENTS TO THESE PARTIES WERE ALSO MADE IN CASH IN VIOLATION OF PROVISIONS OF SECTION 43B. HOWEVER, POSSIBILITIES O F MAKING PURCHASES CANNOT BE RULED OUT. THE YIELD OF STRAW BOARD ARE L OW AS POINTED OUT THE AO IN THE ASSESSMENT ORDER. LOOKING TO THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE SATISFIED THAT TH E BOOKS OF ACCOUNTS WERE RIGHTLY REJECTED BY INVOKING THE PROVISIONS OF SECTION 145(2). HOWEVER, INSTEAD OF MAKING TWO SEPARATE ADDITIONS, THE AO SHOULD HAVE ESTIMATED THE ADDITION ON ACCOUNT OF LOW YIELD. WE ACCORDINGLY DIRECT THE AO TO ESTIMATE THE YIELD ON THE BASIS OF PAST HISTO RY OR YIELD IN COMPARABLE CASES AND REWORK OUT THE ADDITION AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. AS A CONSEQUENCE THEREOF THE AO PASSED FRESH ORDER WHEREIN HE ESTIMATED THE YIELD RESULTING IN AN ADDITION OF RS. 10,02,023/- IN ASST. YEAR 1995-96 AND RS.12,93,153/- IN ASST. YEAR 1996- 97. THE AO ALSO INITIATED PENALTY PROCEEDINGS AGAINST SALES MADE OU TSIDE BOOKS ON ACCOUNT OF LOW YIELD. IN APPEAL ADDITION IN ASST. YEAR 1995 -96 WAS RESTRICTED TO RS.7,20,123/- AS AGAINST RS.10,02,023/- AND IN ASST . YEAR 1996-97 ADDITION WAS RESTRICTED TO RS.10,07,254/- AS AGAINS T RS.12,93,153/-, BOTH THE RESTRICTIONS WERE MADE ON THE GROUND THAT ADDIT IONS AFTER TRIBUNALS ORDER WERE MORE THAN ORIGINALLY MADE. ITA NOS.1819 & 1820/AHD/2009 ASST. YEARS 1995-96 & 1996-97 5 6. IN PENALTY PROCEEDINGS THE AO RELIED ON THE ORDE RS FINALLY MADE BY THE AO AFTER THE TRIBUNALS ORDER, AND LEVIED THE P ENALTY BY OBSERVING AS UNDER :- 10. I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS OF THE ASSESSEE WHICH CANNOT BE ACCEPTABLE FOR THE REASONS THAT THE HONBLE ITAT CONCURRING THE DECISION OF THE LD. CIT(A) ON DISALL OWANCE OF RS.7,20,123/- MADE ON ACCOUNT OF LOW YIELD. THE ASS ESSEE FAILED TO PUT FORTH THE FACTS FOR DECREASE IN YIELD AT THE STAGE OF RE-ASSESSMENT PROCEEDINGS APPELLATE STAGE BEFORE THE CIT(A) AND I TAT TOO. THE AVERAGE YIELD WAS ARRIVED CONSIDERING THE YIELD SHOWN BY TH E ASSESSEE ITSELF IN LAST FIVE ASSESSMENT YEARS CANNOT BE SAID TO BE BASED ON ESTIMATION. 11. CONSIDERING THE ABOVE FACTS, IT IS ESTABLISHED THAT THE ASSESSEE HAS DELIBERATELY CONCEDED ITS INCOME TO THE TUNE OF RS. 7,20,123/- BY UNDERSTANDING THE YIELD. THEREFORE, I HELD THAT THE ASSESSEE HAS COMMITTED DEFAULT U/S 271(1)9C) OF THE ACT. 7. IN ASST. YEAR 1996-97 ALSO THE AO AFTER NARRATIN G THE FINDINGS OF THE TRIBUNAL PASSED SIMILAR ORDER AS ABOVE EXCEPT T HE CHANGE OF FIGURE. 8. LD. CIT(A) CONFIRMED THE PENALTY FOR BOTH THE YE ARS BY PASSING SIMILAR AND SHORT ORDER AS UNDER (FOR ASST. YEAR 19 96-97):- 5.3 I HAVE CONSIDERED THE CONTENTION OF THE APPELL ANT AS WELL AS THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER. THE FACT REMAINS THAT IN THE INSTANT CASE THE ADDITION HAS BEEN MADE ON ACCO UNT OF LOW YIELD BASED ON THE REJECTION OF THE BOOK RESULT AS THE APPELLAN T HAD WHITEWASHED ITS ACCOUNTS AND PROJECTED LOW YIELD. THE APPELLANT COU LD NOT GIVE TANGIBLE REASONS FOR THE SUDDEN FALL IN THE YIELD AND EVEN T HE REASONS GIVEN BY THE APPELLANT WERE NOT ACCEPTABLE TO THE REVENUE. THE F ACT HAS BEEN UNEARTHED BEYOND DOUBT THAT THE APPELLANT HAS SUPPR ESSED YIELD POSITION AND THEREFORE WITH THE DIRECTION OF THE ITAT, THE L OWER AUTHORITIES HAVE DETERMINED THE SUPPRESSION OF YIELD BASED ON THE PA ST RECORD OF YIELD OF THE APPELLANT ITSELF. I AM THEREFORE OF THE CONSIDE RED VIEW THAT IT IS A TYPICAL CASE WHERE CHARGE OF CONCEALMENT HAS BEEN P ROVED BEYOND DOUBT AS THE APPELLANT HAS DELIBERATELY SUPPRESSED THE YI ELD AND THE BOOK RESULT ITA NOS.1819 & 1820/AHD/2009 ASST. YEARS 1995-96 & 1996-97 6 HAS BEEN FOUND TO BE CONCOCTED. THE AMOUNT IN QUEST ION ON ACCOUNT OF SUPPRESSION OF YIELD IS DETERMINED AT RS.10,07,244/ - BASED ON THE APPELLANTS OWN AVERAGE YIELD POSITION OF THE PAST YEARS WHICH CANNOT BE SAID TO HAVE ESTIMATED AS THE SAME HAS BEEN DETERMI NED ON A LOGICAL AND TANGIBLE BASIS. I AM, THEREFORE, INCLINED TO AGREE WITH THE VIEW OF THE AO THAT THE APPELLANT HAS DELIBERATELY CONCEALED ITS I NCOME BY ADOPTING DUBIOUS METHODS AND THAT TOO RESORTING TO SUPPRESSI ON OF THE YIELD POSITION. CONSEQUENTLY, THE PENALTY OF RS.4,63,330/ - LEVIED BY THE AO BY INVOKING THE PROVISIONS OF SECTION 271(1)(C) IS CON FIRMED. THE APPELLANTS GROUND NO.1 IS DISMISSED. IN ASST. YEAR 1995-96 SIMILAR ORDER WAS PASSED BY L D. CIT(A) EXCEPT THE CHANGE OF FIGURE. 9. AGAINST THESE TWO ORDERS OF LD. CIT(A) LD. AR FO R THE ASSESSEE SUBMITTED THAT NO PENALTY CAN BE LEVIED MERELY FOR ESTIMATING THE YIELD. HE REFERRED TO THE DECISION OF HON. PUNJAB & HARYAN A HIGH COURT IN CIT VS. SANGRUR VANASPATI MILLS LTD. 216 CTR92 AND OF T HE SAME COURT IN THE CASE OF CIT VS. DILLON RICE MILLS 256 ITR 447 (P & H). 10. AGAINST THIS, THE LD. DR SUBMITTED THAT IT IS N OT A CASE WHERE PENALTY IS LEVIED MERELY ON ESTIMATE BASIS BUT CONC EALMENT HAS BEEN FOUND BY THE AO IN THE ORIGINAL ASSESSMENT ORDERS P ASSED BY HIM WHEREIN BOGUS CLAIM OF TRANSPORT EXPENSES AND BOGUS CLAIM O F PURCHASES HAVE BEEN FOUND. THE TRIBUNAL HAS NOT DISTURBED THIS FIN DING OF THE AO ABOUT BOGUS PURCHASES BUT HAS ASKED TO ESTIMATE THE ADDIT ION ON THE BASIS OF LOW YIELD. ONCE POSITIVE CONCEALMENT IS FOUND BY THE AO IN THE FORM OF BOGUS PURCHASES THEN IT DOES NOT REMAIN A CASE OF MERE ES TIMATE BUT A CASE OF FINDING ABOUT FURNISHING OF INACCURATE PARTICULARS IN THE FORM OF BOGUS PURCHASES AS FINALLY NOT DISTURBED BY THE TRIBUNAL. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR LEVY OF PENALTY. THE ITA NOS.1819 & 1820/AHD/2009 ASST. YEARS 1995-96 & 1996-97 7 REASONS ARE THAT THE MATERIAL ON THE BASIS OF WHICH AO DERIVES SATISFACTION FOR LEVYING PENALTY HAS TO BE FOUND FROM THE PENALT Y ORDER ONLY. IF FOR THE PURPOSE OF LEVY OF PENALTY AO IGNORES MATERIAL AVAI LABLE ON RECORD AND LEVIES THE PENALTY ON SOME OTHER GROUND THEN RATION AL OF SUCH LEVY OF PENALTY HAS TO BE EXAMINED ON THE BASIS OF FACTS RE LIED ON BY THE AO. SINCE THE AO HAS RELIED FOR LEVY OF PENALTY ONLY ON LOW YIELD THEN THE TRIBUNAL CAN EXAMINE WHETHER PENALTY CAN BE SUSTAIN ED ON THE ADDITION MADE ON THE BASIS OF LOW YIELD. SECTION 271(1)(C) PROVIDES FOR LEVY OF PENALTY ON THE BASIS OF SATISFACTION OF THE AO. THE SECTION READS AS UNDER: SEC. 271(1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (APP EALS) [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDE R THIS ACT, IS SATISFIED THAT ANY PERSON (A). (B). (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR (D) HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY EXPLANATION -1 WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COM PUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT,- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER(APPEAL S) OR THE COMMISSIONER TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND [FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT A LL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM], THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING TH E TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. THEREFORE, THE LIMIT WITHIN WHICH THE JUSTIFICATION FOR LEVY OF PENALTY HAS TO BE EXAMINED IS AS TO WHAT AO HAS CONSIDERED IN H IS PENALTY ORDER. ONLY THOSE FACTS ON THE BASIS OF WHICH HE HAS ARRIV ED AT HIS SATISFACTION, IN THE PENALTY ORDER WOULD BE RELEVANT FOR DECIDING WH ETHER PENALTY CAN BE ITA NOS.1819 & 1820/AHD/2009 ASST. YEARS 1995-96 & 1996-97 8 LEVIED OR NOT. EVEN THE LD. CIT(A) HAS NOT CONSIDER ED IT PROPER TO INCLUDE OTHER FACTS WHICH WERE AVAILABLE IN THE EARLIER ASS ESSMENT ORDER. IN OUR CONSIDERED VIEW WE ARE REQUIRED TO DECIDE WHETHER T HE AO COULD HAVE ARRIVED AT A SATISFACTION FOR LEVY OF PENALTY ON TH E BASIS OF THE FACTS NARRATED IN THE PENALTY ORDER. FOR SUSTAINING PENAL TY WE CANNOT INCLUDE OTHER MATERIAL IF THEY HAVE OTHERWISE NOT BEEN CONS IDERED FOR ARRIVING AT THE SATISFACTION BY THE AO. IT IS THE SATISFACTION OF THE AO FOR LEVY OF PENALTY FOR CONCEALMENT AS THE INITIATION THEREOF H AS BEEN DONE BY HIM IN THE ASSESSMENT ORDER. IF WE SUSTAIN PENALTY ON OTHE R MATERIAL, NOT CONSIDERED BY THE AO, THEN IT WOULD MEAN A NEW CASE AND A NEW SATISFACTION ON DIFFERENT SET OF FACTS, WHICH WE CA NNOT DO AS THE ORDER IN WHICH PENALTY IS INITIATED IS NOT AUTHORED BY US. W E CAN ONLY EXAMINE WHETHER THE SATISFACTION OF THE AO ON THE FACTS NAR RATED BY HIM IN THE PENALTY ORDER IS SUSTAINABLE IN LAW. CONSIDERING OT HER FACTS WOULD BE EQUAL TO A FRESH SATISFACTION, WHICH IS NOT PERMISS IBLE. THEREFORE, THE FACTS RELATING TO BOGUS PURCHASES, CANNOT BE CONSIDERED F OR DECIDING THE LEVY OF PENALTY AS ARGUED BY THE LD. DR. HIS ARGUMENTS IN T HIS REGARD ARE REJECTED. 12. IT IS NOW ACCEPTED POSITION OF LAW THAT PENALTY CANNOT BE LEVIED MERELY ON THE BASIS OF ESTIMATED ADDITION. THE LD. AR HAS RIGHTLY RELIED ON THE TWO JUDGMENTS OF HON. PUNJAB & HARYANA HIGH COURT WHERE IN THE CASE OF SANGRUR VANASPATI MILLS LTD. (SUPRA) HAS OB SERVED AS UNDER :- WHILE COMPLETING THE ASSESSMENT, THE AO EXTRAPOLAT ED THE AVERAGE SALE PRICE IN FOUR INVOICES NOT AVAILABLE IN ORIGINAL TO 53 INVOICES AND MADE ADDITION OF RS.66,16,865/- TOWARDS UNACCOUNTED SALE S IN APPEAL, THE CIT(A) APPLIED YIELD OF 93.13 PER CENT SHOWN BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR AS AGAINST 92.57 PER CEN T SHOWN BY THE ASSESSEE IN THE RELEVANT YEAR AND UPHELD ADDITION O F RS.15,50,000/- - ITA NOS.1819 & 1820/AHD/2009 ASST. YEARS 1995-96 & 1996-97 9 ADDITION SUSTAINED BY TRIBUNAL BY TAKING INTO CONS IDERATION THE YIELD OF PRECEDING YEAR VIS--VIS THE YIELD OF THE YEAR UNDE R CONSIDERATION PENALTY U/S 271(1)(C) LEVIED BY AO DELETED BY THE T RIBUNAL HOLDING THAT THERE WAS NO CONCLUSIVE EVIDENCE THAT THE ASSESSEE HAS, IN FACT, CONCEALED INCOME EVEN THOUGH THE ADDITION HAS BEEN SUSTAINED. CONCLUSION-AO HAVING MADE ADDITION TOWARDS ESTIMATE D UNACCOUNTED SALES AND SAME HAVING BEEN UPHELD BY CIT(A) AND TRI BUNAL SIMPLY BY APPLYING THE YIELD OF THE PRECEDING YEAR TO THE YEA R UNDER CONSIDERATION, TRIBUNAL WAS JUSTIFIED IN DELETING THE PENALTY UNDE R S.271(1)(C) HOLDING THAT THERE WAS NO CONCLUSIVE EVIDENCE THAT THE ASSE SSEE HAS, IN FACT, CONCEALED INCOME, NO SUBSTANTIAL QUESTION OF LAW AR ISES. IN THE CASE OF CIT VS. DHILLON RICE MILLS (SUPRA) T HE HON. COURT HELD AS UNDER :- THE ASSESSEE, WHICH WAS RUNNING A RICE SHELLER, FI LED A RETURN DECLARING A NET LOSS OF RS.26,566/-. THE AO MADE AN ADDITION OF RS.2,85,253/- TO INCOME AND IMPOSED PENALTY OF RS.90,000/- UNDER SEC TION 271(1)(C) OF THE INCOME-TAX ACT, 1961. THE CIT(A) DELETED THE ADDITI ON TO THE TUNE OF RS.81,254/-. ON APPEAL, THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A) AND DELETED THE PENALTY ON THE GROUND THAT THE AO H AD MADE THE ADDITIONS ON THE BASIS OF AN ESTIMATE OF THE YIELD OF PHAK AN D CHHILKA AND AN ESTIMATE OF THE RICE, AND THAT THE ESTIMATE WOULD N OT IPSO FACTO LEAD TO PENALTY. ON AN APPLICATION TO DIRECT REFERENCE. HELD, THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL RIGHTLY HELD THAT THE DEPARTMENT FAILED TO PROVE TH AT THE ASSESSEE HAD CONCEALED ITS INCOME. THEREFORE, THE CANCELLATION O F PENALTY WAS JUSTIFIED. NO QUESTION OF LAW AROSE. RESPECTFULLY FOLLOWING ABOVE TWO DECISIONS WE CANCE L THE PENALTY. AS A RESULT, APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ITA NOS.1819 & 1820/AHD/2009 ASST. YEARS 1995-96 & 1996-97 10 13. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 8/4/11. SD/- SD/- (D. K. TYAGI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 8/4/11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 29/3/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 31/3/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..