Sulekhram Steels Pvt. Ltd., Ahmedabad V. The ACIT(OSD)-Range-8, Ahmedabad

ITA 198/AHD/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6608 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 11-05-2011
• Assessment Year: 1991-1992
• Appeal Filed On: 11-01-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHAVNESH KULSHRESTHA
• Assessee Lawyers: JAGDISH M SHAH
• Keywords: Gross profit estimation; Rejection of books of accounts; Business income; Opportunity of being heard
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. K. GARODIA , AM) ITA NO.198/AHD/2007 A. Y.: 1991-92 SULEKHRAM STEELS PVT. LTD., C/O. VINOD & NARENDRA (C. A.), 101/102, SHAILY, 09. NEHRU PARK SOCIETY, NR. OLD GUJARAT HIGH COURT, NAVRANGPURA, AHMEDABAD -09 VS THE A. C. I. T., CIRCLE-8, AHMEDABAD PA NO. ASDCS 0856 L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI JAGDISH M. SHAH, AR RESPONDENT BY SHRI BHAVNESH KULSHRESTHA, SR. DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XI V, AHMEDABAD DATED 10-11-2006 FOR ASSESSMENT YEAR 1991-92, CHALL ENGING LEVY OF PENALTY U/S 271 (1) ( C ) OF THE IT ACT. 2. THE ASSESSEE FILED CONCISE GROUNDS OF APPEAL AND RAISED TWO GROUNDS THAT ORDER PASSED BY THE AO IS INVALID AND BAD IN LAW AND THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE PEN ALTY ON RS.20,000/- BEING DIFFERENCE IN STOCK AND OF RS.19,77,600/- BEI NG ESTIMATE OF GROSS PROFIT ADDITION. ITA NO.198/AHD/2007 SULEKHRAM STEELS PVT. LTD. VS ACIT, CIRCLE-8, AHMED ABAD 2 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD AND POINTED BY THE PAR TIES. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT PENALTY WAS IMPOSED IN RESPECT OF ADDITION ON ACCOUNT OF DISCREPANCY IN ST OCK TO THE TUNE OF RS.4,70,000/- AS WELL AS GP ADDITION OF RS.19,77,66 0/-. THE FACTS OF THE CASE ARE THAT THERE WAS A SEARCH IN THE ASSESSE ES PREMISES ON 18-7-1990 IN WHICH DISCREPANCY WAS FOUND OUT IN THE VALUE OF SOCK OF RAW MATERIAL AND FINISHED GOODS AND SCRAP AS WELL A S CERTAIN PAPERS WERE SEIZED. IN THE ASSESSMENT, THE AO HAS MADE THE ADDITION ON ACCOUNT OF DISCREPANCY IN STOCK AMOUNTING TO RS.17, 37,851/- AND GP ADDITION OF RS.73,64,212/- AFTER DETAILED DISCUSSIO N IN THE ASSESSMENT ORDER. WHEN THE MATTER WENT IN APPEAL, THE LEARNED CIT(A) DELETED THE ADDITION AND ON FURTHER APPEAL, THE ITAT AHMEDA BAD BENCH IN ITA NO.676/AHD/1996 VIDE ORDER DATED 31-1-2005 ALLO WED THE DEPARTMENTAL APPEAL PARTLY AND ADDITION ON ACCOUNT OF STOCK DISCREPANCY WAS CONFIRMED TO THE EXTENT OF RS.4,70, 000/- AND THE ADDITION ON ACCOUNT OF LOW GP WAS CONFIRMED TO THE EXTENT OF RS.19,77,660/- ON WHICH THE AO LEVIED PENALTY. IN T HE BACKGROUND OF THESE FACTS, NOW WE DECIDE BOTH THE POINTS RAISED I N THE PRESENT APPEAL AS UNDER. 5. PPOINT NO.1 THE ASSESSEE IN ITS CONCISE GROUNDS OF APPEAL CHAL LENGED THE ORDER OF THE LEARNED CIT(A) IN NOT ACCEPTING THE CO NTENTION OF THE ASSESSEE THAT THE ORDER PASSED BY THE AO IS INVALID AND BAD IN LAW. ITA NO.198/AHD/2007 SULEKHRAM STEELS PVT. LTD. VS ACIT, CIRCLE-8, AHMED ABAD 3 THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A) TH AT THE ORDER IS INVALID AND BAD IN LAW AS NO SHOW-CAUSE NOTICE U/S 271 (1) ( C ) OF THE IT ACT WAS ISSUED AND ALSO SUBMITTED THAT PENALTY W AS NOT LEVIED WITHIN TIME LIMIT PRESCRIBED, THEREFORE, PENALTY OR DER IS BARRED BY TIME. THE LEARNED CIT(A) HOWEVER, NOTED THAT PENALTY WAS LEVIED BY THE AO AFTER ISSUING SHOW-CAUSE NOTICE TO THE ASSESSEE WHI CH FACT WAS MENTIONED IN THE ASSESSMENT ORDER. EVEN, THE ASSESS EE HAS TAKEN THIS AS ONE OF THE GROUNDS OF APPEAL FILED BEFORE T HE LEARNED CIT(A) AGAINST THE ORDER WHICH SHOWS THAT PENALTY WAS INIT IATED AND PENALTY NOTICES WERE DULY ISSUED. THE LEARNED CIT(A) ALSO N OTED THAT THE MATTER WAS PENDING IN THE APPELLATE PROCEEDINGS, HE NCE PENALTY PROCEEDINGS WERE RIGHTLY KEPT IN ABEYANCE. THE FINA L ORDER OF THE TRIBUNAL DATED 31-1-2005 WAS RECEIVED BY THE DEPART MENT ON 22-7-2005 AND THE PENALTY ORDER HAVE BEEN PASSED ON 20-12-2005 I.E. WITHIN SIX MONTHS FROM THE RECEIPT OF THE FINA L APPELLATE ORDER; THEREFORE, PENALTY ORDER IS PASSED WITHIN THE PERIO D OF LIMITATION AND IS VALID ORDER. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT NO NOTICE FOR LEVY OF PENALTY HAS BEEN ISSUED AND SERVED UPON THE ASSESSEE. HE HAS REFERRED TO PB-15 REPLY DATED 29-8-2005 FILE D BEFORE THE AO TO SHOW THAT NO NOTICE FOR THE ASSESSMENT YEAR UNDE R APPEAL WAS ISSUED TO THE ASSESSEE. HE HAS ALSO REFERRED TO PB- 16 REPLY OF THE AO DATED 14-11-2005 IN WHICH THE AO EXPLAINED THAT NOTICE FOR PENALTY WAS ISSUED ALONG WITH DEMAND NOTICE AND SER VED UPON THE ASSESSEE. HE HAS ALSO REFERRED TO PB-17 LETTER OF T HE ASSESSEE DATED 15-11-2005 WHEREBY THE ASSESSEE REQUESTED FOR COPY OF THE ITA NO.198/AHD/2007 SULEKHRAM STEELS PVT. LTD. VS ACIT, CIRCLE-8, AHMED ABAD 4 ACKNOWLEDGMENT OF RECEIPT. HE HAS, THEREFORE, SUBMI TTED THAT PENALTY ORDER PASSED WITHOUT ISSUING AND SERVING THE SHOW-C AUSE NOTICE IS BAD IN LAW AND PENALTY ORDER IS LIABLE TO BE QUASHE D. 7. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT NOTICE WAS SER VED UPON THE ASSESSEE BEFORE LEVYING THE PENALTY WHICH IS ALSO N OTED IN THE APPELLATE ORDER AS WELL AS IN THE PENALTY ORDER; TH EREFORE, CONTENTION OF THE ASSESSEE HAS NO MERIT AND BE REJECTED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE AO WHILE FINALIZING THE ASSESSMENT MADE ABOVE ADDITIONS WHICH WERE LATER ON DELETED BY THE LEARNED CIT(A) AND THE MATTER WENT IN APPEAL BEFORE THE TRIBUNAL IN ITA NO.676/AHD/1996 AND THE TRIBUNAL VIDE ORDER DAT ED 31-1-2005 ALLOWED THE APPEAL OF THE DEPARTMENT PARTLY BY REST RICTING THE ADDITION ON BOTH THE ISSUES IN PART AS NOTED ABOVE. THE LEAR NED CIT(A), THEREFORE, RIGHTLY NOTED IN THE IMPUGNED ORDER THAT PENALTY PROCEEDINGS WERE INITIATED BY SERVING THE NOTICE U PON THE ASSESSEE AND THEREAFTER THE MATTER WAS KEPT IN ABEYANCE BECA USE APPEAL WAS PENDING BEFORE APPELLATE AUTHORITY. ACCORDING TO S ECTION 274 (1) OF THE IT ACT, NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL BE MADE UNLESS THE ASSESSEE HAS BEEN HEARD OR HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. THERE IS NO OTHER REQUIREMENT PROVIDED UNDER THE LAW. THE PENALTY ORDER DATED 20- 12-2005 SHOWS THAT AFTER FINALIZING THE ASSESSMENT, THE AO HAS GI VEN FRESH OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE L EVYING PENALTY AND ITA NO.198/AHD/2007 SULEKHRAM STEELS PVT. LTD. VS ACIT, CIRCLE-8, AHMED ABAD 5 IN THAT CONNECTION THE ASSESSEE HAS FILED REPLY DAT ED 29-8-2005 (PB- 15) IN WHICH THE ASSESSEE STATED THAT NO NOTICE U/ S 271 (1) ( C ) OF THE IT ACT HAS BEEN ISSUED. THIS FACT STATED BY THE ASSESSEE IN ITS REPLY BEFORE THE AO AND INCORPORATED IN THE PENALTY ORDER WOULD SHOW THAT THE ASSESSEE HAD A NOTICE OF PENALTY PROCEEDIN GS U/S 271 (1) (C) OF THE IT ACT BEFORE THE AO AND SUCH REPLY WAS FILE D IN CONNECTION WITH THE LETTER OF THE AO DATED 12-8-2005 (PB-14) W HEREBY OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO EXPLAIN WH Y PENALTY SHOULD BE IMPOSED. ONCE THE ASSESSEE APPEARED BEFORE THE A O AT THE PENALTY STAGE IN RESPONSE TO THE NOTICE OF THE AO F OR LEVY OF PENALTY, THE ASSESSEE BECAME AWARE OF THE INITIATION OF THE PENALTY PROCEEDINGS AGAINST IT AND WOULD AMOUNT TO NOTICE U PON THE ASSESSEE OF FINALIZATION OF THE PENALTY PROCEEDINGS . FURTHER, ACCORDING TO SECTION 274(1) OF THE IT ACT ONLY REQU IREMENT BEFORE LEVY OF PENALTY UNDER THAT CHAPTER SHALL BE THAT THE ASS ESSEE HAS BEEN HEARD OR HAS BEEN GIVEN REASONABLE OPPORTUNITY OF B EING HEARD BEFORE IMPOSING THE PENALTY. THEREFORE, PROVISIONS OF SECTION 274(1) OF THE IT ACT HAVE BEEN COMPLIED WITH IN THE MATTER . THESE FACTS WOULD SHOW THAT THE ASSESSEE HAS RAISED FRIVOLOUS O BJECTIONS BEFORE THE AUTHORITIES BELOW JUST TO PROLONG THE LITIGATIO N IN THE MATTER. THE LEARNED CIT(A), THEREFORE, RIGHTLY NOTED IN THE APP ELLATE ORDER THAT PENALTY ORDER HAS BEEN PASSED WELL WITHIN THE TIME AS PRESCRIBED UNDER THE LAW BY SERVING NOTICE FOR LEVY OF PENALTY IN THE MATTER. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE SAME IS REJECTED. THI S GROUND IS DECIDED AGAINST THE ASSESSEE. ITA NO.198/AHD/2007 SULEKHRAM STEELS PVT. LTD. VS ACIT, CIRCLE-8, AHMED ABAD 6 9. POINT NO.2 THE ASSESSEE CHALLENGED THE PENALTY ON RS.20,000/- BEING THE STOCK DIFFERENCE AND ON RS.19,77,600/- BEING ESTIMA TE OF GROSS PROFIT ADDITION. IT WAS CONTENDED BEFORE THE LEARNED CIT(A ) THAT THE TRIBUNAL HAS SPECIFICALLY DECIDED IN THE QUANTUM AP PEAL THAT THE ASSESSEE HAS MADE A STATEMENT U/S 132 (4) OF THE IT ACT AT THE TIME OF SEARCH DISCLOSING DISCREPANCY OF STOCK TO THE EX TENT OF RS.4,50,000/-, HENCE, AS PER EXPLANATION 5 TO SECTI ON 271 (1) (C) OF THE IT ACT PENALTY IS NOT LEVIABLE ON THE DISCREPAN CY OF RS.4,50,000/-. THE LEARNED CIT(A) ACCEPTED THE CONTENTION OF THE A SSESSEE BECAUSE IT HAS SURRENDERED AN AMOUNT OF RS.4,50,000/- AT TH E TIME OF SEARCH IN ITS STATEMENT U/S 132 (4) OF THE IT ACT AND PENALTY IS NOT LEVIABLE UNDER EXPLANATION 5 TO SECTION 271 (1) ( C ) OF THE IT ACT AS HELD BY THE TRIBUNAL IN ITS ORDER DATED 31-1-2005. THE LEAR NED CIT(A) HOWEVER, NOTED THAT THE ASSESSEE IN ITS STATEMENT U /S 132 (4) OF THE IT ACT HAS MADE SURRENDER OF RS.4,50,000/- ONLY, W HEREAS FINAL ADDITION DETERMINED ON THIS ISSUE WAS RS.4,70,000/- BY THE TRIBUNAL., THEREFORE, PENALTY IS LEVIABLE ON THE BALANCE AMOUN T OF RS.20,000/-. THE LEARNED CIT(A) TO THAT EXTENT CONFIRMED THE PEN ALTY. THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US DID NOT CHALLENG E THE ABOVE FINDINGS OF THE LEARNED CIT(A) AND NO ARGUMENTS HAV E BEEN ADVANCED. IT IS, THEREFORE, CLEAR THAT THE ASSESSEE DID NOT CHALLENGED THE LEVY OF PENALTY ON THE BALANCE ADDITION OF RS.2 0,000/- WITH REGARD TO DISCREPANCY IN THE STOCK. IT IS NOT BROUGHT TO O UR NOTICE IF THE DEPARTMENT HAS PREFERRED ANY APPEAL CHALLENGING CAN CELLATION OF THE PENALTY ON THE AMOUNT OF RS.4,50,000/- WHICH IS ALS O NOT POSSIBLE IN ITA NO.198/AHD/2007 SULEKHRAM STEELS PVT. LTD. VS ACIT, CIRCLE-8, AHMED ABAD 7 VIEW OF THE FINDINGS GIVEN BY THE TRIBUNAL IN QUANT UM APPEAL AS IS NOTED BY THE LEARNED CIT(A) IN PARA 15 OF THE TRIBU NAL ORDER (PB-33 AND 34). HOWEVER, WITH REGARD TO THE AMOUNT OF RS.2 0,000/- ADDITION, IT IS CLEAR THAT SUCH ADDITION WAS MADE ON ACCOUNT OF DIFFERENCE IN RAW MATERIAL AND FINISHED GOODS WHICH WAS FOUND DURING THE COURSE OF SEARCH. SUCH FACTS CAME TO THE NOTICE OF THE REVENU E DEPARTMENT AT THE TIME OF SEARCH ITSELF AND THE ASSESSEE ADMITTED DISCREPANCY IN THE STOCK. THEREFORE, IT WAS A FIT CASE FOR HOLDING THA T THE ASSESSEE CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME. IN THE ABSENCE OF ANY CHALLENGE TO THE FIND INGS OF THE LEARNED CIT(A), WE DO NOT FIND ANY JUSTIFICATION TO INTERFE RE WITH THE ORDER OF THE LEARNED CIT(A) IN CONFIRMING THE PENALTY ON THE BALANCE AMOUNT OF ADDITION OF RS.20,000/-. THE ORDER OF THE LEARNE D CIT(A) TO THAT EXTENT IS CONFIRMED AND APPEAL OF THE ASSESSEE TO T HAT EXTENT IS DISMISSED. 10. WITH REGARD TO PENALTY LEVIED ON THE GP ADDITIO N, THE ADDITION HAS BEEN MADE ON THE BASIS OF VARIOUS EVIDENCES FOU ND AT THE TIME OF SEARCH AS HAS BEEN COLLECTED DURING THE COURSE OF A SSESSMENT PROCEEDINGS AND REJECTED THE BOOKS OF ACCOUNTS AND ADDITION HAS BEEN CONFIRMED BY THE TRIBUNAL TO THE EXTENT OF RS. 19,77,660/-. THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A) THAT N O PENALTY CAN BE LEVIED ON THE GP ADDITION WHICH WAS NOT ACCEPTED BY THE LEARNED CIT(A) AND DISMISSED THE APPEAL OF THE ASSESSEE ON THAT MATTER ALSO. 11. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE AUTHORITIES BELOW AND RE FERRED TO THE ITA NO.198/AHD/2007 SULEKHRAM STEELS PVT. LTD. VS ACIT, CIRCLE-8, AHMED ABAD 8 ORDER OF THE TRIBUNAL ON QUANTUM (PB -18) DATED 31- 1-2005 AND SUBMITTED THAT THE TRIBUNAL HAS CONFIRMED THE ESTIM ATED ADDITION ON ACCOUNT OF LOW GP RATE, THEREFORE, PENALTY SHOULD N OT BE IMPOSED ON SUCH A MATTER. ON THE OTHER HAND, THE LEARNED DR RE LIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIAL AVAILABLE ON RECORD. THE ASSESSEE COMPANY IS ENGAGE D IN THE BUSINESS OF MANUFACTURING ACTIVITY OF CTD BARS, ANG LES, ROUNDS MS FLATS ETC. AND ALSO RECEIVING JOB CHARGES FROM THE ASSOCIATE CONCERNS. DURING THE COURSE OF SEARCH CONDUCTED IN THE BUSINE SS PREMISES OF THE ASSESSEE ON 18-7-1990 ADDITION WAS MADE ON ACCO UNT OF GP PERTAINING TO THE PAPERS SEIZED DURING THE COURSE O F SEARCH. THE AO WHILE FINALIZING THE ASSESSMENT MADE ADDITION OF RS .73,64,212/- ON ACCOUNT OF GP ADDITION, BEING THE GP LOW. THE AO DI SCUSSED THE REASONS IN DETAIL AND BRIEFLY THE SAME ARE THAT THO UGH THE STOCK REGISTER HAS BEEN MAINTAINED BUT IT WAS FOUND TO HA VE BEEN MAINTAINED AT THE INSTANCE OF THE MD. FURTHER, NO D ETAILS FOR DAY TO DAY CONSUMPTION, PRODUCTION, BURNING LOSS, SHORTAGE , WASTAGE ETC. HAVE BEEN FURNISHED. AS PER THOSE PAPERS SEIZED IN THE SEARCH ANNEXURE A-1 AND A-5, THE ASSESSEE WAS FOUND TO HAV E OBTAINED THUMB IMPRESSIONS/SIGNATURES FROM THE LABOURERS / C ONTRACTORS ON BLANK PAPERS IN ORDER TO MANIPULATE AND INFLATE THE EXPENSES. NO REASONS HAVE BEEN GIVEN FOR LOW GP RATE AND BURNING LOSS IS EXCESSIVE. THE AO ACCORDINGLY REJECTED THE BOOK RES ULT AND APPLIED HIGHER GP RATE OF 6% IN ORDER TO MAKE THE ADDITION. THE LEARNED CIT(A) DELETED THE ADDITION AND WHEN THE MATTER WEN T BEFORE THE ITA NO.198/AHD/2007 SULEKHRAM STEELS PVT. LTD. VS ACIT, CIRCLE-8, AHMED ABAD 9 TRIBUNAL, EACH GROUND HAS BEEN CONSIDERED SEPARATE LY BY THE TRIBUNAL. THE ASSESSEE EXPLAINED THAT BURNING LOSS WAS REASONABLE AS COMPARED TO EARLIER YEARS. THE ASSESSEE FURNISHE D TECHNICAL REPORT ON THE SAME WHICH WAS ACCEPTED BY THE TRIBUN AL AND THE REASONS FOR EXCESSIVE BURNING LOSS WERE NOT CONSIDE RED ADVERSE AGAINST THE ASSESSEE. ON THE FURTHER REASON OF NON- FURNISHING DAY TO DAY CONSUMPTION AND PRODUCTION RESULTS ETC., THE TR IBUNAL ACCEPTED THE CONTENTION OF THE ASSESSEE ON THE BASIS OF THE PAST HISTORY OF THE ASSESSEE AND CONSIDERED THE SUBSTANTIAL DECLINE IN THE JOB WORK RECEIPTS AS REASONS FOR DECLINE IN GP. OTHER COMPAR ATIVE FIGURES WERE ALSO CONSIDERED FOR LOW GP AND THE BLANK VOUCHERS S INGED BY THE LABOURERS / CONTRACTORS FOUND DURING THE COURSE OF SEARCH WAS ALSO NOT CONSIDERED GOOD REASON FOR REJECTION OF THE BOO K RESULT. THE TRIBUNAL ULTIMATELY CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES DIRECTED THE AO TO TAKE GP RATE OF 3. 5% AND RESTRICTED THE TRADING ADDITION ACCORDINGLY. THE FINDINGS OF T HE TRIBUNAL THUS WOULD SHOW THAT SUBSTANTIAL REASONS NOTED BY THE AO FOR REJECTION OF THE BOOK RESULT HAS NOT BEEN CONSIDERED ADVERSE AGA INST THE ASSESSEE AND THE EXPLANATION OF THE ASSESSEE HAS BE EN ACCEPTED WITH REGARD TO HIGHER BURNING LOSS AND THE LOOSE PA PER FOUND DURING THE COURSE OF SEARCH. THESE WERE THE MAIN REASONS F OR REJECTING THE BOOK RESULTS OF THE ASSESSEE ON WHICH EXPLANATION O F THE ASSESSEE WAS FOUND TO BE SATISFACTORY. THE INCREASE IN THE E STIMATED TURNOVER IS VERY MARGINAL BECAUSE THE ASSESSEE HAS SHOWN TOT AL TURNOVER OF RS.21.54 CRORES. THE ASSESSEE HAS DISCLOSED THE GP OF 2.58% AGAINST WHICH THE ULTIMATE ADDITION ON ACCOUNT OF G P ADDITION IS MADE BY ENHANCING THE GP RATE BY MARGINALLY TO 3.5%. WE, THEREFORE, ITA NO.198/AHD/2007 SULEKHRAM STEELS PVT. LTD. VS ACIT, CIRCLE-8, AHMED ABAD 10 ACCEPT THE CONTENTION OF THE LEARNED COUNSEL FOR TH E ASSESSEE THAT IT IS A CASE OF MERE ESTIMATION OF BUSINESS INCOME. TH E AO MADE EXCESSIVE ADDITION ON ACCOUNT OF GP ADDITION WHICH WAS DELETED BY THE LEARNED CIT(A) IN ENTIRETY AND THE TRIBUNAL CON FIRMED PART OF THE GP ADDITION. THEREFORE, IT IS A CASE WHERE AO WAS N OT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE BUT THE LEARNED CIT (A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND THE TRIBUNAL PARTLY SUSTAINED THE ADDITION. THEREFORE, IT IS A CLEAR CASE OF DIFFEREN CE OF OPINION IN ACCEPTING OR PARTLY REJECTING THE EXPLANATION OF TH E ASSESSEE WITH REGARD TO BOOK RESULTS. IT IS A SIMPLE CASE OF ESTI MATE OF BUSINESS INCOME ON WHICH NO PENALTY SHOULD BE LEVIED. WE REL Y UPON THE DECISIONS OF THE HONBLE PUNJAB & HARYANA HIGH COUR T IN THE CASE OF CIT VS DHILLION RICE MILLS 256 ITR 447 AND HARIGOPA L SINGH VS CIT 258 ITR 85 IN WHICH IT WAS HELD THAT NO PENALTY FOR CONCEALMENT LEVIABLE WHERE INCOME ASSESSED IS A MATTER OF ESTIM ATE. WE ALSO RELY UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS RAVAIL SINGH AND CO.(25 4 ITR 191) IN WHICH IT WAS HELD THAT ADDITION MADE ON THE BASIS OF ESTIMATE AND NOT ON CONCRETE EVIDENCE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, THEREFORE, NO PENALTY IS LEVIABLE. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE, WE ARE OF THE VIEW THAT SUBSTANTIAL REASONS GIVEN BY THE AO FOR REJECTING T HE BOOK RESULT DID NOT FIND FAVOUR FROM LEARNED CIT(A) AS WELL AS THE TRIBUNAL AND ULTIMATELY INCOME IS ESTIMATED. THE EVIDENCES FOUND DURING THE COURSE OF SEARCH WERE NOT FOUND CONNECTED WITH CONC EALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. THEREFORE, MERE REJECTION OF TRADING RESULT WOULD NOT AMOUNT T O CONCEALMENT OF ITA NO.198/AHD/2007 SULEKHRAM STEELS PVT. LTD. VS ACIT, CIRCLE-8, AHMED ABAD 11 INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION WITH THE A UTHORITIES BELOW TO LEVY PENALTY ON THE GP ADDITION OF RS.19,77,660/-. TO THAT EXTENT, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND C ANCEL THE PENALTY. PART OF THIS GROUND OF APPEAL OF THE ASSESSEE IS AL LOWED. 13. NO OTHER POINT IS ARGUED OR PRESSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 13-05-2011 SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 13-05-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD