RAVI HALDIA, Jaipur V. ACIT, Jaipur

ITA 211/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2064 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL
• Assessee Lawyers: M L BORAD
• Keywords: Bogus purchase; Rejection of books of accounts
• Section: 143(3); 153A; 12; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 211/JP/17 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 RAVI HALDIA PROPRIETOR M/S R.H. EXPORTS, R/O 1 ST & 2 ND FLOOR, CORNER OF THATHENRO KA RASTA, CHAURA RASTA, JAIPUR-302003. CUKE VS. THE A CIT, CIRCLE- 1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AACPH3653A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 210/JP/17 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2004-05 SHRI DINESH HALDIA PROPRIETOR M/S D.H. EXPORTS, R/O 1 ST & 2 ND FLOOR, CORNER OF THATHENRO KA RASTA, CHAURA RASTA, JAIPUR-302003. CUKE VS. THE ACIT, CIRCLE- 1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AAKPH9237Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 217/JP/17 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 SHRI DI NESH HALDIA PROPRIETOR M/S D.H. EXPORTS, R/O 1 ST & 2 ND FLOOR, CORNER OF THATHENRO KA RASTA, CHAURA RASTA, JAIPUR-302003. CUKE VS. THE ACIT, CIRCLE- 1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AAKPH9237Q ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 2 VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 218/JP/17 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 SHRI DINESH HALDIA PROPRIETOR M/S D.H. EXPORTS, R/O 1 ST & 2 ND FLOOR, CORNER OF THATHENRO KA RASTA, CHAURA RASTA, JAIPUR-302003. CUKE VS. THE ACIT, CIRCLE- 1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AAKPH9237Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 648/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI DINESH HALDIA PROPRIETOR M/S D.H. EXPORTS, R/O 150, HALDIA HOUSE, 2 ND FLOOR, JOHARI BAZAR, JAIPUR. CUKE VS. THE D CIT, CIRCLE- 3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AAKPH9237Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 219/JP/17 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2003-04 SMT. MAMTA HALDIA PROPRIETOR M/S VIDHI GEMS, R/O 1 ST & 2 ND FLOOR, CORNER OF THATHENRO KA RASTA, CHAURA RASTA, JAIPUR-302003. CUKE VS. THE ACIT, CIRCLE- 1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AAKPH9240H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 3 VK;DJ VIHY LA-@ ITA NO. 220/JP/17 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2004-05 SMT. MAMTA HALDIA PROPRIETOR M/S VIDHI GEMS, R/O 1 ST & 2 ND FLOOR, CORNER OF THATHENRO KA RASTA, CHAURA RASTA, JAIPUR-302003. CUKE VS. THE ACIT, CIRCLE- 1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AAKPH9240H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 221/JP/17 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2005-06 SMT. MAMTA HALDIA PROPRIETOR M/S VIDHI GEMS, R/O 1 ST & 2 ND FLOOR, CORNER OF THATHENRO KA RASTA, CHAURA RASTA, JAIPUR-302003. CUKE VS. THE ACIT, CIRCLE- 1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AAKPH9240H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 222/JP/17 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 SMT. MAMTA HALDIA PROPRIETOR M/S VIDHI GEMS, R/O 1 ST & 2 ND FLOOR, CORNER OF THATHENRO KA RASTA, CHAURA RASTA, JAIPUR-302003. CUKE VS. THE ACIT, CIRCLE- 1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: AAKPH9240H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRHDH VKSJ LS@ ASSESSEE BY : SHRI M.L. BORAD (ADV.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI S.L. CHANDEL (ADDL.CIT) ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 4 LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/08/2017 ?KKS'K .KK DH R KJH[K @ DATE OF PRONOUNCEMENT: 07/09/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THESE ARE APPEALS FILED BY THE RESPECTIVE ASSESSES AGAINST THE ORDER OF LD. CIT(A), JAIPUR CHALLENGING THE CONFIRMATION OF LEVY OF PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. 2. IN RESPECT OF RAVI HALDIA, THE APPEAL RELATES TO A.Y 2005-06 AGAINST THE ORDER OF THE LD CIT(A) DATED 28.04.2015. IN CASE O F DINESH HALDIA, THE APPEAL RELATES TO A.Y. 2004-05, 2005-06, 2007-08 AGAINST T HE ORDER OF THE LD CIT(A) OF EVEN DATE IE, DATED 28.04.2015 & FOR AY 2008-09 AGAINST THE ORDER OF LD CIT(A) DATED 29.04.2016. IN CASE OF MAMTA HALDIA, THE APPEAL RELATES TO A.Y.2003-04, 2004-05, 2005-06 & 2007-08 AGAINST THE ORDER OF THE LD CIT(A) OF EVEN DATE IE, DATED 23.04.2015. GIVEN THE SIMIL ARITY OF FACTS AND COMMON GROUND OF APPEAL INVOLVED IN ALL THESE CASES, ALL T HESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER. 3. AT THE OUTSET, THE LD COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE CASE OF RAVI HALDIA MAY BE TAKEN AS A LEAD CASE. WITH THE CONSENT OF BOTH THE PARTIES, FOR THE PURPOSE OF DISCUSSION, THE FACTS I N CASE OF RAVI HALDIA AS THE LEAD CASE HAVE BEEN CONSIDERED AND THE RESPECTIVE G ROUND OF APPEAL TAKEN AND CONTENTIONS ADVANCED BY BOTH THE PARTIES ARE CO NSIDERED. ITA NO. 211/JP/2017 4. BRIEFLY THE FACTS OF THE CASE ARE THAT SURVEY AN D SEARCH OPERATIONS WERE CARRIED AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE. THEREAFTER ASSESSMENT PROCEEDINGS WERE COMPLETED U/S 153A READ WITH SECTION ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 5 153B/143(3) DETERMINING TOTAL INCOME AT RS. 1,30,67 ,878/-. IN THE ASSESSMENT ORDER, THE AO AFTER REJECTION OF BOOKS O F ACCOUNTS U/S 145(3) OF THE ACT MADE A TRADING ADDITION OF RS. 35,66,906/- BY WAY OF APPLYING G.P. RATE OF 30% AS AGAINST THE DECLARED G.P. RATE OF 1 1.60% ON DECLARED SALES. THE REASONS FOR THE REJECTIONS THE BOOKS OF ACCOUNT S WERE THAT THE BOOKS OF ACCOUNTS WERE FOUND INCOMPLETE AT THE TIME OF SEARC H OPERATIONS AND EXCESS STOCK AND CASH WERE FOUND. FURTHER PURCHASES SHOWN BY THE ASSESSEE FROM CERTAIN PARTIES WERE FOUND UNVERIFIABLE AND BOGUS. IN THE ASSESSMENT ORDER, ADDITION OF RS. 15,903/- WAS ALSO MADE ON PROTECTI VE BASIS BY DISALLOWING THE UNVERIFIABLE PURCHASES BUT THE SAME WAS NOT ADDED T O THE TOTAL INCOME OF THE ASSESSEE AS TRADING ADDITION OF RS. 35,66,906/- WAS MORE THAN THE DISALLOWANCE OF UNVERIFIABLE PURCHASES OF RS 15,903 . SIMULTANEOUSLY, THE PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED FO R CONCEALING AND FURNISHING INCURRED PARTICULARS OF INCOME. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A) AND THEN BEFORE THE TRIBUNAL. THE COORDI NATE BENCH VIDE ITS ORDER DATED 19.12.2011 HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNTS. HOWEVER, IT DIRECTED TO APPLY G.P. RATE OF 15% AS AGAINST G.P. RATE OF 11.60% OFFERED BY THE ASSESSEE AND G.P. RATE OF 30% APPLIED BY THE AS SESSING OFFICER. REGARDING UNVERIFIABLE PURCHASES, THE SAME WAS DELE TED GIVEN THAT THE G.P. ADDITION HAS BEEN CONFIRMED AT 15% IN THE HANDS OF THE ASSESSEE. THE RELEVANT FINDINGS OF THE COORDINATE BENCH IN ITA NO . 14/JP/2011 AND OTHERS DATED 19.12.2011 READS AS UNDER:- 74 GROUND NO. 3 IS AGAINST UPHOLDING APPLICATION O F PROVISIONS OF SECTION 145(3). 75. WE HAVE ALREADY UPHELD THE ACTION OF THE CIT(A) WHILE DISPOSING THE APPEAL FOR ASSESSMENT YEAR 2008-2009 AND 2007-0 8. THEREFORE, FOR THE SAME REASONING, THIS GROUND OF THE ASSESSEE IS ALSO REJECTED. ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 6 76. GROUND NO. 4 IS AGAINST SUSTAINING TRADING ADDI TION OF RS. 35,66,906/- BY APPLYING A HIGHER GP RATE OF 30% AGA INST GP RATE OF 11.60% ON THE SALES OF RS. 1.91 CRORE OR ODD. 77. SIMILAR ISSUE WAS INVOLVED IN THE APPEAL FOR AS SESSMENT YEARS 2008- 09 AND 07-08. WE HAVE DIRECTED TO APPLY GP RATE OF 18% IN THESE ASSESSMENT YEARS I.E. 2008-09 AND 2007-08 FOR THE R EASON THAT BOOKS OF ACCOUNT WERE NOT COMPLETE FOR THE ASSESSMENT YEA RS 2007-08 AND 08-09 AS AT THE TIME OF SEARCH THE BOOKS OF ACCOUNT WERE COMPLETE UPTO ASSESSMENT YEAR 2006-07. FOR THE YEAR UNDER CO NSIDERATION THE BOOKS WERE THERE AND THE ACCOUNTS WERE AUDITED. HOW EVER, THERE ARE CERTAIN DISCREPANCIES AND WE HAVE ALREADY UPHELD TH E APPLICATION OF PROVISIONS OF SECTION 145(3). 77.1 THEREFORE, WE ARE OF THE VIEW THAT FOR THE YEA R UNDER CONSIDERATION IF GP RATE AT 15% IS APPLIED AGAINST GP RATE SHOWN BY ASSESSEE AT 11.60% AND AGAINST GP RATE OF 30% APPLI ED BY THE AO AND LD. CIT(A), THEN IT WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. 78. GROUND NO. 5 AND 6 ARE AGAINST APPLYING 25% OF CASH AND URD PURCHASES AND ENHANCEMENT ON ACCOUNT OF UNVERIFIABL E PURCHASES FROM SOME OF REGISTERED DEALERS AND THEREBY MAKING ADDIT ION @ 25%. 79. SIMILAR ISSUES WERE INVOLVED IN ASSESSMENT YEAR 2007-08. WE HAVE ALREADY DISPOSED OFF THESE GROUNDS AND HAVE ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE. FOR THE SAME REASONING, THESE GROU NDS OF THE ASSESSEE ARE ALLOWED FOR THE YEAR UNDER CONSIDERATION ALSO. 6. PURSUANT TO THE ORDER OF THE COORDINATE BENCH IN THE QUANTUM PROCEEDINGS, WHERE THE TRADING ADDITIONS OF RS 6,96 ,990 APPLYING G.P RATE OF 15% WAS SUSTAINED AS AGAINST G.P RATE OF 13.60% OFF ERED BY THE ASSESSEE IN ITS RETURN OF INCOME, THE AO IMPOSED A PENALTY OF R S 2,34,607 U/S 271(1)(C) OF THE ACT. THE REASONING ADOPTED BY THE AO WHILE LEVYING THE PENALTY AS APPARENT FROM THE READING OF THE PENALTY ORDER IS A S UNDER: 5.(A) THE ASSESSEE EARNED UNEXPLAINED INCOME DURIN G THE COURSE OF CARRYING ON THE BUSINESS IS ESTABLISHED FROM THE ORDERS OF T HE CIT(A)/ITAT AND ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 7 ASSESSEES OWN ADMISSION DURING SEARCH. HAS HERE B EEN NO SEARCH THE INCOME DETERMINED UNACCOUNTED AFTER APPEAL EFFECT O F ORDER OF THE ITAT WOULD HAVE BEEN NO OFFERED TO TAX BY THE ASSESSEE. (B) THE ASSESSEE WAS PROVIDED OPPORTUNITIES OF BEIN G HEARD BOTH DURING ASSESSMENT AND PENALTY PROCEEDINGS. HOWEVER, THE AS SESSEE COULD NOT ESTABLISH HIS CLAIM OF PURCHASE TO BE GENUINE. (C) AS PER PROVISIONS OF SECTION 271(1)(C), IF THE ASSESSING OFFICER IN THE COURSE OF ANY PROCEEDINGS UNDER THE INCOME TAX ACT, 1961 IS SATISFIED THAT ANY PERSONS- ... HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF [SUCH INCOME, OR] IT IS CLEAR THAT BY MAKING PURCHASE FROM UNREGISTER ED DEALERS AND FAILING TO PROVE THE GENUINENESS OF TRANSACTION THE ASSESSEE HAS BOTH CONCEALED HIS TRUE INCOME AND HAS FURNISHED INACCURATE PARTICULAR S OF INCOME. 7. ON APPEAL, THE LD. CIT(A) UPHELD THE LEVY OF PE NALTY AND RELEVANT FINDINGS ARE CONTAINED AT PARA 3.3.4, 3.3.5 AND 3. 3.6 OF HIS ORDER WHICH ARE REPRODUCED AS UNDER:- 3.3.4 THEREFORE, THE ISSUE OF BOGUS BILLS HAS NOT BEEN CONTROVERTED BY THE ASSESSEE BEFORE THE AO AND EVEN AT APPELLATE ST AGES I.E. BEFORE CIT(A) AND ITAT, JAIPUR. THEREFORE, IN ABSENCE OF A NY SATISFACTORY EXPLANATION OR ANY EXPLANATION IN RESPECT OF EXCESS STOCK AND TRADING ADDITIONS MADE THEREOF ON PROPORTIONATE BASIS (AS I T WAS ADMITTED BY THE ASSESSEE THAT IF WAS NOT POSSIBLE TO BIFURCATE STOCKS AMONG FOUR FAMILY MEMBERS NAMELY SH. RAVI HALDIA, SH. DINESH D ALDIA, SMT. DEEPALI HALDIA, & SMT. MAMTA HALDIA) THE FIRST PART OF CLAUSE (A) OF EXPLANATION 1 IS ATTRACTED. IN QUANTUM APPEAL, BOTH CIT(A) AND ITAT, JAIPUR HAVE BOTH DEALT IN DETAILS WITH THE ITEMS OF EXCESS STOCK AND ADDITIONS MADE THEREOF AND THEY HAD RECORDED THEIR FINDINGS. IT WAS A ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 8 CONCURRENT FINDING WHICH IN FACT ENDORSED THE AOS ACTION WITH RESPECT TO QUANTUM ADDITION. THEREFORE, ON FACTS, CONCEALME NT OF INCOME CAME TO BE ESTABLISHED AS THERE WAS GROSS OR FULL NEGLIG ENCE ON PART OF THE ASSESSEE IN FAILING TO RETURN CORRECT INCOME, ACCOR DINGLY PENALTY U/S 271(1)(C) WAS RIGHTLY LEVIED UPON THE ASSESSEE. 3.3.5 IN THIS CASE, RELIANCE CAN BE PLACE ON RATIO OF FACTS IN CASE OF CIT VS. KALINDI RAIL NIRMAN ENGG. LTD. (2014 51 TAXMANN .COM 523/365 ITR 304 (DELHI), (FOLLOWING THE DECISION OF APEX COURT IN CASE OF MAK DATA PVT LTD) WHERE ASSESSEE COULD NOT EXPLAIN THE DISCR EPANCIES AND AO HAS TO RESORT TO ESTIMATION OF PROFIT BY ADOPTING 11% O N GROSS CONTRACT RECEIPT AND INITIATED PENALTY PROCEEDING. 3.3.6 VERY RECENTLY, HONBLE ITAT, JAIPUR BENCH IN CASE OF M/S ANTIQUARIAT VS DCIT (ITA NO. 13&14/JP/2013 DATED 27 /03/2015 HAS FOLLOWED THE DECISION OF MAK DATA PVT LTD AND KALIN DI RAIL NORMAN ENGG. LTD AND CONFIRMED THE IMPOSITION OF PENALTY O N ESTIMATE. IN VIEW OF THESE FACTS, AOS ACTION FOR LEVYING PEN ALTY U/S 271(1)(C) OF THE ACT, IS HEREBY SUSTAINED. ASSESSEE,S APPEAL STA NDS DISMISSED. 8. DURING THE COURSE OF HEARING, LD. AR SUBMITTED T HAT THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS CONSISTING OF CASH BOOK, LEDGER, STOCK REGISTER, PURCHASE AND SALE BILLS AND VOUCHERS AND THE SAME WERE PRODUCED BEFORE THE A.O FROM TIME TO TIME. THERE IS NEITHER CHANGE NOR VARIATION IN THE SYSTEM OF ACCOUNTING MAINTAINED BY THE ASSESSEE IN THE YEAR UNDER APPEAL AS COMPARED TO PRECEDING YEARS. THE LEARNED A.O HAS NO T RECORDED A CLEAR FINDING THAT THE ASSESSEES SYSTEM OF ACCOUNTING WA S SUCH THAT CORRECT PROFITS COULD NOT BE DEDUCED FROM THE BOOKS OF ACCOUNTS KEP T AND MAINTAINED BY THE ASSESSEE. THE A.O HAS NOT POINTED OUT ANY INHERENT DEFECTS IN THE SYSTEM OF ACCOUNTING. NOT A SINGLE ITEM OF SUPPRESSION OF SAL ES NOR INFLATION OF PURCHASES HAS BEEN PINPOINTED BY LEARNED A.O. MOREO VER IT IS A FACT THAT NEITHER DURING THE COURSE OF SURVEY/SEARCH NOR OTHE RWISE THERE ARE ANY EVIDENCE OF ANY UNACCOUNTED PURCHASE/SALE BY THE AP PELLANT. QUANTITATIVE ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 9 DETAILS IN THE FORM OF STOCK REGISTER HAVE BEEN KEP T AND MAINTAINED BY ASSESSEE. THE QUANTITATIVE DETAILS INCLUDING OPENIN G AND CLOSING STOCK INVENTORY STOOD ALREADY FILED BEFORE THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS NOT THE CASE OF THE AO THAT QUAN TITATIVE DETAILS KEPT & MAINTAINED BY THE ASSESSEE ARE NOT SUBJECT TO VERIF ICATION. NOR IS THERE ANY ALLEGATION OF SUPPRESSION OF SALE NOR ANY ALLEGATIO N OF INFLATION OF PURCHASES AGAINST THE ASSESSEE. THE ASSESSMENT HAS BEEN FRAME D ON THE BASIS OF NET PROFIT FIGURE DECLARED IN PROFIT AND LOSS ACCOUNT S UBMITTED BY THE ASSESSEE ALONG WITH RETURN OF INCOME. THE ASSESSEE DEALS IN GEMS AND STONES AND IN THIS LINE OF BUSINESS MULTIPLE BUSINESS ARE STARTED EVERY YEAR WHICH GIVES A TOUGH COMPETITION IN THE MARKET AND EFFECTS GP RATE . OTHERWISE ALSO THE ADDITIONS MADE ARE OF ROUTINE NATURE AND THERE IS N O CONSCIOUS NOR POSITIVE CONCEALMENT OF INCOME. THE ASSESSEES EXPLANATION I S BASED ON SUPPORTING DOCUMENTS. THE CONSENSUS OF JUDICIAL OPINION IS THA T FOR ROUTINE ADDITIONS LIKE TRADING ADDITIONS AND DISALLOWANCE OF DEDUCTIONS AN D EXPENSES, NO PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURA TE PARTICULARS OF INCOME SHOULD BE LEVIED. IT IS RESPECTFULLY SUBMITTED THAT IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAD SUPPRESSED THE SALE AND/OR IN FLATED PURCHASES. THAT THE ONUS OF PROVING MENSREA ON THE PART OF THE ASSESSEE WAS ON THE A.O AND THE AO HAS NOT PROVED MENSREA OR ILL INTENTION OF ASSES SEE. THERE IS A CONSENSUS OF JUDICIAL PRONOUNCEMENTS THAT IN THE ABSENCE OF M ENSREA, NO PENALTY SHOULD BE LEVIED. THE JUDICIAL CONSENSUS IN REGARD TO LEV Y OR NOT TO LEVY PENALTY U/S 271 (1)(C) OF THE I.T. ACT IS THAT THE PARAMETERS O F JUDGING THE JUSTIFICATION FOR ADDITION MADE IN THE ASSESSMENT CASE OF THE ASSESSE E IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE /ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDING ON THE PREPONDERA NCE OF PROBABILITIES, BUT NO PENALTY COULD BE IMPOSED U/S 271(1)(C) ON TH E PREPONDERANCE OF ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 10 PROBABILITIES AND REVENUE HAS TO PROVE THE GUILTY M IND OF THE ASSESSEE. BUT IN THIS CASE IT IS LACKING ON THE PART OF THE REVENUE. 8.1 IT WAS FURTHER SUBMITTED THAT THE LEARNED CIT(A ) HAS ALSO RELIED UPON THE JUDGMENT OF HONBLE TRIBUNAL JAIPUR BENCH JAIPU R IN ITA NO. 13 AND 14/JP/2013 FOR AY 2004-05 AND 2005-06 IN THE CASE O F ANTIQUARIAT VS. DCIT, CC-2 JAIPUR. THE FACTS OF THIS CASE I.E. ANTIQUARIA T CASE ARE WHOLLY DIFFERENT FROM THE FACTS OF THE APPELLANT ASSESSEES CASE. IN ANTIQUARIAT CASE ARE WHOLLY DIFFERENT FROM THE FACTS OF THE APPELLANT ASSESSEE S CASE. IN ANTIQUARIAT CASE ADDITIONS WERE MADE AND CONFIRMED ON THE BASIS OF B OGUS PURCHASE DETECTED BY THE DEPARTMENT IN SEARCH/INVESTIGATION MADE BY T HE VARIOUS AUTHORITIES INCLUDING ASSESSING OFFICER. BUT THE PRESENT APPEAL IS SIMPLY A CASE OF ADDITIONS MADE BY THE APPLICATION OF HIGHER GP RATE WHICH TOO WAS REDUCED FROM 30% TO 15% BY THE HONBLE TRIBUNAL IN QUANTUM APPEAL. 9. THAT AS AGAINST THE RELIANCE PLACED BY THE LEARN ED CIT(A) ON THE ABOVE MENTIONED CASES, THE APPELLANT CRAVES LEAVE TO REFE R TO AND RELY UPON FOLLOWING JUDICIAL PRONOUNCEMENTS:- 10. THAT IT IS BY NOW VERY WELL SETTLED PROPOSITIO N OF LAW THAT ADHOC TRADING ADDITIONS CANNOT BECOME A GOOD BASIS FOR LEVY OF PE NALTY. THE ASSESSEE PLACES RELIANCE ON THE CASE OF CIT VS. KHODAY 83 IT R 369 (SUPREME COURT). 11. THAT THE HONBLE RAJASTHAN HIGH COURT IN THE C ASE OF SHIV LAL TAK VS. CIT [251 ITR 373] INTER ALIA HELD THAT WHERE THE DI FFERENCE BETWEEN THE ASSESSED INCOME AND THE RETURNED INCOME DOES NOT AR ISE ON ACCOUNT OF ANY GROSS OR WILFUL NEGLIGENCE ON THE PART OF THE ASSES SEE, NO PENALTY IS LEVIABLE. THE HONBLE JURISDICTIONAL HIGH COURT HAS FURTHER O BSERVED IN THIS VERY CASE THAT THE STATUTE HAS CLEARLY DRAWN A DISTINCTION BE TWEEN A DELIBERATE FALSE ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 11 EXPLANATION FURNISHED BY THE ASSESSEE AND AN EXPLAN ATION, WHICH MAY NOT BE FALSE BUT IS NOT ACCEPTED BECAUSE THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE IT. 12. THE HONBLE KOLKATA HIGH COURT IN THE CASE OF D URGA KAMAL RICE MILLS (265 ITR 25) HAS HELD THAT QUANTUM PROCEEDINGS ARE NOT BINDING IN THE PENALTY PROCEEDINGS AS BOTH ARE INDEPENDENT PROCEED INGS. 13. MOREOVER, MENSREA WHICH IS A MAIN INGREDIENT FO R LEVY OF PENALTY IS ABSENT IN THE PRESENT CASE. IN SUPPORT OF THIS SUBM ISSION THE ASSESSEE CRAVES LEAVE TO REFER TO AND RELY ON THE LEADING JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CEMENT MARKETING COMPANY OF INDIA LTD. VS. ASSISTANT CST, (1980) 124 ITR 15, 18 (SC) 14. THE APPELLANT ALSO CRAVES LEAVE TO REFER TO AND RELY ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ANWAR ALI (1970) 76 ITR 696 (SC). IN THIS JUDGMENT THE HONBLE COURT HELD THAT IN PENALTY PROCEEDINGS, THE ONUS IS ON THE DEPARTMENT TO ESTABLISH THAT THE ASS ESSEE IS GUILTY OF VIOLATION. THE PENALTY PROCEEDINGS ARE NOT CRIMINAL PROCEEDIN GS RATHER THEY ARE QUASI CRIMINAL IN NATURE. 15. IT IS HELD IN VERY MANY CASES THAT THE FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS WOULD BE RELEVANT AND ADMISSIBLE MATERI ALS IN PENALTY PROCEEDINGS; BUT THOSE FINDINGS CANNOT OPERATE AS R ES JUDICATA BECAUSE THE CONSIDERATIONS THAT ARISE IN PENALTY PROCEEDINGS AR E DIFFERENT FROM THOSE IN ASSESSMENT PROCEEDINGS. 16. THAT IN DILIP N SHROFFS CASE REPORTED IN 291 I TR 519 (SC), THE HONBLE SUPREME COURT APPROVED THE JUDGMENT IN RAM COMMERCI ALS CASE AND HELD THAT MENSREA IS NECESSARY INGREDIENT FOR IMPOSITION OF PENALTY UNDER THE ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 12 SECTION. THIS POSITION WAS REVISITED IN RELIANCE PE TRO PRODUCTS CASE REPORTED IN CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD 322 ITR 158 (SC) WHEN THE HONBLE SUPREME COURT HELD THAT THE LAW LAID DOWN IN DILIP N SHROFFS CASE AS TO THE MEANINGS OF THE WORDS CONCEAL AND INACCURATE CO NTINUES TO BE GOOD LAW. 17. IN THE CASES OF HB LEASING & FINANCE CO LTD 334 ITR 367 (DEL); AND RAJ OVERSEAS 336 ITR 261 (P&H) IT WAS HELD THAT NO PENALTY LEVIABLE WHERE ADDITION/DISALLOWANCE IS IN REGARD TO DEBATABLE ISS UE. IN THIS REGARD IT IS RESPECTFULLY SUBMITTED THAT IN THE CASE OF PRESENT ASSESSEE, THE AO APPLIED GP RATE OF 30% BUT THE HONBLE TRIBUNAL REDUCED IT 15% . 18. THE ASSESSEE CRAVES LEAVE TO REFER TO AND RELY UPON THE DECISION OF HONBLE TRIBUNAL JAIPUR BENCH IN THE CASE OF KAMLES H DANGAYACH PROP OF GREEN FIRE VS. ACIT, CIRCLE 1 JAIPUR IN ITA NO. 18- 19/JP/2012 DATED 16-5- 2012. IN THIS CASE THE AO APPLIED GP RATE OF 11% KE EPING IN VIEW OF THE PAST HISTORY OF GP AT 14% THE WORTHY CIT(A) REDUCED SUCH GP ADDITION. THE HONBLE TRIBUNAL HAS ACCORDINGLY HELD THAT SUSTAINI NG OF HIGH GP RATE TO PLUG LEAKAGE OF INCOME WILL NOT CONSTITUTE CONCEALMENT O F INCOME AND ACCORDINGLY PENALTY IMPOSED BY THE AO WAS DELETED. 19. THE APPELLANT ALSO PLACES RELIANCE ON THE CASE OF CIT VS. AERO TRADERS P LTD (2010) 322 ITR 316 (DEL). IN THIS CASE THE AO R EJECTED BOOKS OF ACCOUNTS AND ACCORDINGLY ESTIMATED INCOME OF THE ASSESSEE AT RS. 61,00,000. HE ALSO INITIATED PENALTY PROCEEDINGS SEPARATELY. THE CIT(A ) ESTIMATED THE TOTAL INCOME OF THE ASSESSEE AT RS. 1,02,980. THE TRIBUNA L CONFIRMED THIS ORDER. THE AO OBSERVED THAT THE PROFIT WAS ESTIMATED AFTER REJECTION OF BOOKS OF ACCOUNT DUE TO CERTAIN DISCREPANCIES AND IMPOSED A PENALTY ON THE ASSESSEE OF RS. 36,41,003, ON THE GROUND THAT IT WAS A CLEAR CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. THE CIT(A) DELETE D THE PENALTY HOLDING THAT ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 13 THE ADDITION MADE BY THE AO ON THE BASIS OF ESTIMAT ED PROFIT COULD NOT BE A SUBJECT MATTER OF PENALTY FOR CONCEALMENT OF INCOME . THE TRIBUNAL CONFIRMED THIS ORDER. THE HONBLE DELHI COURT, DISMISSING THE APPEAL, HELD THAT THE FINDING ARRIVED AT BY THE TRIBUNAL DID NOT WARRANT INTERFERENCE AS IT WAS PURELY A FINDING OF FACT. 20. THE ASSESSEE CRAVES LEAVE TO REFER TO AND RELY ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MAHENDRA SINGH KHEDLA REPORTED IN 252 CTR 453 AND JUDGEMENT IN THE CASE O F CIT VS. KRISHI TYRE RETREADING & RUBBER INDUSTRIES REPORTED IN (2014) 360 ITR 580 (RAJ.). THE LATTER JUDGMENT IS GIVEN BY THE HONBLE JURISDICTIONAL HIGH COURT TAKING INTO CONSIDERATION JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF UOI VS. DHARMENDRA TEXTILES PROCESSOR REPOR TED IN 306 ITR AT PAGE 277. IN THIS CASE THE HONBLE JURISDICTIONAL HIGH C OURT INTER ALIA HELD THAT PENALTY PROCEEDINGS ARE ENTIRELY DISTINCT FROM ASSE SSMENT PROCEEDINGS AND HOWSOEVER RELEVANT AND GOOD THE FINDINGS IN ASSESSM ENT PROCEEDINGS MAY BE, THEY ARE NOT CONCLUSIVE SO FAR AS THE PENALTY PROCE EDINGS ARE CONCERNED. 21. THE JUDICIAL CONSENSUS IN REGARD TO LEVY OR NO T TO LEVY PENALTY U/S 271 (1)(C) OF THE I.T. ACT IS THAT THE PARAMETERS OF JU DGING THE JUSTIFICATION FOR ADDITION MADE IN THE ASSESSMENT CASE OF THE ASSESSE E IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE /ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDING ON THE PREPONDERA NCE OF PROBABILITIES, BUT NO PENALTY COULD BE IMPOSED U/S 271 (1)(C) ON T HE PREPONDERANCE OF PROBABILITIES AND REVENUE HAS TO PROVE THE GUILTY M IND OF THE ASSESSEE. BUT IN THIS CASE IT IS LACKING ON THE PART OF THE REVENUE. ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 14 22. THE LD DR IS HEARD WHO HAS VEHEMENTLY ARGUED TH E MATTER AND SUPPORTED THE ORDER OF THE AO IN LEVY OF PENALTY AN D THE ORDER OF THE LD CIT(A) IN CONFIRMING THE SAME. 23. THE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. KRISHI TYRE RETREADING & RUBBER INDUSTRIES (SUPRA) HAS HELD AS UNDER: 8. ON A PERUSAL OF FACTS, IT IS APPARENT THAT THE TRIBUNAL IN THE REGULAR PROCEEDINGS HAD UPHELD THE ADDITION BY OBSERVING TH AT THE ASSESSING OFFICER, THOUGH JUSTIFIED IN MAKING SOME ADDITION, HOWEVER, IT OBSERVED THAT EVEN THE ASSESSING OFFICER HAD MADE AN ESTIMATED ADDITION FO R HE WAS NOT SURE AS TO EXACT AMOUNT OF ADDITION, TO BE MADE AND CONSIDERIN G THE PECULIAR FACTS OF THE CASE, THE TRIBUNAL MODIFIED THE ORDER BY OBSERV ING THAT 'WE FIND JUSTIFICATION IN THE ORDER OF THE LOWER AUTHORITIES WHO HAVE RIGHTLY MADE THE ADDITION ON ESTIMATE BASIS. BUT THE SAME IS LOOKING ON HIGHER SIDE DUE TO THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. BY MO DIFYING BOTH THE ORDERS OF THE LOWER AUTHORITIES, WE RESTRICT THE ADDITION TO RS. 1,00,000 (RS. ONE LAKH) ONLY. THUS, THE ASSESSEE WILL GET THE RELIEF OF RS. 44,000 (RS. FORTY FOUR THOUSAND) FROM THE ORDERS OF THE LOWER AUTHORITIES ON AD HOC BASIS. 9. ON A PERUSAL OF THE FACTS STATED HEREINBEFORE, IT T RANSPIRED THAT THE ADDITION HAS BEEN SUSTAINED PURELY ON ESTIMATE BASIS AND, IN OUR VIEW, NO POSITIVE FACT OR FINDING HAS BEEN FOUND SO AS TO EVEN MAKE THE SAID ADDITION. IT IS, ACCORDING TO US, A PURE G UESS WORK AND, IN OUR VIEW, ON SUCH GUESS WORK OR ESTIMATION, NO PENA LTY UNDER SECTION 271(1)(C) OF THE ACT CAN BE SAID TO BE LEVI ABLE. FOR IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ASS ESSING OFFICER HAS TO CLEARLY PROVE THE CONDUCT OF THE ASSESSEE, WHICH IN THIS CASE, HAS NOT BEEN PROVED. MERELY BECAUSE THE BOOKS OF ACCOUN T OF THE ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 15 ASSESSEE WERE REJECTED OR ESTIMATED ADDITION WAS MA DE, IN OUR VIEW, NO PENALTY IS LEVIABLE. THE ASSESSEE OFFERED AN EXP LANATION, WHICH COULD NOT BE TERMED AS NOT BONA FIDE. IN THE ABSENC E OF ANY CORROBORATIVE EVIDENCE TO PROVE THE CHARGE OF CONCE ALMENT, IN OUR VIEW, THE PENALTY COULD NOT BE IMPOSED. 10. PENALTY PROCEEDINGS ARE ENTIRELY DISTINCT FROM ASSESSMENT PROCEEDINGS AND, HOWSOEVER RELEVANT AND GOOD, THE FINDINGS IN A SSESSMENT PROCEEDINGS MAY BE, THEY ARE NOT CONCLUSIVE SO FAR AS THE PENAL TY PROCEEDINGS ARE CONCERNED. 24. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE O F CIT VS. MAHENDRA SINGH KHEDLA REPORTED IN 252 CTR 453 HAS HELD AS UNDER: 7. THE APPELLATE AUTHORITY AS WELL AS THE APPELLAT E TRIBUNAL BOTH CONSIDERED THE MATTER IN DETAIL AND BY SPEAKING ORDER SET ASID E THE PENALTY LEVIED BY ASSESSING OFFICER, IN THE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE. THE RELEVANT PORTION OF PARA 7 OF ORDER OF THE TRIBUNAL IS REPRODUCED AS UNDER:- 'PARA 7. .....THE ENQUIRY CONDUCTED BY THE AO MAY L EAD TO ARRIVE AT THE FINDINGS AS TO WHETHER THE PARTICULARS DISCLOSED AR E TRUTHFUL OR FALSE OR NOT PROVED TO BE SATISFACTORY. IN THE FIRST CASE IT WOU LD BE A POSITIVE CASE OF NO CONCEALMENT, IN SECOND CASE IT WOULD BE A POSITIVE CASE OF CONCEALMENT AND IN THIRD CASE BENEFIT OF DOUBT WILL GO IN FAVOUR OF TH E ASSESSEE. THE CASE OF THE ASSESSEE FALLS WITHIN THIRD CATEGORY WHERE THE ALLE GED FACT OF INTRODUCTION OF CAPITAL IS FOUND TO BE NOT PROVED SATISFACTORILY. T HEREFORE, IT IS NOT A CASE OF POSITIVE CONCEALMENT AND BENEFIT OF DOUBT GOES IN F AVOUR OF THE ASSESSEE. THERE IS NO DISPUTE THAT TRADING ADDITION WAS MADE ON THE BASIS OF ESTIMATION BECAUSE THE RESULTS SHOWN BY THE ASSESSEE WAS NOT F OUND SATISFACTORY BY THE AO. WHERE AN ESTIMATED ADDITION WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PA RT OF THE ASSESSEE TO THE ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 16 EXTENT OF AMOUNT IN DIFFERENCE SHOWN BY THE ASSESSE E AND ESTIMATED BY THE DEPARTMENT DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF THE CASE. .. UNDER THESE CIRCUMSTANCES WHEN IN THE PRESENT CASE THERE WAS NO POSITIVE EVIDENCE BEYOND DOUBT REGARDING ESTIMATED TRADING A DDITION THAT THE AMOUNT IN DIFFERENCE BETWEEN THE RESULT SHOWN BY THE ASSES SEE AND THAT ESTIMATED BY THE AO WAS RESULTANT OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE A SSESSEE, PENALTY UNDER SECTION 271 (1) (C) OF THE ACT CANNOT BE LEVIED. TH E AO HAD REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE TRADING ADDITION ON THE BASIS THAT THE ASSESSEE HAD NOT MAINTAINED SITE-WISE ACCOUNT, NO H EAD-WISE DETAILS OF CLAIMED PURCHASES WERE FURNISHED, NO SEPARATE HEAD OF EXPENSES WAS MAINTAINED, WORK IN PROGRESS WAS NOT DECLARED, SOME WAGES WERE SHOWN OUTSTANDING WITHOUT COMPLETE DETAILS OF CREDITORS, STOCK REGISTER WAS NOT MAINTAINED AND MISC. EXPENSES ON WATER TRANSPORTATI ON ETC. WERE NOT VERIFIABLE AND PURCHASE VOUCHERS OF SAND, STEEL, BA JRI ETC. WERE SELF MADE ETC. ASSESSEE EXPLAINED REASONS FOR THE ABOVE DEFECTS WH ICH WERE NOT ACCEPTED BY THE AO AS NOT FOUND SATISFACTORY. THE AO ACCORDINGL Y MADE ESTIMATION. THE CIRCUMSTANCES SUGGEST THAT IT MAY BE JUST AND PROPE R CASE OF MAKING ESTIMATED TRADING ADDITION BUT AN INFERENCE THEREFR OM CANNOT BE DRAWN BEYOND DOUBT ESPECIALLY KEEPING IN MIND THE NATURE OF WORK IN NOT MAINTAINING THOSE BOOKS AND DETAILS SUPPORTED WITH PROPER VOUCHERS ETC. THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR F URNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE TO ATTRACT THE PENAL PROVISIONS. IN VIEW OF ABOVE DISCUSSION AND KEEPING IN MIND THE FACT AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE LD . CIT (A) WAS JUSTIFIED IN DELETING THE PENALTY IN ABSENCE OF POSITIVE EVIDENC E WITH THE DEPARTMENT THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR F URNISHING INACCURATE ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 17 PARTICULARS THEREOF ON THE PART OF THE ASSESSEE TOW ARDS THE ADDITION IN QUESTION. THE FIRST APPELLATE ORDER ON THE ISSUE IS THUS UPHELD.' 8. THE ABOVE FINDING OF THE TRIBUNAL MAKES IT CLEAR TH AT ADDITIONS MADE BY THE ASSESSING OFFICER WERE BASED ON ESTIMAT ION ONLY. A FACT OR ALLEGATION BASED ON ESTIMATION CANNOT BE SAID TO BE CORRECT ONLY, IT CAN BE INCORRECT ALSO. THEREFORE, IN THE FACTS A ND CIRCUMSTANCES OF THE CASE, PENALTY WAS WRONGLY LEVIED BY THE ASSESSI NG OFFICER. THE BASIS FOR LEVYING PENALTY IN THE PRESENT CASE IS ON LY ESTIMATION, WHICH IS PURELY A QUESTION OF FACT AND THERE IS A CONCURRENT FINDIN G OF FACT RECORDED BY FIRST APPELLATE AUTHORITY AS WELL AS THE APPELLATE TRIBUN AL BOTH. 25. IN THE INSTANT CASE, THE COORDINATE BENCH IN T HE QUANTUM PROCEEDINGS HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNTS ON AC COUNT OF CERTAIN DISCREPANCIES AND THE TRADING ADDITIONS HAVE BEEN S USTAINED BY APPLYING G.P RATE OF 15%, AS AGAINST G.P RATE OF 30% APPLIED BY THE AO AND G.P RATE OF 11.60% OFFERED BY THE ASSESSEE IN ITS RETURN OF INC OME, HOLDING THAT THE SAME WILL MEET THE ENDS OF JUSTICE. IT IS THEREFORE A S ITUATION WHERE ONE ESTIMATE IS REPLACED BY ANOTHER ESTIMATE. THE SAME CAN FORM THE BASIS FOR ADDITION IN THE QUANTUM PROCEEDINGS BUT THE SAME CANNOT FORM THE SO LE BASIS FOR LEVY OF PENALTY. THERE IS NO POSITIVE ACT OR FINDING RECOR DED BY THE AUTHORITIES WHICH PROVES THE ACT OF CONCEALMENT OF INCOME OR FURNISHI NG INACCURATE PARTICULARS OF INCOME ON PART OF THE ASSESSEE. FURTHER, THERE IS NO FINDING THAT BOGUS PURCHASES HAVE BEEN DETECTED DURING THE COURSE OF S EARCH OPERATIONS AND EVEN THE ADDITIONS OF RS 15,903/- MADE BY THE AO O N THIS ACCOUNT HAS ALSO BEEN DELETED BY THE COORDINATE BENCH IN THE QUANTUM PROCEEDINGS. EVEN LOOKING AT THE QUANTUM OF BOGUS PURCHASES OF RS 15, 703 VIS--VIS TRADING ADDITION OF RS 6,96,990 SO SUSTAINED, THERE IS A FU NDAMENTAL FALLACY IN THE VERY BASIS FOR LEVY OF PENALTY BY THE AO WHERE HE S AYS THAT PENALTY HAS BEEN ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 18 LEVIED ON ACCOUNT OF UNVERIFIABLE PURCHASES WHEREBY THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS THEREOF. IT IS THUS A CASE FOR LEVY OF PENALTY PURELY ON TRADING ADDITION ON AN ESTIMATE BASIS WHICH CANN OT BE SUSTAINED. 26. AS WE HAVE HELD ABOVE, THE BASIS FOR LEVY OF P ENALTY WAS TRADING ADDITION AS SUSTAINED BY THE COORDINATE BENCH IN TH E QUANTUM PROCEEDINGS. THE LD CIT(A) HAS HOWEVER CONFIRMED THE LEVY OF PEN ALTY HOLDING THAT EXCESS STOCK AND VALUATION THEREOF HAS BEEN CONFIRMED BY T HE COORDINATE BENCH AND THE SAME HAS FORMED THE BASIS FOR LEVY OF PENALTY. ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THERE IS NO ADDITION MADE BY THE AO TOWARDS THE EXCESS STOCK AT FIRST PLACE. ACCORDINGLY, THE LD CIT(A) WAS NOT CORRECT IN HOLDING THAT EXCESS STOCK FOUND DURING THE COURSE O F SEARCH HAS BEEN SUSTAINED AND THE SAME HAS FORMED THE BASIS FOR LEV Y OF PENALTY. INFACT, THE ISSUE OF EXCESS STOCK WAS IN AY 2008-09 WHEREIN ALS O THE COORDINATE BENCH HAS DELETED THE SAID ADDITIONS AND THE RELEVANT FIN DINGS CONTAINED IN THE CONSOLIDATED ORDER IN ITA NO. ITA NO. 14/JP/2011 AN D OTHERS DATED 19.12.2011 READS AS UNDER: 30. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES A ND IN VIEW OF THE CONSISTENT APPROACH OF THE TRIBUNAL, WE ARE OF THE VIEW THAT ADDITION MADE AND SUSTAINED ON THE BASIS OF EXCESS VALUATION IS NOT JUSTIFIED AS THERE IS NO DIFFERENCE IN ITEMS, WEIGHT DISCLOSED I N THE BOOKS OF ACCOUNT AND FOUND DURING THE COURSE OF SEARCH. WHATEVER A S MALL DIFFERENCE WAS THERE, ON THIS ACCOUNT THE ASSESSEE HIMSELF HAS SUR RENDERED A SUM OF RS. 34,00,000/- OR ODD ON ACCOUNT OF CASH PURCHASES BY SHRI RAVI HALDIA AND SHRI DINESH HALDIA. THEREFORE, IN OUR VI EW, NO FURTHER ADDITION IS REQUIRED. ACCORDINGLY, THE REMAINING EN TIRE ADDITION IS DELETED. 27. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIR ETY OF FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWIN G THE DECISIONS OF THE HONBLE RAJASTHAN HIGH COURT REFERRED SUPRA, WE HER EBY DELETE THE LEVY OF ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 19 PENALTY U/S 271(1)(C) ON ESTIMATED TRADING ADDITION S TO THE EXTENT SO SUSTAINED IN THE QUANTUM PROCEEDINGS. IN THE RESUL T, GROUND TAKEN BY ASSESSEE IS ALLOWED. 28. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ITA NO. 210/JP/2017 29. IN ITS APPEAL FOR AY 2004-05, DINESH HALDIA, T HE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL: THAT THE LEARNED CIT(APPEALS) ERRED IN SUSTAINING PENALTY OF RS. 2,06,287/- LEVIED BY THE AO U/S 271(1)(C) OF THE I .T. ACT, WHICH SUSTAINING OF LEVY OF PENALTY OF RS. 2,06,287/- U/S 271(1)(C) OF THE I.T. ACT IS MOST ARBITRARY, UNJUST AND UNTENABLE IN FACT AND IN LAW AND IN THE ALTERNATIVE EXCESSIVE W.R.T. FACTS AND CIRCUMSTANCE S OF THE CASE. 30. BRIEFLY THE FACTS OF THE CASE ARE THAT ORIGINAL LY THE ASSESSEE FILED RETURN OF INCOME U/S 139(1) OF THE I.T. ACT ON 31.10.2004 ALONG WITH A COPY OF AUDIT REPORT U/S 44AB DECLARING TOTAL INCOME OF RS. 1,06, 86,409/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) FOR THE ABOVE ASSESSMENT Y EAR ON 24.11.2006 AT A TOTAL INCOME OF RS. 1,27,98,787/- BY APPLYING A GP RATE OF 35% AS AGAINST DECLARED GP RATE OF 28.70%. THE TRIBUNAL REDUCED T HE GP RATE FROM 35% TO 30% AND THEREBY SUSTAINED TRADING ADDITION OF RS. 6 ,25,112/- ON WHICH PENALTY OF RS 2,06,287 WAS LEVIED BY THE AO U/S 271 (1)(C) OF THE ACT. 31. IN THE CONTEXT OF QUANTUM PROCEEDINGS, THE REL EVANT FINDING OF THE COORDINATE BENCH IN ITA NO. 321/JP/2008 DATED 31.07 .2008 READS AS UNDER:- 10. LIKEWISE IN THE CASE OF DINESH HALDIA PROP. M/ S D.H. EXPORTS, THE ASSESSEE COULD NOT BE PRODUCE EVEN ONE OF THE 24 SU PPLIERS BEFORE THE A.O. FROM WHOM THE ASSESSEE CLAIMED TO HAVE MADE PU RCHASES OF THE GOODS EXPORTED NOR ANY ONE OF THEM WAS FOUND ON THE GIVEN ADDRESS. ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 20 THE A.O. HAD THUS INVOKED THE PROVISIONS OF S. 145( 3) OF THE ACT AND HAD ESTIMATED THE INCOME BY APPLYING A G.P. RATE OF 35% ON THE DECLARED SALES AGAINST 28% SHOWN BY THE ASSESSEE RE SULTING INTO TRADING ADDITION OF RS. 30,17,684/-. IN THE PRESENT CASE, DURING THE A.Y. 2002-03 THE ASSESSEE HAS SHOWN G.P. RATE OF 62.86%. THE REASON FOR DECLINING IN G.P. RATE THIS YEAR WAS EXPLAINED THAT THERE WAS STIFF COMPETITION AND TURNOVER AT ALMOST 2.5 TIMES MORE T HAN THE TURNOVER IN THE A.Y. 2003-04 WAS ACHIEVED BY THE ASSESSEE BY RE DUCING ITS MARGIN OF PROFIT. WE THUS FOLLOWING OUT ABOVE DECISION UND ER THE SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE ARE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN ACCEPTING THE GENUINENESS OF THE P URCHASES CLAIMED TO HAVE BEEN MADE FROM 24 PARTIES AND DELETING THE TRA DING ADDITION MADE BY THE A.O. WE HOWEVER, OF THE VIEW THAT APPLICATIO N OF G.P. RATE AT 30% WILL MEET THE END OF JUSTICE. WE ORDER ACCORDIN GLY WHILE RESTORING THE ACTION OF A.O. WITH THIS MODIFICATION IN APPLIC ATION OF G.P. RATE AT 30%. THE GROUNDS AS WELL AS APPEAL IS THUS PARTLY A LLOWED. 32. UNDISPUTEDLY, BOTH THE PARTIES AGREED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL TO CASE OF RAVI HALDIA IN ITA NO. 211/JP/2017 WHERE THE TRADING ADDITIONS HAVE BEEN SUSTAINED ON ESTIMA TE BASIS AND PENALTY HAS BEEN LEVIED THEREON. SIMILAR ARGUMENTS HAVE BEEN C ANVASSED BY BOTH THE PARTIES AND FOR THE PURPOSES OF BREVITY, WE ARE NOT REPRODUCING THE SAME. OUR FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 21 1/JP/2017 SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL AS WELL. THE APPEAL OF THE ASSESSE E IS THUS ALLOWED. ITA NO. 217/JP/2017 33. IN ITS APPEAL FOR AY 2005-06, DINESH HALDIA, T HE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL: THAT THE LEARNED CIT(APPEALS) ERRED IN SUSTAINING PENALTY OF RS. 66,352/- LEVIED BY THE AO U/S 271(1)(C) OF THE I.T . ACT, WHICH SUSTAINING OF LEVY OF PENALTY OF RS. 66,352/- U/S 2 71(1)(C) OF THE I.T. ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 21 ACT IS MOST ARBITRARY, UNJUST AND UNTENABLE IN FACT AND IN LAW AND IN THE ALTERNATIVE EXCESSIVE W.R.T. FACTS AND CIRCUMSTANCE S OF THE CASE. 34. BRIEFLY THE FACTS OF THE CASE THAT ASSESSMENT U /S 143(3) R/W SEC. 153A/153B WAS COMPLETED ON 30.11.2009 WHEREIN TRADI NG ADDITION OF RS. 2,03,2002/- BY WAY OF APPLYING 30% GP RATE AGAINST THE DECLARED LOSS OF RS. 1,84,972/- WAS MADE. IN FIRST APPEAL THE LEARNED CI T(A) SUSTAINED TRADING ADDITION OF RS. 2,03,202/- MADE BY THE AO BY WAY OF APPLYING 30% GP RATE AGAINST THE DECLARED LOSS. IN SECOND APPEAL, THE TR IBUNAL RESTRICTED THE TRADING ADDITION BY DIRECTING TO APPLY GP RATE OF 20% INSTE AD OF 30% AS APPLIED BY THE AO. ON THE TRADING ADDITIONS SUSTAINED BY THE T RIBUNAL, THE PENALTY OF RS 66,352 WAS LEVIED BY THE AO U/S 271(1)(C) OF THE AC T. ITA NO. 218/JP/2017 35. IN ITS APPEAL FOR AY 2007-08, DINESH HALDIA, T HE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL: THAT THE LEARNED CIT(APPEALS) ERRED IN SUSTAINING PENALTY OF RS. 29,434/- LEVIED BY THE AO U/S 271(1)(C) OF THE I.T . ACT, WHICH SUSTAINING OF LEVY OF PENALTY OF RS. 29,434/- U/S 2 71(1)(C) OF THE I.T. ACT IS MOST ARBITRARY, UNJUST AND UNTENABLE IN FACT AND IN LAW AND IN THE ALTERNATIVE EXCESSIVE W.R.T. FACTS AND CIRCUMSTANCE S OF THE CASE. 36. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASS ESSMENT U/S 143(3) R/W SEC. 153A/153B WAS COMPLETED ON 30.11.2009 WHEREIN ADDITION OF RS. 13,00,000/- WAS MADE BY THE AO FOR UNVERIFIABLE PU RCHASES AND A TRADING ADDITION OF RS. 1,95,137/- ON PROTECTIVE BASIS BY W AY OF APPLYING 30% GP RATE AGAINST THE DECLARED GP RATE OF 11.8% WAS ALSO MADE . IN FIRST APPEAL, THE LEARNED CIT(A) SUSTAINED ADDITIONS OF RS. 3,25,000/ - BEING 25% OF UNVERIFIABLE PURCHASES OF RS. 13,00,000/-. THE LEA RNED CIT(A) ALSO SUSTAINED TRADING ADDITION OF RS. 1,95,137/- ON PROTECTIVE BA SIS MADE BY THE AO BY WAY ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 22 OF APPLYING 30% GP RATE AGAINST THE DECLARED GP RAT E OF 11.88%. IN SECOND APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL DELETED T HE ADDITION OF RS. 3,25,000/- SUSTAINED BY LEARNED CIT(A) IN REGARD TO 25% OF UNVERIFIABLE PURCHASES OF RS. 13,00,000/-. HOWEVER THE TRIBUNAL SUSTAINED ON SUBSTANTIVE BASIS THE TRADING ADDITION OF RS. 87,447/-. ON THE TRADING ADDITIONS SUSTAINED BY THE TRIBUNAL, THE PENALTY OF RS 29,434 WAS LEVIE D BY THE AO U/S 271(1)(C) OF THE ACT. ITA NO. 648/JP/2016 37. IN ITS APPEAL FOR AY 2008-09, DINESH HALDIA, T HE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL: THAT THE LEARNED CIT(APPEALS) ERRED IN SUSTAINING PENALTY OF RS. 55,781/- LEVIED BY THE AO U/S 271(1)(C) OF THE I.T . ACT, WHICH SUSTAINING OF LEVY OF PENALTY OF RS. 55,781/- U/S 2 71(1)(C) OF THE I.T. ACT IS MOST ARBITRARY, UNJUST AND UNTENABLE IN FACT AND IN LAW AND IN THE ALTERNATIVE EXCESSIVE W.R.T. FACTS AND CIRCUMSTANCE S OF THE CASE. 38. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSME NT U/S 143(3) R/W SEC. 153A/153B WAS COMPLETED ON 31.12.2009 WHEREIN CERTA IN ADDITIONS WERE MADE WHICH INTER-ALIA INCLUDED ADDITION OF EXCESS S TOCK ON PROTECTIVE BASIS AT RS. 1,91,16,000/-, TRADING ADDITION OF RS. 1,75,393 /- BY WAY OF APPLYING 30% G.P. RATE AGAINST THE DECLARED G.P. RATE OF 12.27%, DISALLOWANCE OF SOME OF THE EXPENSES @ 20% AT RS. 1,38,269/-. IN FIRST APPE AL BEFORE THE LEARNED CIT(A) THE ADDITION ON ACCOUNT OF UNEXPLAINED STOCK WAS DELETED TO THE EXTENT OF RS. 89,86,534/- OUT OF TOTAL ADDITION OF RS. 1,9 1,16,000/- AND ADDITION OF RS. 1,01,29,466/- WAS SUSTAINED BY THE LEARNED CIT( A). IN APPEAL BEFORE THE TRIBUNAL, THE ADDITION OF RS. 1,01,29,466/- SUSTAIN ED BY THE LEARNED CIT(A) WAS DELETED. AS REGARDS TRADING ADDITION OF RS. 1 ,75,393/- MADE BY THE AO BY WAY OF APPLYING 30% GP RATE AGAINST THE DECLARED GP RATE OF 12.27%, THE ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 23 TRIBUNAL REDUCED THE GP RATE TO 20% AND CONSEQUENTL Y REDUCED TRADING ADDITION FROM RS. 1,75,393/- TO RS. 76,489/-. BESI DES THE TRIBUNAL SUSTAINED THE DISALLOWANCE OF EXPENSES @ 10% BY CONFIRMING TH E ORDER OF LEARNED CIT(A) WHEREBY THE LEARNED CIT(A) HAD UPHELD THE DI SALLOWANCE OF SOME OF THE EXPENSES @ 10% AGAINST DISALLOWANCE OF 20% MADE BY THE A.O. ON THE TRADING ADDITIONS AND DISALLOWANCE OF EXPENSES, THE AO LEVIED THE PENALTY OF RS 55,781 U/S 271(1)(C) OF THE ACT. OUR FINDINGS IN ITA NO. 217&218/JP/17 AND 648/JP/16 39. UNDISPUTEDLY, BOTH THE PARTIES AGREED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL TO CASE OF RAVI HALDIA IN ITA NO. 211/JP/2017 AND DINESH HALDIA IN ITA NO. 210/JP/17 WHERE THE TRADIN G ADDITIONS HAVE BEEN SUSTAINED ON ESTIMATE BASIS AND PENALTY HAS BEEN LE VIED THEREON. SIMILAR ARGUMENTS HAVE BEEN CANVASSED BY BOTH THE PARTIES A ND FOR THE PURPOSES OF BREVITY, WE ARE NOT REPRODUCING THE SAME. OUR FIND INGS AND DIRECTIONS CONTAINED IN ITA NO. 211/JP/2017 AND ITA NO. 210/JP /17 SHALL APPLY MUTATIS MUTANDIS TO THESE APPEALS AS WELL. IN THE RESULT, THE PENA LTY IS DELETED AND THE APPEALS OF THE ASSESSEE FOR THE IMPUNGED ASSESS MENT YEARS ARE ALLOWED. ITA NO. 219/JP/2017 40. IN ITS APPEAL FOR AY 2003-04, MAMTA HALDIA, TH E ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL: THAT THE LEARNED CIT(APPEALS) ERRED IN SUSTAINING PENALTY OF RS. 13,757/- LEVIED BY THE AO U/S 271(1)(C) OF THE I.T . ACT, WHICH SUSTAINING OF LEVY OF PENALTY OF RS. 13,757/- U/S 2 71(1)(C) OF THE I.T. ACT IS MOST ARBITRARY, UNJUST AND UNTENABLE IN FACT AND IN LAW AND IN THE ALTERNATIVE EXCESSIVE W.R.T. FACTS AND CIRCUMSTANCE S OF THE CASE. ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 24 41. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSMENT U/S 143(3) R/W SEC. 153A/153B WAS COMPLETED ON 30.11.2009 WHEREIN ADDIT ION OF RS. 11,84,063/- WAS MADE BY THE AO FOR UNVERIFIABLE PURCHASES OF R S. 11,84,063/- AND SIMULTANEOUSLY, A TRADING ADDITION OF RS. 2,22,208/ - ON PROTECTIVE BASIS BY WAY OF APPLYING 30% GP RATE AGAINST THE DECLARED GP RATE OF 13.82% WAS ALSO MADE BY THE AO. IN FIRST APPEAL, THE LEARNED C IT(A) SUSTAINED ADDITIONS OF RS. 2,96,016/- BEING 25% OF UNVERIFIABLE PURCHA SES OF RS. 11,84,063/-. THE LEARNED CIT(A) ALSO SUSTAINED TRADING ADDITION OF RS. 2,22,208/- ON PROTECTIVE BASIS MADE BY THE AO. IN APPEAL BEFORE T HE TRIBUNAL, THE TRIBUNAL DELETED THE ADDITION OF RS. 2,96,016/- SUSTAINED BY LEARNED CIT(A) IN REGARD TO 25% OF UNVERIFIABLE PURCHASES OF RS. 11,84,063/- . HOWEVER THE TRIBUNAL SUSTAINED ON SUBSTANTIVE BASIS THE TRADING ADDITION OF RS. 43,674/- BY APPLYING GP RATE OF 17% AS AGAINST GP RATE OF 30% A PPLIED BY THE AO. ON THE TRADING ADDITIONS SO SUSTAINED, THE AO LEVIED T HE PENALTY OF RS 13,757 U/S 271(1)(C) OF THE ACT. ITA NO. 220/JP/2017 42. IN ITS APPEAL FOR AY 2004-05, MAMTA HALDIA, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL: THAT THE LEARNED CIT(APPEALS) ERRED IN SUSTAINING PENALTY OF RS. 64,866/- LEVIED BY THE AO U/S 271(1)(C) OF THE I.T . ACT, WHICH SUSTAINING OF LEVY OF PENALTY OF RS. 64,866/- U/S 2 71(1)(C) OF THE I.T. ACT IS MOST ARBITRARY, UNJUST AND UNTENABLE IN FACT AND IN LAW AND IN THE ALTERNATIVE EXCESSIVE W.R.T. FACTS AND CIRCUMSTANCE S OF THE CASE. 43. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSMENT U/S 143(3) R/W SEC. 153A/153B WAS COMPLETED ON 30.11.2009 WHEREIN TRADI NG ADDITIONS OF RS. 9,11,038/- WAS MADE BY APPLYING GP RATE OF 30% WHIC H WAS UPHELD BY THE LD CIT(A). THE TRIBUNAL REDUCED THE GP RATE TO 15% AN D CONSEQUENTLY REDUCED TRADING ADDITION FROM RS. 9,11,038/- TO RS. 2,16,22 1/-. ON THE TRADING ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 25 ADDITIONS SO SUSTAINED, THE AO LEVIED THE PENALTY O F RS 64,866 U/S 271(1)(C) OF THE ACT. ITA NO. 221/JP/2017 44. IN ITS APPEAL FOR AY 2005-06, MAMTA HALDIA, TH E ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL: THAT THE LEARNED CIT(APPEALS) ERRED IN SUSTAINING PENALTY OF RS. 37,291/- LEVIED BY THE AO U/S 271(1)(C) OF THE I.T . ACT, WHICH SUSTAINING OF LEVY OF PENALTY OF RS. 37,291/- U/S 2 71(1)(C) OF THE I.T. ACT IS MOST ARBITRARY, UNJUST AND UNTENABLE IN FACT AND IN LAW AND IN THE ALTERNATIVE EXCESSIVE W.R.T. FACTS AND CIRCUMSTANCE S OF THE CASE. 45. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSMENT U/S 143(3) R/W SEC. 153A/153B WAS COMPLETED ON 30.11.2009 WHEREIN TRADI NG ADDITIONS OF RS. 4,50,545/- WAS MADE BY APPLYING G.P. RATE OF 30% A GAINST THE DECLARED G.P. RATE OF 10.11% WHICH WAS UPHELD BY THE LEARNED CIT( A). THE TRIBUNAL REDUCED THE GP RATE TO 15% AND CONSEQUENTLY REDUCED TRADING ADDITION FROM RS. 4,50,545/- TO RS. 1,10,785/-. ON THE TRADING A DDITIONS SO SUSTAINED, THE AO LEVIED THE PENALTY OF RS 37,291 U/S 271(1)(C) OF THE ACT. ITA NO. 222/JP/2017 46. IN ITS APPEAL FOR AY 2007-08, MAMTA HALDIA, TH E ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL: THAT THE LEARNED CIT(APPEALS) ERRED IN SUSTAINING PENALTY OF RS. 14,830/- LEVIED BY THE AO U/S 271(1)(C) OF THE I.T . ACT, WHICH SUSTAINING OF LEVY OF PENALTY OF RS. 14,830/- U/S 2 71(1)(C) OF THE I.T. ACT IS MOST ARBITRARY, UNJUST AND UNTENABLE IN FACT AND IN LAW AND IN THE ALTERNATIVE EXCESSIVE W.R.T. FACTS AND CIRCUMSTANCE S OF THE CASE. ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 26 47. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSMENT U/S 143(3) R/W SEC. 153A/153B WAS COMPLETED ON 30.11.2009 WHEREIN ADDIT ION OF RS. 7,50,000/- WAS MADE BY THE AO FOR UNVERIFIABLE PURCHASES OF R S. 7,50,000/- AND SIMULTANEOUSLY A TRADING ADDITION OF RS. 1,76,838/- ON PROTECTIVE BASIS BY WAY OF APPLYING 30% GP RATE AGAINST THE DECLARED GP RAT E OF 10.02% WAS ALSO MADE BY THE AO. IN FIRST APPEAL THE LEARNED CIT(A) SUSTAINED ADDITIONS OF RS. 1,87,500/- BEING 25% OF UNVERIFIABLE PURCHASES OF RS. 7,50,000/-. THE LEARNED CIT(A) ALSO SUSTAINED TRADING ADDITION OF R S. 1,76,838/- ON PROTECTIVE BASIS MADE BY THE AO. THE TRIBUNAL DELETED THE ADDI TION OF RS. 1,87,500/- SUSTAINED BY LEARNED CIT(A) WITH REGARD TO 25% OF U NVERIFIABLE PURCHASES OF RS. 7,50,000/-. HOWEVER THE TRIBUNAL SUSTAINED ON S UBSTANTIVE BASIS THE TRADING ADDITION OF RS. 44,054/- BY APPLYING GP RAT E OF 15% AS AGAINST GP RATE OF 30% APPLIED BY THE AO. ON THE TRADING ADDI TIONS SO SUSTAINED, THE AO LEVIED THE PENALTY OF RS 14,830 U/S 271(1)(C) OF TH E ACT. OUR FINDINGS IN ITA NO. 219 TO 222/JP/17 48. UNDISPUTEDLY, BOTH THE PARTIES AGREED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL TO CASE OF RAVI HALDIA IN ITA NO. 211/JP/2017 AND DINESH HALDIA IN ITA NO. 210/JP/17 WHERE THE TRADIN G ADDITIONS HAVE BEEN SUSTAINED ON ESTIMATE BASIS AND PENALTY HAS BEEN LE VIED THEREON. SIMILAR ARGUMENTS HAVE BEEN CANVASSED BY BOTH THE PARTIES A ND FOR THE PURPOSES OF BREVITY, WE ARE NOT REPRODUCING THE SAME. OUR FIND INGS AND DIRECTIONS CONTAINED IN ITA NO. 211/JP/2017 AND ITA NO. 210/JP /17 SHALL APPLY MUTATIS MUTANDIS TO THESE APPEALS AS WELL. IN THE RESULT, THE PENA LTY IS DELETED AND THE APPEALS OF THE ASSESSEE FOR THE IMPUNGED ASSESS MENT YEARS ARE ALLOWED. 49. ALL THE APPEALS OF THE RESPECTIVE ASSESSEES AR E THUS ALLOWED IN LIGHT OF ABOVE DIRECTIONS. ITA NO. 648/JP/16, 210,211/JP/2017 217 TO 222/JP/2017 RAVI HALDIA & OTHERS VS.ACIT, C-1, JAIPUR. 27 ORDER PRONOUNCED IN THE OPEN COURT ON 07/09/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 07/09/2017 SANTOSH VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - RAVI HALDIA, PROPRIETOR M/S R.H. EXPORTS/ SHRI DINESH HALDIA, PROPRIETOR M/S D.H. EXPORTS/ SM T. MAMTA HALDIA PROPRIETOR M/S VIDHI GEMS, R/O 1 ST & 2 ND FLOOR, CORNER OF THATHENRO KA RASTA, CHAURA RASTA, JAIPUR-302003. 2. IZR;FKHZ@ THE RESPONDENT - ACIT, CIRCLE-1/DCI, CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, 6. XKMZ QKBZY@ GUARD FILE (ITA NO.648/JP/2016 & 210,211,217 TO 222/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT REGISTRAR.