The Dy. CIT, Circle-6, Ahmedabad V. M/s. Zodiac Eicher, Ahmedabad

ITA 2258/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8397 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 07-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY RANJAN WITH IRA KAPOOR
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE DCIT, CIRCLE - 6, AHMEDABAD (APPELLANT) VS M/S. ZODIAC EICHER, A/6, SATYAMEV COMPLEX - 1, 2 ND FLOOR, OPP. HIGH COURT, S.G. HIGHWAY, GHATLODIA, AHMEDABAD - 380061 PAN: AAAFZ3166E (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: S H RI VIJAY RANJAN WITH IRA KAPOOR , A.R. DATE OF HEARING : 26 - 02 - 2 018 DATE OF PRONOUNCEMENT : 16 - 04 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2006 - 07 , AR ISES FROM ORDER OF THE CIT(A) - IX , AHM EDABAD DATED 15 - 05 - 2014 , IN DELETING THE PENALTY OF RS. 13,46,400/ - , IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 13 , 08 , 572/ - WAS FILED ON 31 ST DECEMBER, 2006. SUBSEQUENTLY THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUE OF NOTICE UNDER SECTION 143 ( 2 ) OF THE ACT ON 2 8 TH JUNE 2 007 . ON I T A NO . 2258 / A HD/ 20 14 A SSESSMENT YEAR 200 6 - 07 I.T.A NO. 2258 /AHD/20 14 A.Y. 2006 - 07 PAGE NO DCIT VS. M/S. ZODIAC EICHER 2 SCRUTINY THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS DEBITED THE FOLLOWING EXPENSES IN THE PROFIT AND LOSS ACCOUNT 1) HEAVY CULTIVATOR EXP.RS.75.46 LACS 2) LIGHT CULTIVATOR EXP. RS.41.60 LACS 3) MEDIUM CULTIVATOR EXP. RS.32.95 LACS THE ASSESSEE HAS SUBMITTED THAT THE SE EXPENSES WERE INCURRED IN RESPECT OF PURCHASE OF VARIOUS TYPES OF CULTIVATORS AND DISTRIBUTED THE SAME AS COMPLIMENTARY TO THE PURCHASERS OF THE TRACTORS. THE ASSESSEE WAS ASKED TO FURNISH THE COPIES OF BILLS REGARDING PU RCHASE OF VARIOUS KINDS OF CULTIVATORS. THE ASSESSEE HAS SUBMITTED THE SAME WITH ITS SUBMISSION DATED THE 20 /11/2008 AS ELABORATED AT PAGE NUMBER 3 TO 8 OF THE ASSESSMENT ORDER SHOWING THE NAME AND ADDRESS OF THE PARTIES, BILL NUMBER AND DATE, THE AMOUNT A ND NUMBER OF CULTIVATORS PURCHASED. THEREAFTER THE ASSESSING OFFICER HAS CONDUCTED INQUIRIES THROUGH THE ASSISTANT DIRECTOR O F INCOME TAX INVESTIGATION/ DY. D IRECTOR OF INCOME TAX INVESTIGATION AT VARIOUS STATIONS A S SURAT, J AMNAGAR, GANDHI DHAM, RAJKOT, B HAVNAGAR ETC. AND AT VARIOUS OTHER PLACES INQUIRIES WERE ALSO CON DUCTED THROUGH INCOME TAX INSPECTORS. THE DDIT/ADIT HAVE REPORTED AFTER CONDUCTING INQUIRIES FROM THE AFORESAID PLACES THAT NO SUCH PARTIES ARE EXISTED AT THE GIVEN ADDRESS ES AND FURTHER R EPORTED THAT INVOICES FURNISHED BY THE ASSESSEE WERE BOGUS. THE ASSESSING OFFICER HAS ELABORATED THE FINDING OF THESE INQUIRIES AT PAGES 15 TO 20 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS ALSO EXAMIN ED SUB - DEALERS MR. BHAGWANBHAI PATEL PARTNERS OF M/S CHEHARKRUPA TRACTORS, VIRANGAM AND HE HAS ADMITTED THAT THERE WAS NO SUCH SCHEME TO PROVID E FREE COMPLIMENTARY CULTIVATORS TO THE PURCHASERS OF TRACTORS. THE REAFTER T HE ASSESSEE VIDE ITS LETTER DATED 19 /12/2008 OFFERED 25% OF THE P URCHASE EXPE NSES OF CULTIVATORS AS IT'S INCOME FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER HAS ALSO CONDUCTED INQUIRIES FROM OTHER SUB - DEALERS OF THE ASSESSEE WHO HA VE ALSO ADMITTED THAT NO CULTIVATORS WERE PROVIDED TO THE BUYERS OF TRACTORS. CONSEQUENTLY THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS.40 I.T.A NO. 2258 /AHD/20 14 A.Y. 2006 - 07 PAGE NO DCIT VS. M/S. ZODIAC EICHER 3 LAKH ON FAILING OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES OF CULTIVATORS WHICH HE HAS FOUND TO BE BOGUS AS ELABORATED SUPRA IN THIS ORDER . DURING THE COURSE OF PENALTY PROCEEDINGS U/S. 27 1(1)(C) OF THE ACT , THE ASSESSEE HAS EXPLAINED THAT DURING THE COURSE OF A SSESSMENT PROCEEDINGS, IT HAS SUBMITTED A LETTER DATED 17 TH DECEMBER, 2008 THEREBY THE AMOUNT OF RS. 40 LACS HAD BEEN OFFERED AS ADDITIONAL INCOME OF THE ASSESSEE FOR THE SIMPLE RE ASON THAT IT IS QUITE DIFFICULT RATHER IMPOSSIBLE TO PRODUCE THOSE SMALL SELF EMPLOYED PERSONS FROM UN - ORGANIZED SECTOR OF THE RURAL AREAS TO PROVE TO THE SATISFACTION OF THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF T HE ASSESSEE. THE ASSESSING OFFICER HAS STATED THAT INQUIRIES REPORT S OF ADIT /DDIT , INSPECTORS AND ADMISSION MADE BY SUB DEALERS AND OTHER PERSONS DISAFFIRMED THE CLAIM OF THE ASSESSEE ABOUT THE COM P LIMENT A RY DISTRIBUTION OF CULTIVATORS TO THE BUYERS OF TR ACTORS. HE HAS ALSO STATED THAT NO FREE CULTIVATORS EITHER BY HIS FIRM OR M/S ZODIAC EICHER , AHMEDABAD HAD GIVEN TO THE PURCHASER S OF THE TRACTOR S . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , WHEN THE ASSESSING OFFICER HAD BROUGHT THE FACT OF NON - EXISTE NCE OF THE PARTIES FROM WHOM THE ASSESSEE HAS CLAIMED THE PURCHASES OF VARIOUS KINDS OF CULTIVATORS , THE ASSESSEE HAS COME FORWARD WITH A LETTER DATED 19 TH DECEMBER, 2008 AND OFFERED 25% OF THE PURCHASE EXPENSES OF CULTIVATORS AS ITS INCOME FOR THE YEAR UN DER CONSIDERATION. T HE ABOVE FACTS AND MATERIAL SUBSTANTIATE THAT CLAIM OF THE CULTIVATORS EXPENDI TU RE WERE BOGUS AS ASSESSE COULD N OT PROVE GENUINENESS OF THESE EXPENDITURE IN SPITE OF GIVING A NUMBER OF OPPORTUNITIES BEFORE THE ASSESSING OFFICER DURING T HE CORE COURSE OF ASSESSMENT PROCEEDING. CONSEQUENTLY THE ASSESSING OFFICER HAS LEVIED PENALTY OF RS. 13 , 46 , 400/ - FOR FURNISHING INACCURATE PARTICULARS OF INCOME RESULTING IN CONCEALMENT OF INCOME. 3. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DELET ED THE PENALTY LEVIED BY THE ASSESSING OFFICER STATING THAT THE ADDITION WAS MADE ON THE BASIS OF ESTIMAT ION AND THE ASSESSE E HAS MADE THE DIS CLOSURE OF INCOME WITH A VIEW TO PURCHASE PEACE OF MIND AND TO AVOID LITIG ATION . I.T.A NO. 2258 /AHD/20 14 A.Y. 2006 - 07 PAGE NO DCIT VS. M/S. ZODIAC EICHER 4 4. D URING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. DEPARTMENTAL REPRESENTATIVE HAS CONTENDED THAT LD. CIT(A) HAS ERRED IN HIS DECISION AS THE ASSESSING OFFICER HAS PROVED IT BY VERIFICATION AND THOROUGH INVESTIGATION THAT THE EXPENDITURE INCURRED BY THE AS SESSEE REGARDING PURCHASE OF CULTIVATOR S WERE BOGUS AND THE ASSESSEE FAILED TO SUBSTANTIATE THE GENUINENESS OF THESE EXPENSES IN SPITE OF GIVING AMPLE OPPORTUNITIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, HE HAS COME FORWARD ON THE BASIS OF INFORMATION COLLECTED BY THE ASSESSING OFFICER AND OFFERED 25% OF THE PURCHASE EXPENSES OF CULTIVATORS AS IT'S INCOME FOR THE YEAR UNDER CONSIDERATION. HE HAS ALSO PLACED RELIANCE ON THE DECISION OF HON BLE HIGH COURT OF DELHI IN THE CASE OF PR.CI T VS DR. VANDANA GUPTA VIDE ITA 2192017 DATED 20.02.2018. ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUBMITTED PAPER BOOK CONTAINING SUBMISSION BEFORE THE ASSESSING OFFICER AND LD. CIT(A) AND CONTENDED THAT THE LD.CIT (A) IS JUSTIFIED IN DELETING T HE PENALTY WHICH WAS LEVIED BY THE ASSESSING OFFICER ON ESTIMATION BASIS . 5 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO JUSTIFY THE EXPENSES INCURRED F OR PURCHASE OF CULTIVATORS. IN THIS CONNECTION THE ASSESSEE HAS FURNISHED NAME AND ADDRESS OF THE PARTY, BILL NUMBER AND DATE, BEEN AMOUNT AND NUMBER OF CULTIVATORS. THEREAFTER THE ASSESSING OFFICER HAS CONDUCTED ENQUIRIES AT VARIOUS STATIONS THROUGH ADI T/DDIT AND INSPECTORS . IT WAS REPORTED THAT NO SUCH PERSONS ARE EXISTED AT THE ADDRESS GIVEN BY THE ASSESSEE. THE ASSE SSING OFFICER HAS EXAMINED SUB - DEALERS SH RI BHAGWANBHAI PA TEL PARTNER OF M/S CHEHARKRUPA T RACTORS, VIRAMGAM WHO HAS ADMITTED THAT THERE WAS NO SCHEME INTRODUCED FOR PROVIDING FREE CULTIVATORS TO THE PURCHASERS OF THE TRACTORS. T HE ASSESSEE HAS SUBMITTED THAT IT HAS TRIED TO CONTACT THESE PARTIES WHO HAD PROVIDED THE CULTIVATORS, BUT THESE PARTIES AREN T READILY AVAILABLE. THE ASSESSING OFFICER HAS ALSO CONDUCTED ENQUIRY THROUGH ADIT INVESTIGATION MEHSANA IN THE CASE OF M/S KISAN TRACTORS, BECHARJAI, DIST. I.T.A NO. 2258 /AHD/20 14 A.Y. 2006 - 07 PAGE NO DCIT VS. M/S. ZODIAC EICHER 5 MEHSANA W HO HAS REPORTED THAT 37 TRACTORS WERE SUPPLIED THROUGH M/S ZODIAC EICHER BUT NEITHER ANY PROMOTIONAL SCHEME WAS INTRODUCED NOR ANY COMPLIMENTARY EQUIPMENT HAS BEEN GIVEN TO THE FARMERS THROUGH ZODIAC EICHER AHMEDABAD. M/S SHREE AMBICA TRADERS BHARUCH HAD SOLD 61 TRACTORS TO VARIOUS FARMERS AFTER PURCHASING THE TRACTORS FROM M/S ZODIAC EICHER HAS ALSO REPORTED THAT NO COMPLI MENTARY CULTIVATORS HAVE BEEN PROVIDED EITHER DIRECTLY OR THROUGH M/S ZODIAC EICHER. IT IS ESTABLISHED FROM THE ABOVE THAT ASSESSEE HAS SUBMITTED BILLS OF PURCHASE FROM 21 PARTIES (105) BILLS AND ALL THE BILLS WERE FOUND TO BE BOGUS AS PER THE INQUIRIES C ONDUCTED. IT IS EVIDENT FROM THE ABOVE FACTS THAT ASSESSING OFFICER HAS CONDUCTED INDEPTH INQUIRIES WITH THE HELP OF ADIT/DDIT AT VARIOUS STATIONS SUCH AS SURAT,RAJKOT,GANDHIDHAM,BHAVNAGAR ETC. THAT REVEALED THAT NONE OF THE PARTIES WERE IN EXISTENC E AND THE PURCHASES SHOWN BY THE ASSESSEE WERE BOGUS . SUBSEQUENTLY THE ASSESSEE HAS FURNISHED MERELY AFFIDAVITS OF THE 21 PERSONS AND 2 SUB - DEALERS AND COULD NOT PRODUCE ANY PERSON/PARTY FOR EXAMINATION TO CONTROVERT THE FINDINGS OF THE ASSESSING OFFICER. SECTION 271(1)(C) OF THE ACT HAS A DIRECT BEARING ON THE CONTROVERSY AND, THEREFORE, IT IS SALUTARY UPON US TO TAKE NOTE OF THE RELEVANT PROVISIONS OF SECTION 271(1)(C) ALONG WITH EXPLANATION 1 WHICH READ AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMP LY WITH NOTICES, CONCEALMENT OF INCOME, ETC. (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON ( A ) AND ( B )** ** ** ( C ) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. ( I ) AND (INCOME - TAX OFFICER,)** ** ** ( III ) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLAUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE B Y HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1 . - WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR T HE COMMISSIONER(APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE I.T.A NO. 2258 /AHD/20 14 A.Y. 2006 - 07 PAGE NO DCIT VS. M/S. ZODIAC EICHER 6 SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUBSECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED'. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THAT FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM SHOULD BE SATISFIED, T HAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH TH E ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERTAIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUTORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATIO N I TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FIRST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSE SSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEALS); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD COME TO PLAY IF THE ASS ESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDING TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY I.T.A NO. 2258 /AHD/20 14 A.Y. 2006 - 07 PAGE NO DCIT VS. M/S. ZODIAC EICHER 7 FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1)(C) MA KES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING TH E INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. HERE THE ASSESSEE HAS FAILED TO SUBSTANTIATE HIS EXPLANATION AS IT HAS FAILED TO CONTROVERT THE FACT OF NON EXISTENCE OF EVEN A SINGLE PARTY FROM WHOM THE ASSESSEE HAS CLAIMED THAT THE PURCHASES OF VARIOUS KINDS OF CULTIVATORS WAS MADE . ON ITS FAILURE TO SUBSTANTIATE ITS EXPLANATION THE ASSESSEE HAS COME FORWARD WITH A LETTER DATED 19 TH DECEMBER, 2008 AND OFFERED 25% OF THE PURCHASE EXPENSES OF CULTIVATORS AS ITS INCOME FOR THE YEA R UNDER CONSIDERATION. AFTER CONSIDERING THESE FACTS AND EVIDENCES, IT IS CLEAR THAT ASSSESSEE HAS COME FORWARD TO MAKE DISCLOSURE OF 25% OF THE EXPENDITURE AS UNDISCLOSED INCOME OF THE ASSESSEE BECAUSE IT FAILED TO PROVE THE GENUINENESS OF THE AFORESAID PURCHASES IN SPITE OF GIVING A NUMBER OF OPPORTUNITIES BY THE ASSESSING OFFICER. IN THE CASE OF VIDYA SAGAR OSWAL V. CIT [1977] 108 ITR 861 (PUNJ. & HAR.), THE FACTS OF THE C ASE WERE AS FOLLOWS: - THE HON BLE PUNJAB AND HARYANA HIGH COURT HELD AS UNDER AS PER HEAD NOTE: 'HELD, THAT THE TOTALITY OF THE CIRCUMSTANCES IN THE PRESENT CASE LED TO THE IRRESISTIBLE CONCLUSION THAT THE ASSESSEE HAD CONSCIOUSLY CONCEALED THE PARTI CULARS OF INCOME AND HAD DELIBERATELY FURNISHED INACCURATE PARTICULARS IN ORDER TO CONCEAL THE INCOME. IN THESE DAYS OF HIGH PRICES, EVEN AN ORDINARY MAN CANNOT LIVE ON RS. 2,000 A YEAR. THE ASSESSEE WHO HAD INCOME OF MORE THAN RS. 86,000 AND WAS THE MANAG ING DIRECTOR OF A LEADING MILL IN LUDHIANA AND WHOSE FAMILY CONSISTED OF HIS WIFE, FOUR SONS AND A DAUGHTER SHOULD HAVE SPENT MORE THAN RS. 500 PER MONTH FOR HIS HOUSEHOLD EXPENSES. THE DOMESTIC EXPENSESA SSESTIMATED BY THE INCOME - TAX OFFICER WERE RATHER R IDICULOUSLY ON THE LOW SIDE. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ASSESSEE WAS LIABLE TO PAYPENALTY.' HOWEVER IN THE CASE OF THE ASSESSEE IT IS NOT MERELY ESTIMATION OF INCOME BUT IT HAS BEEN PROVED THAT THE VARIOUS EXPENSES CLAIMED IN THE PROFIT AN D LOSS ACCOUNT FILED WITH THE RETURN OF INCOME ARE FICTITIOUS BECAUSE THEY ARE NOT I.T.A NO. 2258 /AHD/20 14 A.Y. 2006 - 07 PAGE NO DCIT VS. M/S. ZODIAC EICHER 8 VERIFIABLE AT ALL. WE OBSERVE THAT IN THE CASE OF THE ASSESSEE EVEN THE PART OF THE BASIC MATERIAL THAT IS EVIDENCE OF EXISTENCE OF THE SELLERS OF THE CULTIVATORS WERE NO T ESTABLISHED. WE FURTHER OBSERVE THAT IT IS IMPERATIVE AND FUNDAMENTAL LIABILITY OF THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS OF INCURRING OF THESE EXPENDITURE . EVEN THE ASSESSEE HAS COMPLETELY FAILED TO CONTROVERT THE REASON FOR NON EXISTENCE OF THE SELLERS OF CULTIVATORS. IN VIEW OF ABOVE FACTS THE DISCLOSURE MADE BY T H E ASSESSEE ON FAILING TO CONTRO VERT THE FINDINGS OF THE ASSESS ING OFFICER CANNOT BE SAID THAT IT IS ESTIMATED ADDITION WITHOUT ANY BASIS . RESORTING TO ESTIMATE IN THIS CASE WAS NOT A N ESTIMATE WITHOUT BASIS BUT WITH A CLEAR CUT BACKGROUND MATERIAL . THEREFORE, WE FIND THAT ESTIMATION OF PURCHASES TO THE EXTENT OF 25% IS NOT A GENERAL ESTIMATION BUT IT IS BASED ON SPECIFIC UNDISPUTED FACTS THAT THE GENUINENESS OF THE PURCHASE WAS NOT PR OVED BECAUSE IT WAS SUBSTANTIATED WITH RELEVANT MATERIAL AND COMPLETE MODUS OPERANDI OF RECEIVING BOGUS BILLS OF PURCHASES WITHOUT ANY DELIVERY OF GOODS. WE FURTHER OBSERVE THAT THERE IS NO RULE THAT PENALTY FOR CONCEALMENT UNDER SECTION 271(1)( C ) CANNOT BE IMPOSED WHERE THE INCOME IS ESTIMATED. THE LEVY OF PENALTY UNDER SECTION 271(1)( C ) DEPENDS ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IF THE CONCEALMENT OF INCOME IS APPARENT FROM THE RECORD, THERE IS NO REASON WHY PENALTY UNDER SECTION 271(1)( C ) CAN NOT BE IMPOSED FOR CONCEALMENT OF INCOME. LOOKING TO THE ABOVE FAC T S AND CIR CUM S TANCE S , WE CONSIDER THAT THE DECISION OF THE LD. CIT(A) IS NOT JUSTIFIED ,THEREFORE WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND UPHELD THE PENALTY ORDER OF THE ASSESSING OFFI CER. ACCORDINGLY, THE APPEAL OF THE REVENUE IS ALLOWED. 6. IN THE RESULT , THE APPEAL OF THE REVENUE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 16 - 04 - 201 8 SD/ - SD/ - ( S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL MEM BER ACCOUNTANT MEMBER AHMEDABAD : DATED 16 /04 /2018 I.T.A NO. 2258 /AHD/20 14 A.Y. 2006 - 07 PAGE NO DCIT VS. M/S. ZODIAC EICHER 9 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,