SHRI Sanjay Somani, Indore V. THE DCIT-5(1), Indore

ITA 236/IND/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2288 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 16-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SHRI S SHRI S SHRI
• Keywords: Rejection of books of accounts; Unexplained investment; Peak credit; Difference of opinion
• Section: 40A(3); 147; 145; 148; 132

Judgement Text

SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 1 OF 11 , , IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE INDORE BENCH, INDORE INDORE BENCH, INDORE INDORE BENCH, INDORE , ' .., ( BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT AND SHRI O.P.MEENA, ACCOUNTANT AND SHRI O.P.MEENA, ACCOUNTANT AND SHRI O.P.MEENA, ACCOUNTANT MEMBER MEMBER MEMBER MEMBER SHRI SANJAY SOMANI SHRI SANJAY SOMANI SHRI SANJAY SOMANI SHRI SANJAY SOMANI , ,, , 101, CLASSIC CENTRE, M G ROAD 101, CLASSIC CENTRE, M G ROAD 101, CLASSIC CENTRE, M G ROAD 101, CLASSIC CENTRE, M G ROAD INDORE INDORE INDORE INDORE V. V.V. V. DCIT 5(1) INDORE DCIT 5(1) INDORE DCIT 5(1) INDORE DCIT 5(1) INDORE ) / APPELLANT APPELLANT APPELLANT APPELLANT +,) / RESPONDENT RESPONDENT RESPONDENT RESPONDENT . . ./ PAN: PAN: PAN: PAN: AQQPS7473P AQQPS7473P AQQPS7473P AQQPS7473P ) - / APPELLANT BY APPELLANT BY APPELLANT BY APPELLANT BY SHRI S SHRI S SHRI S SHRI S .S. DESHPANDE, CA .S. DESHPANDE, CA .S. DESHPANDE, CA .S. DESHPANDE, CA +,) - / RESPONDENT BY RESPONDENT BY RESPONDENT BY RESPONDENT BY SHRI MOHD. JAVED, SR. D.R. SHRI MOHD. JAVED, SR. D.R. SHRI MOHD. JAVED, SR. D.R. SHRI MOHD. JAVED, SR. D.R. - / DATE OF HEARING DATE OF HEARING DATE OF HEARING DATE OF HEARING 02 0202 02 - -- - 05 0505 05 - -- - 2017 20172017 2017 2 - / DATE OF PRONOUNCEMENT DATE OF PRONOUNCEMENT DATE OF PRONOUNCEMENT DATE OF PRONOUNCEMENT 02 0202 02 - -- - 05 0505 05 - -- - 2017 20172017 2017 ORDER ORDER ORDER ORDER PER O.P PER O.P PER O.P PER O.P. MEENA . MEENA . MEENA . MEENA, ACCOUTANT , ACCOUTANT , ACCOUTANT , ACCOUTANT MEMEBR MEMEBR MEMEBR MEMEBR. .. . THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAIN ST THE SEPARATE ORDERS OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)- II, INDORE [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 28-08 -2014 FOR ASSESSMENT YEAR 2003-04 AND 2005-06 CONFIRMING THE PENALTIES OF RS. 15,00,000/- AND RS. 10,00,000/- RESPECTIVELY AND CO NFIRMING PENALTY OF . . ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO. 757 & 758 757 & 758 757 & 758 757 & 758/IND/201 /IND/201 /IND/201 /IND/2014 AND 236/IND/2016 4 AND 236/IND/2016 4 AND 236/IND/2016 4 AND 236/IND/2016 / ASSESSMENT YEAR: 20 ASSESSMENT YEAR: 20 ASSESSMENT YEAR: 20 ASSESSMENT YEAR: 2003 0303 03- -- -04 , 2005 04 , 2005 04 , 2005 04 , 2005- -- -06 AND 2004 06 AND 2004 06 AND 2004 06 AND 2004- -- -05 05 05 05 SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 2 OF 11 RS. 5,25,000/- VIDE ORDER DTD. 31-12-2015 FOR THE A SSESSMENT YEAR 2004-05. SINCE THE FACTS ARE COMMON IN ALL THESE APPEALS EXC EPT FIGURES, WE DISPOSE OF THESE APPEALS BY THIS COMMON ORDER. 2. THE ASSESSEE HAS TAKEN COMMON GROUNDS OF APPEAL IN ALL THE YEARS EXCEPT THE FIGURES OF PENALTY. HOWEVER, WE ARE REPR ODUCING THE GROUNDS IN I. T. A. NO. 757/IND/2014, FOR THE SAKE OF BREVITY. 1. THE LD. CIT (A) ERRED IN MAINTAINING THE PENALTY OR DER U/S 271(1) (C). 2. THE ADDITIONS HAVE BEEN MADE ON THE MERELY ON THE G ROUND OF ESTIMATE OF GROSS PROFIT AND AS SUCH , THE PENALTY CONFIRMED BY THE LD. CIT (A) ON THE ADDITIONS WHICH WERE MADE ON ESTIMAT E BASIS IS BAD- IN-LAW. THE LD. CIT (A) FURTHER ERRED IN NOT FOLLOW ING ORDER OF HON`BLE TRIBUNAL IN THE CASE OF THE ASSESSEE IN SUB SEQUENT YEAR ON SIMILAR FACTS. 3. THE PENALTY LEVIED MAY PLEASE BE DELETED. 3. WE ARE DISCUSSING FACTS IN I. T. A. NO. 757/IND/201 4, FOR THE ASSESSMENT YEAR 2003-04, THE DECISION OF WHICH SHAL L BE BINDING ON OTHER APPEALS FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A NO TICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 26-03-2010. IN RESPONS E TO WHICH THE ASSESSEE HAS SUBMITTED VIDE LETTER DATED 26.04.2010 THAT RETURN FILED U/S. SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 3 OF 11 139(1) DECLARING TOTAL INCOME OF RS. 1,29,054/- MA Y BE TREATED AS FILED IN RESPONSE TO SAID NOTICE UNDER SECTION 148 OF THE AC T. THERE WAS A SEARCH U/S 132 OF THE ACT CARRIED OUT ON 30.09.2008 IN THE CASE OF SHRI BHARAT KOTHARI GROUP OF CASES. DURING THE COURSE OF SEARCH , A STATEMENT U/S 132(4) OF THE INCOME-TAX ACT, 1961, WAS RECORDED FR OM THE PROPRIETORS OF M/S. NIKITA STEELS, M/S. BHARAT ENTERPRISES, M/S . MAA ENTERPRISES, M/S. HARSH ENTERPRISES, M/S. SALUJA ENTERPRISES, M/ S. SONAM STEELS AND M/S. PRATIK ENTERPRISES (CALLED AS BILL PROVIDE RS). IN THE STATEMENT RECORDED, THEY HAVE ADMITTED THAT THEY WERE INDULGE D IN THE ACTIVITY OF RECEIVING BOGUS BILLS, WITHOUT MAKING ACTUAL DELIVE RY OF IRON AND STEEL. THEY HAD FURTHER CONFIRMED THIS FACT DULY IN SWORN AFFIDAVITS. THEY HAVE ALSO ADMITTED THAT THEY HAD RECEIVED CHEQUES F OR BILLS AND RETURNED THE ENTIRE AMOUNT TO THE PARTIES BY MAKING CASH WITHDRAWALS FROM THE BANK BY DEDUCTING NOMINAL COMMISSION RANGI NG FROM RS. 10/- TO RS. 40/- PER TON IRON. DURING THE COURSE O F POST SEARCH ENQUIRIES, IT WAS FOUND THAT THE ASSESSEE HAD DECLA RED PURCHASE OF IRON AND STEEL FROM THE ABOVE PARTIES. IT IS FOUND THAT THE ASSESSEE HAD SHOWN PURCHASES FROM THE ABOVE ENTRY PROVIDERS FOR RS. 3,14,50,484/-. ACCORDINGLY, THE CASE WAS REOPENED U/S 147 AND INCO ME WAS ASSESSED ON 28.12.2010 BY CONSIDERING THE ABOVE BILLS AS NON -VERIFIABLE. ACCORDINGLY, THE AO ESTIMATED 6% PROFIT ON THE SALE OF RS.3,14,50,484/- SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 4 OF 11 AND, ACCORDINGLY, MADE AN ADDITION OF RS. 18,87,029 /-. THE AO FURTHER NOTED THAT THE ASSESSEE HAS MADE CASH PURCHASES FOR WHICH CERTAINLY HE MADE INVESTMENT FROM UNDISCLOSED SOURCES, WHICH WER E NOT RECORDED IN THE BOOKS OF ACCOUNTS. IT WAS SUBMITTED BY THE A SSESSEE THAT IF IT IS PRESUMED THAT INITIAL INVESTMENT IS MADE IN CASH FO R PURCHASE OF GOODS, AND THEN THERE MAY BE NUMBER OF PRESUMPTIONS , SUCH PAYMENTS HAVE BEEN MADE AS AND WHEN APPROPRIATED BY BHARAT K OTHARI GROUP. THUS, IN ABSENCE OF ANY EVIDENCE, PRESUMPTION OF IN ITIAL INVESTMENT WILL NOT BE APPLIED. HOWEVER, THE AO DID NOT SATIS FY WITH THE EXPLANATION OF THE ASSESSEE AND OBSERVED THAT THE O NUS IS ON THE ASSESSEE TO ESTABLISH THAT THE CASH WAS FIRST ISSUE D FROM KOTHARI GROUP OF CONCERNS AGAINST CHEQUES PAYMENT FOR BOGUS BILLS ISSUED AND SAME WAS UTILIZED FOR MAKING PAYMENT FOR CORRESPONDING U NRECORDED PURCHASES. THEREFORE, CONSIDERING THE NATURE OF BUS INESS OF THE ASSESSEE, THE AO NOTED THAT IT WOULD BE UNJUSTIFIAB LE TO MAKE ADDITION OF THE ENTIRE PURCHASES, AS THERE MAY BE POSSIBILIT Y OF AVAILABILITY OF CASH, WHICH HAS BEEN RECEIVED AGAINST THE SALE. AS NUMBER OF THE PEAK CREDIT IS ALLOWED TO THE ASSESSEE, THE ASSESSEE HAS SUBMITTED A STATEMENT, ACCORDING TO WHICH THE PEAK INVESTMENT W AS WORKED OUT AT RS.20,00,855/-. THE AO ALSO MADE ADDITION OF RS. 62 ,90,096/- UNDER SECTION 40A(3) OF THE ACT. THUS, THE SAID AMOUNT WA S TREATED AS SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 5 OF 11 INVESTED IN PURCHASES FROM UNDISCLOSED SOURCES. THE PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT WERE INITIATE D IN RESPECT OF ABOVE ADDITION. IN REPLY TO PENALTY SHOW CAUSE NOTICE, TH E AO NOTED THAT IT IS NOT THE CASE OF A REMISSION OF PROFIT AS THE ASSESS EE HAS SUBMITTED INACCURATE PARTICULARS SHOWING THAT THE PURCHASES W ERE MADE FROM BOGUS BILLS PROVIDERS, WHILE PURCHASES WERE MADE WI TH ALTERNATIVE SOURCES. THE ADDITION IN PROFIT WAS MADE CONSIDERIN G THE SAVINGS OF THE ASSESSEE BY NOT PAYING SALES TAX AND ENTRY TAX. WHILE IN THE PRESENT CASE, NO RELIEF REGARDING ADDITION FOR PROF IT WAS ALLOWED BY ANY APPELLATE AUTHORITY. THUS, IT IS A CLEAR-CUT CASE O F FURNISHING INACCURATE PARTICULARS, AS SUCH THE CASE LAWS RELIED UPON BY T HE ASSESSEE ARE ALSO NOT APPLICABLE. HON'BLE I.T.A.T. ALSO CONFIRMED THE ADDITION MADE BY THE AO. CONSIDERING THESE FACTS, THE AO LEVIED PENA LTY OF RS. 15 LAKHS U/S 271(1) (C) OF THE INCOME-TAX ACT, 1961, AS AGAI NST MINIMUM PENALTY @ 100% AT RS.14,83,456/-. SIMILARLY, PENALTY OF RS. 5,25,000/- FOR A.Y. 2004-05 AND RS. 10 LAKH FOR THE ASSESSMENT YEAR 200 5-06 WAS LEVIED BY THE AO. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A). THE LD. CIT(A) NOTED THAT THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE CIT(A), WHEREIN THE ASSESSEE HAS GOT RELIEF ON ACCO UNT OF ADDITION U/S 40A(3) AMOUNTING TO RS. 62,90,096/- AND THE ADDITIO N ON ACCOUNT OF SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 6 OF 11 INVESTMENT AND PURCHASES AMOUNTING TO RS.20,00,855/ - AND ADDITION OF RS. 18,87,029/- WAS CONFIRMED. THE ASSESSEE AS WELL AS DEPARTMENT FILED AN APPEAL BEFORE THE TRIBUNAL, WHEREIN THE TR IBUNAL APPLIED THE DECISION IN THE CASE OF M/S. PRIYA STEELS, DATED 26 .07.2012 , BEING PARI MATERIA AND UPHELD THE ADDITION ON ACCOUNT OF PROFI T ON PURCHASES FROM ENTRY PROVIDERS AMOUNTING TO RS.18,87,029/- AN D DELETION OF ADDITION OF RS.62,90, 096/- MADE U/S 40A(3) OF THE ACT. HOWEVER, THE ADDITION ON ACCOUNT OF INITIAL INVESTMENT AMOUNTING TO RS. 20,00,855/- WAS SET-ASIDE AND THE ORDER OF THE AO WAS RESTORED. THUS, IN NUT-SHELL, THE TRIBUNAL HAS CONFIRMED THE ADDITION OF RS.18,87 ,029/- AND RS. 20,00,855/-. THE LD. CIT (A) NOTED THAT THE TRIBUN AL HAS OBSERVED THAT IT IS NOT THE CASE OF THE ASSESSEE THAT THE ENTIRE ALTERNATIVE PURCHASES MADE BY THE ASSESSEE HAS BEEN ADDED BY THE AO. THE ADDITION HAS BEEN MADE ONLY UP TO THE DATE OF WORKING OUT PEAK INVEST MENT. THE LD. CIT (A) HAS FURTHER OBSERVED THAT THE TRIBUNAL HAS CONC LUDED THE ORDER OF THE CIT (A) WAS NOT CORRECT TO THE EXTENT OF ALLOWI NG SETTING OFF ENTIRE 6% PROFIT, WHICH WAS ADDED IN RESPECT OF PURCHASES MADE FROM THE KOTHARI GROUP AGAINST PEAK AND UNEXPLAINED INVESTME NT WORKED OUT ON A PARTICULAR DATE. THEREFORE, THE AO WAS DIRECTE D TO RECOMPUTE THE ADDITION MADE ON ACCOUNT OF PURCHASES MADE FROM KOT HARI GROUPS UP TO THE DATE OF WORKING OUT UNEXPLAINED INVESTMENT O N SUCH PURCHASE. SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 7 OF 11 FURTHER, IT WAS DIRECTED THAT TO THAT EXTENT THE SE T-OFF SHOULD BE ALLOWED. THEREFORE, THE LD. CIT (A) OBSERVED THAT T HE AO SHOULD HAVE GIVEN EFFECT TO THE DIRECTION OF I.T.A.T. BEFORE LE VYING AND DECIDING THE QUANTUM OF PENALTY AMOUNT IN VIEW OF THE ABOVE. THE LD. CIT(A) DIRECTED THE AO TO RECOMPUTE THE QUANTUM ADDITION W ITH REFERENCE TO THE DIRECTION OF I.T.A.T. WITHIN REASONABLE TIME FR AMED AND THE QUANTUM OF PENALTY SHALL BE CONSIDERED AS MODIFIED TO THAT EXTENT OF DIFFERENCE WORKED OUT AFTER RECOMPUTATION. ACCORDIN GLY, THE ACTION OF THE AO WAS CONFIRMED WITH THESE DIRECTIONS. 6. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEF ORE THE TRIBUNAL. THE LD. A.R. REITERATED THE SUBMISSIONS M ADE BEFORE THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE PENALTY ORDER U/S 271(1) (C) HAS BEEN PASSED IN HASTE BASED ON WRONG FACTS. THE AO STATED IN HIS ORDER THAT THE REPLY OF THE ASSESS EE IS NOT ACCEPTABLE. IT IS NOT THE CASE OF ESTIMATION OF PROFIT. WHEREAS THE SAME AO REJECTED THE BOOKS OF ACCOUNTS U/S 145 OF THE INCOM E-TAX ACT, 1961. AS PER, PARA 5 OF THE ASSESSMENT ORDER AND FURTHER STA TED BEFORE MAKING ADDITION THAT AS SUCH IT IS CLEAR THAT THE AMOUNT IN PURCHASE BILLS ARE MENTIONED AS PER SWEET WILL OF THE ASSESSEE AND THE SAME ARE NOT VERIFIABLE AS SUCH 6% PROFIT RATE ON SALE OF RS. 37 ,43,849/- IS APPLIED AND ACCORDINGLY, AN ADDITION OF RS. 2,24,630/- IS MADE TO THE INCOME OF THE ASSESSEE. IN THE INSTANT CASE THE ADDITION HAS BEE N MADE BASED ON GUESSWORK HENCE, THE SAME CANNOT BE SUBJECT MATTER OF PENALTY FOR CONCEALMENT OF INCOME. PENALTY BEING A QUASI-CRIMIN AL PROCEEDING IT IS THE DUTY OF THE AO TO ESTABLISH THE GUILT OF THE AS SESSEE IN CONCEALING SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 8 OF 11 THE INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. THE LD. A.R. OF THE ASSESSEE RELIED UPON THE DECISION O F I.T.A.T. INDORE BENCH IN THE CASE OF M/S. PRIYA STEELS [I.T.A. NO. 481/IND/2014 DTD. 16.05.2016] OF THE SAME GROUP AND WHEREIN THE I.T.A .T. INDORE BENCH HAS CANCELLED THE PENALTY IN THE CASE OF PRIYA STEE LS. THE INSTANT APPEALS ARE ALSO COVERED BY THE DECISION OF I.T.A. T. THE LD. A.R. FURTHER RELIED IN THE CASE OF SHRI PANKAJ KANWAR V. ACIT [I.T.A. NO. 692 & 693/IND/2015 FOR ASSESSMENT YEAR 2005-06 AND 2006-07 DTD. 5.4.2016] OF TRIBUNAL INDORE BENCH AND SHRI RAJESH GANDHI [I.T.A. NO. 403 TO 406 FOR A.Y. 2003-04 TO 2006-07 DTD. 26-10-2 016] . THE LD. A.R. OF THE ASSESSEE CONCLUDE THAT THERE IS NEITHER ANY CON CEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PRAYE D THAT THE IMPUGNED PENALTY IN THE INSTANT CASE FOR ALL THE YE ARS BE CANCELLED. 7. ON THE OTHER HAND, THE LD. SR. D.R. RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 8. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. WE HAVE GONE THROUGH THE CASE LAWS RELIED UPON THE LD. A.R. OF THE ASSESSEE AND THE DECISION OF I.T.A.T. INDORE BENCH IN THE CASE OF M/S. PRIYA STEELS [I.T.A. NO. 481/IND/2014 DTD. 16.05.20 16]. WE FIND THAT THE I.T.A.T. INDORE BENCH HELD AS UNDER :- 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE IS A PARTNERSHIP FIRM DOING THE BUSINESS OF TRADING OF S TEELS. THE BOOKS OF ACCOUNTS ARE AUDITED U/S 44AB AND QUANTITATIVE DETA ILS HAVE BEEN MAINTAINED BY THE ASSESSEE. A SEARCH U/S 132 WAS CO NDUCTED AT THE PREMISES OF BHARAT KOTHARI GROUP AND DURING THE COU RSE OF STATEMENT SHRI MAYUR KOTHARI THAT THEY ARE ISSUING THE BILLS WITHOUT MAKING ANY DELIVERY OF IRON AND STEEL. THEY FURTHER STATED THA T THEY HAVE RECEIVED THE CONSIDERATION OF SUCH SHARE BY ACCOUNT PAYEE CH EQUES AND AFTER KEEPING THE COMMISSION, AMOUNTS ARE RETURNED. ON TH E BASIS OF THIS STATEMENT, THE CASE OF THE ASSESSEE WAS REOPENED UN DER SECTION 147 AND SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 9 OF 11 THE AO HAS MADE THE ADDITION OF PROFIT ON SUCH BOGU S PURCHASE @ 6%. THE TRIBUNAL HAS UPHELD THE ACTION OF AO AND THE LD . CIT(A) FOR DISALLOWANCE OF 6% OF PURCHASE PRICE IN RESPECT OF ACCOMMODATION BILLS OF KOTHARI GROUPS. THE 6% PROFIT WAS ESTIMATED ON E STIMATE BASIS. THE PROFIT FOR SUCH TRANSACTIONS HAVE ALREADY BEEN DISC LOSED BY THE ASSESSEE. THE ADDITIONS HAVE BEEN SUSTAINED BY THE LD. CIT(A) AND TRIBUNAL BY ESTIMATING THE GROSS PROFIT AT 6% ON THESE PURCHASE S AND DISALLOWANCE OF EXPENDITURE OF 6% ON THESE PURCHASES. THE ASSESS EE HAS PURCHASED THE GOODS, WHICH IS UNDISPUTED FACT. THE KOTHARI GR OUP MIGHT HAVE ARRANGED THE BILLS BUT PURCHASE CANNOT BE TREATED A S NON-GENUINE, SINCE THE SAME QUANTITY OF GOODS HAVE BEEN SOLD BY THE AS SESSEE. WE FIND THAT IN THE ASSESSMENT ORDER, THE AO HAS ESTIMATED THE P ROFIT OF THE ASSESSEE ON THE GROUND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS PRODUCED THE QUANTITATIVE TALLY, WHICH SHOWS THAT THE ASSESSEE HAS SOLD THE GOODS TO OTHER PARTIES AND IS SUED THE BILLS AND AMOUNTS RECEIVED FROM THEM THROUGH CHEQUES. AS SUCH , IT APPEARS THAT THE SALES WERE ACTUALLY MADE. AS PURCHASES WERE NOT MADE FROM THE BILLS PROVIDERS AS IT IS AND EVIDENT THAT THE PURCH ASES WERE MADE FROM THE THIRD PARTY. IT IS WELL KNOWN FACT THAT THERE W AS LEVY OF COMMERCIAL TAX @ 4% ON BILLING PRICE, WHICH WAS ONE TIME LEVY AT THE TIME OF IMPORT FROM OUT OF M.P. OR AT THE TIME OF FIRST SAL E AFTER PRODUCTION WITHIN THE STATE. THE ASSESSEE HAS SAVED THE AMOUNT EQUIVALENT TO COMMERCIAL TAX BY PURCHASING THE GOODS WITHOUT BILL S AND OBTAINING THE BILLS FROM BILL PROVIDERS SHOWING M.A.C.T. PAID GOO DS PURCHASES. THE SAME MODUS OPERANDI WAS ADOPTED BY SHRI PIYUSH GUPT A AND IN THAT CASE, IT WAS FOUND THAT THERE WERE SOME BILLS, WHIC H WERE NOT ENTERED IN THE BOOKS, BUT THE BILLS FROM THE BILLS PROVIDE FOR THE SAME ADDED AND QUANTITIES WERE ENTERED INTO BOOKS AND IT WAS FOUND THAT AMOUNT OF BILLS OF ENTRY PROVIDER WAS HIGHER THAN THAT OF BILLS FRO M WHICH THE GOODS WERE ACTUALLY PURCHASED. THE PURCHASE AMOUNT WAS ME NTIONED AS PER SWEET WILL OF THE ASSESSEE AND THE SAME ARE NOT VER IFIABLE AND AS SUCH, 6% PROFIT RATE ON SALE WAS APPLIED. FROM THE ORDER OF THE AO, WE FOUND THAT THE AO HAS ESTIMATED THE INCOME ON THE BILLS I SSUED BY THE ASSESSEE AND THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS SA VED 4% COMMERCIAL TAXES. THE KOTHARI GROUPS MIGHT HAVE ARRANGED THE B ILLS; THE ASSESSEE HAS MADE PURCHASES AND SAME QUANTITATIVE DETAILS HA VE BEEN SHOWN. THEREFORE, THE AO HAS ESTIMATED THE INCOME ON PURE GUESS WORK. THE SIMILAR ISSUE HAD COME BEFORE THE HON'BLE M.P. HIGH COURT IN THE CASE OF CIT VS. SHIVNARAYAN JAMNALAL, (1998) 232 ITR 311 ( MP), WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT THE BOOKS OF A CCOUNTS MAINTAINED BY THE ASSESSEE WERE NOT PROPERLY MAINTAINED AND IF ASSESSEE HAS NOT CONCEALED ANY MATERIAL AND NOT TRIED TO DEFRAUD THE AUTHORITIES, THE SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 10 OF 11 PENALTY CANNOT BE LEVIED, BECAUSE THE INCOME WAS AS SESSED ON ESTIMATE BASIS. WE FOUND THAT SIMILAR CASE HAS COME UP BEFOR E THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF HARIGO PAL SINGH VS. CIT, 258 ITR 85 (P&H), WHEREIN IT IS HELD THAT IT W AS A DIFFERENCE OF OPINION AS REGARDS THE ESTIMATE OF INCOME OF THE AS SESSEE, IT COULD NOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE INCOME SO AS TO ATTRACT THE PROVISIONS OF SECTION 271(1)(C). IN THE INSTANT CAS E, THE ASSESSEE HAS FILED THE RETURN OF INCOME AND WHICH WAS REOPENED ON THE BASIS OF THE STATEMENT OF SHRI MAYUR KOTHARI AND ON THE BASIS OF THE STATEMENT, THE ASSESSEES INCOME WAS ESTIMATED ON THE GROUND THAT THE ASSESSEE HAS SAVED THE COMMERCIAL TAX @4% AND HIS INCOME WAS EST IMATED. IN ORDER TO PROTECT THE CLAUSE (C) OF SECTION 271(1) OF THE ACT, IT IS NECESSARY THAT THERE MUST BE CONCEALMENT BY THE ASSESSEE OF PARTIC ULARS OF HIS INCOME OR IF HE FURNISHES THE INACCURATE PARTICULARS OF IN COME. THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNTS AND HE HAS FILED THE R ETURN OF INCOME AND DURING THE COURSE OF SEARCH, THE AO HAS ESTIMATED 6 % PROFIT ON THE GROUND THAT THE ASSESSEE MIGHT HAVE SAVED 4% OF COM MERCIAL TAX BY OBTAINING BOGUS BILLS. THE ASSESSEE MIGHT HAVE MADE PURCHASES WITHOUT BILLS. THEREFORE, THE ADDITION WAS MADE AND INCOME WAS ESTIMATED. THEREFORE, THE ADDITION WAS MADE ON ESTIMATED BASIS . THEREFORE, WE ARE OF THE VIEW THAT THE PENALTY CANNOT BE LEVIED. 9. WE FIND THAT THE ABOVE DECISION OF THE I.T.A.T., IN DORE BENCH IN THE CASE OF M/S. PRIYA STEELS[ I.T.A. NO. 481/IND/2014 DTD. 16.05.2016], SHRI PANKAJ KANWAR V. ACIT [I.T.A. NO . 692 & 693/IND/2015 FOR A.Y. 2005-06 AND 2006-07 DTD. 05.0 4.2016] OF TRIBUNAL, INDORE BENCH AND SHRI RAJESH GANDHI [I.T.A. NO. 403 TO 406 FOR A.Y. 2003-04 TO 2006-07 DTD. 26-10-2016] ARE SQUARELY AP PLICABLE TO THE INSTANT CASE ALSO. RESPECTFULLY FOLLOWING THE PREVIOUSLY ME NTIONED DECISIONS OF I.T.A.T. INDORE BENCH, WE CANCEL THE PENALTY IN ALL THE YEARS. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE IS ALLOW ED FOR ALL THREE-ASSESSMENT YEARS. SHRI SANJAY SOMANI/ I.T.A. NO.757&758/IND/2014/AY:0 3-04&05-06 & I.T.A. NO. 236/IND/2016/AY04-06 PAGE 11 OF 11 11. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 02.0 5.2017. SD/ SD/SD/ SD/- -- - ( ( ( ( ) )) ) (CHANDRA MOHAN (CHANDRA MOHAN (CHANDRA MOHAN (CHANDRA MOHANG GG GARG) ARG) ARG) ARG) SD/ SD/SD/ SD/- -- - ( (( ( .. ) (O.P.MEENA) (O.P.MEENA) (O.P.MEENA) (O.P.MEENA) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTAN ACCOUNTAN ACCOUNTAN ACCOUNTANT TT T M MM MEMBER EMBER EMBER EMBER DATED :02.05.2017