The ITO, 3(2), Bhopal V. Shri Jai Raj Chouhan, Gwalior

ITA 278/IND/2011

• Counselvise Citation: 27822714 RSA 2011
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 03-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: ANIL DUBE
• Keywords: Unexplained investment; Business income; Additional evidence
• Section: 142(1); 144; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AEBPC0603E I.T.A.NO. 278 & 279 /IND/201 1 . A.Y. : 2006 - 07 INCOME - TAX OFFICER, SHRI JAI RAJ CHOUHAN, 3(2), BHOPAL VS PROP. M/S. SAINATH FILLING STATION, LASHKAR, GWALIOR. APPELLANT RESPONDENT C.O.NO.56/IND/2011 (ARISING OUT OF I.T.A.NO. 278/IND/2011. A.Y. : 2006 - 07 SHRI JAI RAJ CHOUHAN, INCOME - TAX OFFICER, PROP. M/S. SAINATH FILLING STATION, VS 3(2), BHOPAL LASHKAR, GWALIOR. CROSS OBJECTOR RESPONDENT DEPARTMENT BY : SHRI R.A.VERMA, SR. DR ASSESSEE BY : SHRI ANIL DUBE, ADV. -: 2: - 2 DATE OF HEARING : 10 . 10 .2012 DATE OF PRONOUNCEMENT : 12 . 10 .201 2 O R D E R PER R. C. SHARMA, A.M. I.T.A.NO. 278/IND/2011 & C.O.NO.56/IND/2011: THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF CIT( A) DATED 04.07.2011 FOR THE ASSESSMENT YEAR 2006-07, IN THE MATTER OF ORDER PASSED U/S 144 OF THE INCOME-TAX ACT, 1961. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE DURING THE CURRENT YEAR STARTED THE BUSINESS OF RUNNING PE TROL PUMP AND DECLARED INCOME FROM RETAIL TRADE OF PETROLEUM PRODUCTS. THE ASSESSEE FILED RETURN OF TOTAL INCOME ALONGWITH TAX AUDIT REPORT IN FORM NO. 3CB AND 3CD DECLARING INCOME OF RS. 25,087/-. THE ASSESSING OFFICER IN THE ASSESSMENT O RDER HAS NOTED THAT NOTICES U/S 143(2) AND 142(1) WERE ISSUE D AT THE ADDRESS MENTIONED IN THE RETURN, HOWEVER, THE SAME RETURNED BACK UN-SERVED. THEREAFTER, NOTICES WERE RECEIVED B Y SHRI -: 3: - 3 SANDEEP MUKHERJEE, C. A. AND AUDITOR OF THE ASSESSE E. THERE WAS NON-ATTENDANCE AND NON SUBMISSION OF DETAILS IN THE ASSESSEES CASE, THEREFORE, EX-PARTE BEST JUDGEMENT ASSESSMENT ORDER U/S 144 OF THE INCOME-TAX ACT, 196 1, WAS PASSED BY THE ASSESSING OFFICER ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS. 34,39,600/- AS AGAINST RETURNED INCOME OF RS. 25,087/-. THE ASSESSING OFFICER IN THE ASSESSME NT ORDER NOTED THAT THIS IS THE FIRST YEAR OF RUNNING PETROL PUMP BUSINESS AND THE ASSESSEE HAS SHOWN FIXED ASSETS OF RS. 5,690/- AND ADVANCE FOR LAND RS. 6,61,000. THE INIT IAL CAPITAL EMPLOYED BY THE ASSESSEE IS ONLY RS. 1,00,000/-. TH E ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS MADE SUBSTANTIAL INVESTMENT IN ERECTING PETROL PUMP WHIC H HAS NOT BEEN DISCLOSED. ACCORDINGLY, THE ASSESSING OFFICER ESTIMATED THE INVESTMENT IN ERECTING PETROL PUMP AT RS. 20,00 ,000/- AND ADDED TO THE TOTAL INCOME AS INVESTMENT FROM UNDISC LOSED SOURCES. THE ASSESSING OFFICER NOTED THAT THE ASSES SEE HAS SHOWN SALES TO THE TUNE OF RS. 44,08,046/- DISCLOSI NG NET PROFIT AT 0.47% AT RS. 20,837/-. HOWEVER, IN THE AB SENCE OF VERIFICATION OF BOOKS AND BANK ACCOUNT, THE ASSESSI NG OFFICER -: 4: - 4 NOTED THAT TRADING RESULTS ARE NOT VERIFIABLE AND R EJECTED THE SAME. THE ASSESSING OFFICER OBSERVED THAT GROSS PRO FIT RATE OF 1.46 % SHOWN IS ON THE LOWER SIDE. IN THE ABSENCE O F MANDATORY STOCK REGISTER, ASSESSING OFFICER OBSERVE D THAT ASSESSEE HAS SUPPRESSED THE SALES/STOCK AND ESTIMAT ED THE SAME AT RS. 50,00,000/- AND APPLIED GROSS PROFIT RA TE OF 2.26 % AFTER DRAWING COMPARISON TO THE CASE OF M/S. KART AR FILL AND FLY PETROL PUMP ENGAGED IN SIMILAR BUSINESS AND ASS ESSED BY HIM TO ESTIMATE THE INCOME OF THE ASSESSEE AT RS. 1 ,13,000/-. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS. 6,0 0,000/- U/S 68 OF THE INCOME-TAX ACT, 1961, IN RESPECT OF U NSECURED LOAN FROM SHRI MAHESH RATHORE WHICH BEING NOT SUPPO RTED BY ANY CONFIRMATION WITHIN THE MEANING OF SECTION 68 O F THE INCOME-TAX ACT, 1961. SINCE, EX PARTE ORDER WAS PAS SED BY THE ASSESSING OFFICER U/S 144, WRITTEN SUBMISSIONS ALON GWITH ADDITIONAL EVIDENCES FILED IN SUPPORT OF ASSESSEES CLAIM WERE FORWARDED BY THE LD.CIT(A) TO THE ASSESSING OFFICER VIDE LETTER DATED 20.07.2010. THE ASSESSING OFFICER SUBMITTED I N HIS REMAND REPORT DATED 23.11.2010, THAT THE ADDITIONAL EVIDENCE SHOULD NOT BE ACCEPTED AS DURING THE ASSESSMENT PRO CEEDINGS -: 5: - 5 AS WELL AS PENALTY PROCEEDINGS, THE ASSESSEE WAS NO N COOPERATIVE. THE ASSESSING OFFICER IN HIS REMAND RE PORT REITERATED THE STAND TAKEN AND FINDINGS/OBSERVATION S MADE IN THE EX-PARTE ASSESSMENT ORDER. 3. AFTER CONSIDERING THE REMAND REPORT AND THE REPLY F ILED BY THE ASSESSEE IN RESPECT OF THE OBJECTIONS RAISED BY THE ASSESSING OFFICER IN HIS REMAND REPORT, THE LD. CIT (A) DELETED MAJOR PART OF THE ADDITIONS AFTER HAVING THE FOLLOW ING OBSERVATIONS :- 9. I HAVE GONE THROUGH THE OBSERVATIONS MADE BY THE AO IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT. IT IS SEEN THAT THE NOTICES SERVED AT THE APPELLANT'S GIVEN ADDRESS IN THE RETURN WERE RECEIV ED BACK BY THE AO, THEREFORE, NO PROPER OPPORTUNITY OF HEARING WAS AVAILABLE WITH THE APPELLANT. THEREFORE , THE ADDITIONAL EVIDENCES FILED ALONGWITH THE APPELL ATE SUBMISSIONS DESERVE TO BE ACCEPTED UNDER THE PROVISIONS OF RULE 46A OF THE I.T. RULES. MOREOVER, WHEN THESE ADDITIONAL EVIDENCES HAVE DIRECT NEXUS WITH THE ISSUES INVOLVED IN THE CASE OF THE APPELLA NT -: 6: - 6 ARE VITAL FOR DECIDING THE APPEAL. ACCORDINGLY, THE ADDITIONAL EVIDENCES BEING COMMERCIAL TAX DOCUMENTS, DEALERSHIP LETTER DATED 18.11.2005 OF IB P CO. LTD., AGREEMENT DATED 22.12.2005 AND POWER OF ATTORNEY BETWEEN THE APPELLANT AND SHRI MAHESH RATHORE AND SHRI MAYANK SHARMA, WORKING CAPITAL LOAN UNDER CORPUS FUND SCHEME OF ISSUE IN THE NAME OF THE APPELLANT, AFFIDAVIT DATED 08.06.2011 ETC. A RE ACCEPTED AS ADDITIONAL EVIDENCES U/R 46A OF THE I.T . RULES. 1. 11. I HAVE GONE THROUGH THE OBSERVATIONS AND FINDINGS OF THE AO MADE IN THE EX PARTE ASSESSMENT ORDER AS WELL AS THE REMAND REPORT. I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS AND ADDITIONAL EVIDENCES FILED BY THE APPELLANT. IT IS SEEN THAT NOTICES U/S 142(1) AND 143(2) OF THE LT. ACT WERE ISSUED TO THE APPELLANT AT THE ADDRESS MENTIONED BY HIM IN THE RETURN BUT THE SAME WERE RETURNED UNDELIVERED RESULTING IN EX-PARTE ASSESSMENT ORDER. HOWEVER, BY CONDONING THE DELAY IN FILING APPEAL AS -: 7: - 7 WELL AS ACCEPTING THE WRITTEN SUBMISSIONS OF THE APPELLANT ALONGWITH ADDITIONAL EVIDENCES RELIED UPON BY HIM IN HIS SUPPORT, PROPER AND MEANINGFUL OPPORTUNITY HAS BEEN ALLOWED. THEREFORE, GROUNDS NO. 1, 2, 7, 8, 9, 10, 11 AND 12 ALL BEING INTERREL ATED AND CONNECTED WITH GRIEVANCE OF THE APPELLANT ARE HEREBY REJECTED AND GROUNDS OF APPEAL RAISING SPECIFIC ISSUES OF ADDITIONS MADE ARE SEPARATELY ADJUDICATED. 12. AS REGARDS THE ISSUE RAISED IN GROUND NO. 3, I FIND THAT THE AO WAS NOT AT ALL JUSTIFIED IN MAKING LUMP SUM ADDITION OF RS. 20,00,000/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN ERECTING PETROL PUMP. THE APPELLANT REQUIRED THE PETROL PUMP IN SCHEDULE CAST E QUOTA FROM M/S. IBP CO. LTD. HOWEVER, NEITHER DID H E POSSES ANY EXPERIENCE NOR FINANCIAL CAPACITY TO RUN THE PETROL PUMP BUSINESS AS IS CLEAR FROM THE AGREEMENT DATED 22.12.2005 ENTERED BETWEEN THE APPELLANT AND SHRI MAHESH RATHORE AND SHRI MAYANK SHARMA. AS PER THE AGREEMENT, THE -: 8: - 8 APPELLANT TRANSFERRED THE RIGHT TO RUN THE PETROL P UMP IN THE ABOVE TWO PERSONS AND AS PER CLAUSE 3(B) OF THE AGREEMENT RECEIVED RS. 3,50,000/- AS CONSIDERATION. THEREFORE IT IS CLEAR THAT THE APPEL LANT DID NOT MAKE INVESTMENT OF RS. 20,00,000/- AS HELD BY THE AO OTHERWISE WHY WILL THE APPELLANT NOT RUN THE PETROL PUMP BUSINESS BY HIMSELF INSTEAD OF GIVI NG THE RUNNING RIGHTS TO THE AFORESAID TWO PERSONS. THEREFORE, ADDITION OF RS. 20,00,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN ERECTING PETROL PUMP IS DELETED IN FULL. HOWEVER, AS IS EVIDENTLY CLEAR THAT THE APPELLANT RECEIVED RS. 3,50,000/- AS CONSIDERATION IN LIEU OF TRANSFERRING THE RIGHT TO RUN THE PETROL PUMP BUSINESS ALLOTTED IN H IS NAME FROM THESE TWO PERSONS AND HAS NOT OFFERED THE SAME AS INCOME TO TAX, AN ADDITION OF RS. 3,50,000/- IS MADE TO THE TOTAL INCOME OF THE APPELLANT ON THIS COUNT. THUS, GROUND NO. 3 IS DECIDED ACCORDINGLY. 13. AS REGARDS, THE ISSUE RAISED IN GROUND NO. -: 9: - 9 4, I FIND THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE AO WAS JUSTIFIED IN ADOPTING GP RATE OF 2.26 % ON THE BASIS OF COMPARABLE CASE INFERENCE DRAWN BY HIM BY ESTIMATING TURNOVER OF THE APPELLANT AT RS.50,00,000/- THEREBY COMPUTING INCOME OF RS. 1,13,000/- FROM BUSINESS OF RUNNING PETROL PUMP. THE AO FINDINGS THAT NEITHER BOOKS OF ACCOUNT OR STOCK REGISTER ARE PRODUCED JUSTIFY THE SUSTAINING OF THE ADDITION. FURTHER, IN THE ABSENCE OF ANY PROOF OR EVIDENCE FILED BY THE APPELLANT THAT PETROL PUMP BUSINESS INCOME HAS BEEN DECLARED BY THE TWO PERSONS NAMELY SHRI MAHESH RATHORE AND SHRI MAYANK SHARMA, THE SAME IS ASSESSABLE IN THE HANDS OF THE APPELLANT. THUS, GROUND NO. 4 IS DECIDED AGAINST THE APPELLANT AND ADDITION OF RS. 1,13,000/- IS CONFIRMED. 14. AS REGARDS, THE ISSUE RAISED IN GROUND NO.5, I FIND THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 6,00,000/- U/S 68 OF THE INCOME-TAX ACT, 1961, ON ACCOUNT OF UNSECURED LOAN RECEIVED -: 10: - 10 FROM SHRI MAHESH RATHORE. IT IS SEEN THAT THE APPELLANT HAS NOT RECEIVED ANY AMOUNT EITHER IN CASH OR CHEQUE FROM SHRI MAHESH RATHORE TOWARDS UNSECURED LOAN. THIS UNSECURED LOAN OF RS.6,00,000/- REPRESENT CREDIT OF SHRI MAHESH RATHORE ON ONE AND DEBIT OF RS.6,00,000/- OUT OF ADVANCE FOR LAND OF RS.6,61,000/- ON THE OTHER SIDE. SINCE FOR THE PETROL PUMP LAND WAS GIVEN BY SHRI MAHESH RATHORE, IT IS EVIDENT FROM THE AGREEMENT DATED 22.12.2005 BETWEEN THE APPELLANT AND SHRI MAHESH RATHORE AND SHRI MAYANK SHARMA THAT THE LAND ON WHICH PETROL PUMP IS SITUATED I ERECTED BELONGED TO THEM AND THAT THESE TWO PERSONS HAVE LEASED THE SAME TO IBP CO. LTD. FOR SETTING UP PETROL PUMP. THEREFORE, THE ADDITION OF RS.6,00,000/- U/S 68 IF THE IT ACT IS HEREBY DELETED. THUS, GROUND NO.5 IS DECIDED IN FAVOUR OF THE APPELLANT. 15. AS REGARDS, THE ISSUE RAISED IN GROUND NO. 6, I FIND THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.7,26,595/- U/S 68 OF THE LT. ACT ON -: 11: - 11 ACCOUNT OF SUNDRY CREDITOR BALANCE OUTSTANDING IN THE NAME OF THE IBP. CO. LTD. FROM THE RECOVERY SCHEDULE STATEMENT OF M/S. INDIAN OIL CORPORATION LTD. MARKETING DIVISION, MPSO IN THE NAME OF THE APPELLANT'S PETROL PUMP, IT IS SEEN THAT WORKING CAPITAL LOAN OF RS.7,26,596/- UNDER CORPUS FUND SCHEME HAS BEEN GIVEN TO THE APPELLANT WHICH IS REPAYABLE IN 100 EMI AT INTEREST RATE OF 11 %. THE REPAYMENT OF LOAN STARTS W.E.F. DECEMBER 2006 AND THEREFORE, CREDIT BALANCE OF RS. 7,26,595/- IN THE BOOKS OF THE APPELLANT AS ON 31.03.2006 STANDS JUSTIFIED. THERE IS ALSO MENTION OF REPAYMENT OF TH IS LOAN IN THE AGREEMENT DATED 22.12.2005 BETWEEN THE APPELLANT AND SHRI MAHESH RATHORE AND SHRI MAHESH SHARMA. THEREFORE, THE ADDITION OF RS.7,26,595/- MADE BY THE AO U/S 68 OF THE INCOME-TAX ACT, 1961, IS HEREBY DELETED. THUS, GROUND NO. 6 IS DECIDED IN FAVOUR OF THE APPELLANT. 4. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US AND HAS RAISED THREE GROUNDS :- -: 12: - 12 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN :- 1. DELETING THE ADDITION OF RS. 20,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN ERECTING PETROL PUMP. 2. DELETING THE ADDITION OF RS. 6,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNSECURED LOAN U/S 68 OF THE INCOME-TAX ACT, 1961. 3. DELETING THE ADDITION OF RS. 7,26,595/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUNDRY CREDITORS U/S 68 OF THE INCOME-TAX ACT, 1961, 5. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION, WHEREI N HE HAS OBJECTED FOR ADDITION OF RS. 3.50 LAKHS SUSTAIN ED BY THE LD.CIT(A). 6. RIVAL CONTENTIONS HAVE BEEN CONSIDERED AND ORDERS O F THE AUTHORITIES BELOW HAVE BEEN PERUSED. FROM THE R ECORD, WE -: 13: - 13 FOUND THAT ADDITION WAS MADE BY THE ASSESSING OFFIC ER BY ESTIMATING INVESTMENT IN THE PETROL PUMP, UNSECURED LOANS AND SUNDRY CREDITORS. AS THE ORDER WAS PASSED U/S 1 44 AND THE ASSESSEE DID NOT GET PROPER OPPORTUNITY, THE LD . CIT(A) CALLED FOR A REMAND REPORT WITH RESPECT TO THE DOCU MENTS SUBMITTED BY THE ASSESSEE DURING APPELLATE PROCEEDI NGS. THUS, PROPER OPPORTUNITY TO THE ASSESSING OFFICER WAS GIV EN AS PER RULE 46A. THE LD. CIT(A) UPHELD THE ORDER PASSED U/ S 144, HOWEVER, AFTER GIVING HIS SPECIFIC FINDINGS WITH RE GARD TO THE EACH AND EVERY ADDITION, HE RETAINED ADDITION OF RS . 3.50 LAKHS OUT OF ESTIMATED ADDITION OF RS. 20 LAKHS MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF INVESTMENT IN PETRO L PUMP. THE PETROL PUMP WAS ALLOTTED TO THE ASSESSEE UNDER THE SCHEDULED CASTE QUOTA OF IVP COMPANY LIMITED. THE A SSESSEE ENTERED INTO AGREEMENT WITH MAHESH RATHORE AND MAHE NDRA SHARMA, ACCORDING TO WHICH THE RIGHT TO RUN THE PET ROL PUMP WERE TRANSFERRED TO THESE PERSONS FOR A CONSIDERATI ON OF RS. 3.50 LAKHS. WHILE DELETING THE ADDITION OF RS. 20 L AKHS, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE DID NOT MAKE ANY INVESTMENT OF RS. 20 LAKHS. HOWEVER, THE FACT REMAI NS THAT -: 14: - 14 SOME INVESTMENT WAS MADE IN ERECTING PETROL PUMP. S INCE THE INVESTMENT WAS NOT MADE BY THE ASSESSEE, WE CONFIRM THE DELETION OF ADDITION MADE BY THE LD.CIT(A) IN ASSES SEES HANDS. HOWEVER, THE DEPARTMENT IS AT LIBERTY TO VERIFY THE INVESTMENT MADE IN ERECTING PETROL PUMP IN THE HANDS OF SHRI M AHESH RATHORE AND SHRI MAHENDRA SHARMA WITH WHOM THEY ENT ERED INTO AGREEMENT. WE DIRECT ACCORDINGLY. 7. OTHER TWO ADDITIONS MADE ON ACCOUNT OF UNSECURED LOAN AND SUNDRY CREDITORS MADE IN THE HANDS OF THE ASSESSEE WAS ALSO DELETED BY THE LD. CIT(A) AFTER RECORDING DETAILED FINDINGS. 8. FROM THE RECORD, WE FOUND THAT ADDITION ON ACCOUNT OF UNSECURED LOAN OF RS. 6 LAKHS WAS DELETED BY THE LD .CIT(A) AFTER RECORDING A FINDING THAT THE ASSESSEE HAD NOT RECEIVED ANY ADVANCE EITHER IN CASH OR KIND, IT WAS ONLY A B OOK ENTRY IN RESPECT OF LAND GIVEN BY SHRI RATHORE FOR RUNNING P ETROL PUMP. ADDITION OF RS. 7,26,595/- U/S 68 WAS DELETED BY TH E LD.CIT(A) AFTER RECORDING A FINDING THAT IT WAS AN AMOUNT DUE FROM INDIAN OIL CORPORATION LIMITED, MARKETING DIVISION. WORKING CAPITAL LOAN OF RS. 7,26,596/- WAS SANCTIONED BY IN DIAN OIL -: 15: - 15 CORPORATION UNDER CORPUS FUND SCHEME, WHICH WAS REP AYABLE IN 100 E.M.I. AT INTEREST RATE OF 11%. THE FINDINGS SO RECORDED BY CIT(A) WAS NOT CONTROVERTED BY THE DEPARTMENT BY BRINING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, NO IN TERFERENCE IS REQUIRED IN THE DELETION SO MADE BY THE LD.CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED . I.T.A.NO. 279/IND/2011 : 10. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER PASSED BY THE LD.CIT(A) DATED 5.7.2011 FOR TH E ASSESSMENT YEAR 2006-07 IN THE MATTER OF DELETION O F PENALTY IMPOSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 11. AS DISCUSSED ABOVE, VARIOUS ADDITIONS WERE MADE BY THE ASSESSING OFFICER IN THE ORDER PASSED U/S 144 A ND RETURNED INCOME OF WHICH RS. 25,087/- WAS ASSESSED AT RS. 34,39,595/-. BY OBSERVING THAT THE ASSESSEE HAS CON CEALED INCOME OF RS. 34,14,508/-, THE ASSESSING OFFICER LE VIED PENALTY U/S 271(1)(C) OF THE ACT AMOUNTING TO RS. 11,01,737 /-. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE PENALTY AFTER HAVING THE FOLLOWING OBSERVATIONS :- -: 16: - 16 5. I HAVE GONE THROUGH THE OBSERVATIONS AND FINDINGS OF THE ASSESSING OFFICER MADE IN THE PENALTY ORDER, I HAVE ALSO CONSIDERED THE SUBMISSIONS MADE BY THE LD. AUTHORIZED REPRESENTATIVE. THE APPELLANTS QUANTUM APPEAL AGAINST EX PARTE ORDER U/S 144 OF THE INCOME-TAX ACT, 1961, PASSED BY THE ASSESSING OFFICER, HAS BEEN DECIDED BY ME IN CIT(A) CIT(A)-II/BPL/IT-44/2009-10 DATED 4-07-2011. MY FINDINGS IN GROUND NO'S 3 TO 6 ARE REPRODUCED HEREUNDER:- 6. AS REGARDS THE ISSUED RAISED IN GROUND NO. 3, I FIND THAT THE AO WAS NOT AT ALL JUSTIFIED IN MAKING LUMP SUM ADDITION OF RS. 20,00,000/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN ERECTING PETROL PUMP. THE APPELLANT ACQUIRED THE PETROL PUMP IN SCHEDULE CASTE QUOTA FROM M/S IBP CO. LTD. HOWEVER, NEITHER DID HE POSES ANY EXPERIENCE NOR FINANCIAL CAPACITY TO RUN THE -: 17: - 17 PETROL PUMP BUSINESS AS IS CLEAR FROM THE AGREEMENT DATED 22.12.2005 ENTERED BETWEEN THE APPELLANT AND SHRI MAHESH RATHORE AND SHRI MAYANK SHARMA. AS PER THE AGREEMENT, THE APPELLANT TRANSFERRED THE RIGHT TO RUN THE PETROL PUMP IN THE ABOVE TWO PERSONS AND AS PER CLAUSE 3(B) OF THE AGREEMENT RECEIVED RS. 3,50,000/- AS CONSIDERATION. THEREFORE IT IS CLEAR THAT THE APPELLANT DID NOT MAKE INVESTMENT OF RS. 20,00,000/- AS HELD BY THE AO OTHERWISE WHY WILL THE APPELLANT NOT RUN THE PETROL PUMP BUSINESS BY HIMSELF INSTEAD OF GIVING THE RUNNING RIGHTS TO THE AFORESAID TWO PERSONS. THEREFORE, ADDITION OF RS. 20,00,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT IN ERECTING PETROL PUMP IS DELETED IN FULL. HOWEVER, AS IS EVIDENTLY CLEAR THAT THE APPELLANT RECEIVED RS. 3,50,000/- AS CONSIDERATION IN LIEU OF -: 18: - 18 TRANSFERRING THE RIGHT TO RUN THE PETROL PUMP BUSINESS ALLOTTED IN HIS NAME FROM THESE TWO PERSONS AND HAS NOT OFFERED THE SAME AS INCOME TO TAX, AN ADDITION OF RS. 3,50,000/- IS MADE TO THE TOTAL INCOME OF THE APPELLANT ON THIS COUNT. THUS, GROUND NO. 3 IS DECIDED ACCORDINGLY. 7. AS REGARDS, THE ISSUE RAISED IN GROUND NO.4, I FIND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AO WAS JUSTIFIED IN ADOPTING GP RATE OF 2.26% ON THE BASIS OF COMPARABLE CASE INFERENCE DRAWN BY HIM BY ESTIMATING TURNOVER OF THE APPELLANT AT RS.50,00,000/- THEREBY COMPUTING INCOME OF RS. 1,13,OOO/- FROM BUSINESS OF RUNNING PETROL PUMP. THE AO FINDING THAT NEITHER BOOKS OF ACCOUNT OR STOCK REGISTER ARE PRODUCED JUSTIFY SUSTAINING OF THE ADDITION. FURTHER, IN THE ABSENCE OF ANY PROOF OR EVIDENCE FILED BY -: 19: - 19 THE APPELLANT THAT PETROL PUMP BUSINESS INCOME HAS BEEN DECLARED BY THE TWO PERSONS NAMELY SHRI MAHESH RATHORE AND SHRI MAYANK SHARMA, THE SAME IS ASSESSABLE IN THE HANDS OF THE APPELLANT. THUS, GROUND NO.4 IS DECIDED AGAINST THE APPELLANT AND ADDITION OF RS.1,13,OOO/- IS CONFIRMED. 8. AS REGARDS, THE ISSUE RAISED IN GROUND NO.5, I FIND THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 6,00,000/- U/S 68 OF THE LT. ACT ON ACCOUNT OF UNSECURED LOAN RECEIVED FROM SHRI MAHESH RATHORE, IT IS SEEN THAT THE APPELLANT HAS NOT RECEIVED ANY AMOUNT EITHER IN CASH OR CHEQUE FROM SHRI MAHESH RATHORE TOWARDS UNSECURED LOAN. THIS UNSECURED LOAN OF RS. 6,00,000/- REPRESENT CREDIT OF SHRI MAHESH RATHORE ON ONE SIDE AND DEBIT OF RS. 6,00,000/- OUT OF ADVANCE FOR LAND OF RS. 6,61,000/- ON THE -: 20: - 20 OTHER SIDE. SINCE, FOR THE PETROL PUMP LAND WAS GIVEN BY SHRI MAHESH RATHORE AS IS EVIDENT FROM THE AGREEMENT DATED 22.12.2005 BETWEEN THE APPELLANT AND SHRI MAHESH RATHORE AND SHRI MAYANK SHARMA THAT THE LAND ON WHICH PETROL PUMP IS SITUATED/ERECTED BELONGED TO THEM AND THAT THESE TWO PERSONS HAVE LEASED THE SAME TO IBP CO. LTD. FOR SETTING UP PETROL PUMP. THEREFORE, THE ADDITION OF RS. 6,00,000/- U/S 68 IF THE IT. ACT IS HEREBY DELETED. THUS, GROUND NO.5 IS DECIDED IN FAVOUR OF THE APPELLANT. 9. AS REGARDS THE ISSUE RAISED IN GROUND NO. 6, I FIND THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 7,26,595/- U/S 68 OF THE IT. ACT ON ACCOUNT OF SUNDRY CREDIT BALANCE OUTSTANDING IN THE NAME OF THE IBP. CO. LTD. FROM THE RECOVERY SCHEDULE STATEMENT OF M/S. INDIAN OIL CORPORATION -: 21: - 21 LTD. MARKETING DIVISION, MPSO IN THE NAME OF THE APPELLANT'S PETROL PUMP, IT IS SEEN THAT WORKING CAPITAL LOAN OF RS. 7,26,596/- UNDER CORPUS FUND SCHEME HAS BEEN GIVEN TO THE APPELLANT WHICH IS REPAYABLE IN 100 EMI AT INTEREST RATE OF 11 %. THE REPAYMENT OF LOAN STARTS W.E.F. DECEMBER 2006, AND THEREFORE, CREDIT BALANCE OF RS. 7,26,595/- IN THE BOOKS OF THE APPELLANT AS ON 31.03.2006 STANDS JUSTIFIED. THERE IS ALSO MENTION OF REPAYMENT OF THIS LOAN IN THE AGREEMENT DATED 22.12.2005 BETWEEN THE APPELLANT AND SHRI MAHESH RATHORE AND SHRI MAHESH SHARMA. THEREFORE, THE ADDITION OF RS. 7,26,595/- MADE BY THE AO U/S 68 OF THE LT. ACT IS HEREBY DELETED. THUS, GROUND NO. 6 IS DECIDED IN FAVOUR OF THE APPELLANT. 10 FROM THE ABOVE FINDINGS, THE -: 22: - 22 APPELLANTS INCOME HAS BEEN FINALLY ASSESSED AT RS. 4,63,000/- AS AGAINST INCOME RETURN OF RS. 25,087/- AND ASSESSED AT RS. 34,39,600/- BY THE AO U/S 144 . ON THE SAID UNDISCLOSED/CONCEALED INCOME OF RS. 4,63,000/-, TAX EVADED SHALL BE COMPUTED BY THE AO AS PER LAW AND PENALTY @ 100% OF TAX SOUGHT TO BE EVADED SHALL BE LEVIED U/S 271(1)(C) OF THE I .T. ACT 1961. CONSIDERING ALL THE FACTS AND CIRCUMSTANCES, PENALTY U/S 271(1)(C) OF THE 1. T. ACT TO THIS EXTENT IS HEREBY CONFIRMED. THUS, APPELLANT GETS PARTIAL RELIEF AND THIS GROUND IS DECIDED ACCORDINGLY. 12. AGAINST THE ABOVE ORDER OF THE LD. CIT(A), THE REVE NUE IS IN FURTHER APPEAL BEFORE US. 13. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. AS DISCUSSED ABOVE, THE RETURNED INCOME AS SESSED AT RS. 34,39,600/- WAS REDUCED TO RS. 4,63,000/- BY TH E LD.CIT(A), AFTER RECORDING A DETAILED FINDING. WE H AVE ALSO -: 23: - 23 CONFIRMED THE FINDING OF CIT(A) WITH RESPECT TO THE ADDITIONS DELETED BY HIM AS WELL AS ADDITIONS RETAINED BY HIM . AS WE HAVE CONFIRMED THE DELETION OF ADDITION BY THE LD.C IT(A), WE CONFIRM THE ORDER OF CIT(A) FOR DIRECTING THE ASSES SING OFFICER TO LEVY PENALTY WITH RESPECT TO THE BALANCE OF ADDI TION RETAINED BY HIM AMOUNTING TO RS. 4,63,000/-. 14. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AS WE LL AS CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2012. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12 TH OCTOBER, 2012. CPU* 1110