Prakash Chand Sharma , Kanpur V. Dy. Commissioner of Income Tax, Kanpur

ITA 502/LKW/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100393 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 04-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT NIAGAM
• Keywords: Unexplained investment; Business income; Bad and doubtful debts
• Section: 133A; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.502/LKW/2013 ASSESSMENT YEAR 2006-07 DY. COMMISSIONER OF INCOME TAX, RANGE-VI, 15/295-A, CIVIL LINES, KANPUR VS PRAKASH CHAND SHARMA, (PROP. PRAKASH BOX FACTORY, 51/5, RAM GANJ, KANPUR PAN AGIPS 4954 P (RESPONDENT) (APPELLANT) SHRI RAKESH GARG, ADVOCATE APPELLANT BY SHRI AMIT NIAGAM, DR RESPONDENT BY 25 /0 8 /2015 DATE OF HEARING 18 /0 9 /2015 DATE OF PRONOUNCEMENT O R D E R PER SUNIL KUMAR YADAV, JM. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-I, KANPUR CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS ACT) OF RS.20,00, 000/- BY THE ASSESSING OFFICER. 2. THE FACTS IN BRIEF BORN OUT FROM THE RECORDS ARE THAT THE ASSESSEE HAS BEEN CARRYING ON THE BUSINESS OF MANUFACTURING AND TRADI NG OF PLAYING CARDS AND PRINTING. A SURVEY U/S 133A OF THE ACT WAS CONDUCTE D ON THE BUSINESS PREMISES OF ASSESSEE ON 02.11.2007 DURING WHICH THE CERTAIN BOO KS OF ACCOUNTS AND OTHER INCRIMINATING DOCUMENTS WERE FOUND AND IMPOUNDED. B ASED ON THE IMPOUNDED MATERIAL, THE AO HAS ASSESSED THE INCOME OF RS.72,7 0,456/-, WHEREIN THE FOLLOWING ADDITIONS WERE MADE:- (I) ADDITION ON ACCOUNT OF EXTRA PROFIT RS.26,6 3,200/- DERIVED FROM SALES NOT RECORDED IN BOOKS OF ACCOUNT. (II) ADDITION ON A/C OF CAPITAL DEPLOYED FOR CARRYI NG RS.9,00,00/- UNACCOUNTED SALES. (III) ADDITION ON A/C OF EXTRA PROFIT DERIVED FROM UNRECORDED SALES EXTRAPOLATED FOR THE ENTIRE YEAR RS.32,20,458/- 2 3. THE CIT(A) WHILE DISPOSING THE QUANTUM APPEAL RE DUCED THE ADDITION MADE BY THE AO. THE AO HAS LEVIED THE IMPUGNED PENALTY O N THE ADDITIONS CONFIRMED BY THE LD. CIT(A). SINCE THE ADDITIONS WERE MADE UN DER DIFFERENT HEADS ON WHICH PENALTY WAS LEVIED BY THE AO U/S 271(1)(C) OF THE A CT, WE PREFER THE DEAL WITH EACH AND EVERY ADDITION INDEPENDENTLY. 4. THE ADDITION OF RS.2,99,798/- WAS MADE ON UNACCO UNTED SALE AND WITH REGARD TO THIS ADDITION, IT WAS CONTENDED BY THE AS SESSEE BEFORE THE CIT(A) THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED B Y THE QUALIFIED CHARTERED ACCOUNTANTS. SINCE THE ASSESSEE HAD NO KNOWLEDGE RE GARDING MAINTENANCE OF BOOKS OF ACCOUNTS & CORRESPONDENCE, THEREFORE, HE W AS WHOLLY & SOLELY DEPENDENT UPON HIS ACCOUNTANT LATE SHRI KAILASH NAT H GUPTA WHO WAS LOOKING AFTER HIS ALL BUSINESS AFFAIRS WHICH INCLUDE MAINTE NANCE OF BOOKS OF ACCOUNTS MANUALLY/SALES TAX/INCOME TAX PROCEEDING/LABOUR CAS ES ETC. IN ANOTHER WORDS, HE WAS LOOKING AFTER ALL OF THE BUSINESS FORMALITIES A ND WAS FULLY RESPONSIBLE FOR HIS DEEDS. THE BOOKS OF ACCOUNTS WERE MAINTAINED MANUAL LY TILL MID OF THE A.Y. 2006- 07 I.E. UPTO SEPTEMBER, 2005. THEREAFTER, THE OTHER PERSON HAS TAKEN OVER A CHARGE AND HAS COMPLETED THE BOOKS ON COMPUTER FROM BEGINNING TO END OF THE FINANCIAL YEAR. WHILE DOING SO, CERTAIN MISTAKE OCC URRED, THOUGH THE SAME WERE CURABLE UNDER THE LAW. THE SUCCESSOR ACCOUNTANT HAV ING NO PROPER KNOWLEDGE OF BUSINESS OF ASSESSEE/RECORDS MAINTAINED BY LATE SHR I GUPTA, COULD NOT ENTER ALL THE SALES INCLUDING EXPENSES ON SALE. THE CIT(A) DI D NOT ACCEPT THE CONTENTION OF THE ASSESSEE IN QUANTUM APPEAL AND, HE CONFIRMED TH E ADDITION. 5. THE AO ACCORDINGLY INITIATED THE PENALTY PROCEED ING U/S 271(1)(C) OF THE ACT. THE AO NOTED WHILE LEVYING THE PENALTY, FROM T HE IMPOUNDED BILL BOOK, NAMELY ANNEXURE-BK2/1 CONTAINING BILLS ISSUED IN RE SPECT OF JOB WORK DONE BY THE ASSESSEE TOTALING RS.6,36,758/-, THE TOTAL RECEIPTS ON ACCOUNT OF JOB WORK DONE AS SHOWN IN THE FIELD ACCOUNT WAS ONLY RS.3,36,960/-. THE AO ADDED THE DIFFERENCE OF RS.2,99,798/- AS CONCEALED INCOME OF THE ASSESSE E FROM JOB WORK DONE. IN RESPONSE TO THIS, IT WAS CONTENDED BY THE ASSESSEE THAT JOB WORK HAS BEEN DONE 3 BY THE ASSESSEE FOR SOME OF THE PARTIES IN THE CITY . THE ACCOUNTANT WAS DIRECTED TO ENTER THE RECEIPTS OF AMOUNT AGAINST THE RESPECT IVE BILLS OF THE JOB WORK. IN THE BILL BOOK MARKED AS ANNEXURE BK-2/1, THE TOTAL JOB WORK HAS BEEN SHOWN TO RS.6,36,758/-. THE ACCOUNTANT WAS DIRECTED TO CONTA CT THE CHARTERED ACCOUNTANT IN FINALIZATION OF AUDIT WORK SO THAT HE MAY BE ABL E TO PREPARE AUDITED BALANCE SHEET, PROFIT & LOSS ACCOUNT ETC. AND OTHER ANNEXUR E FORMING PART OF THE BALANCE SHEET ETC. IT WAS FURTHER CONTENDED THAT THE PAYMEN TS OF JOB WORK FROM SOME OF THE PARTIES WERE NOT RECEIVED BY THE ASSESSEE AND T HE AMOUNT STOOD FORFEITED. IT APPEARS THAT THE CA WHILE AUDITING THE ACCOUNTS MIG HT HAVE FORGOT THE ENTRY OF THE BALANCE AMOUNT AS SHOWING BAD DEBTS AND HE HAS CREDITED THE ONLY AMOUNT WHICH WAS RECEIVED IN CASH. THIS IS MISTAKE OF CLER ICAL MISTAKE. FROM THE RECEIPTS BOOKS, IT IS CLEAR THAT HE HAS NOT CONCEALED THE JO B WORK AND THERE IS NO MISTAKE ON THE PART OF THE ASSESSEE. HAD THE ASSESSEE INTEN DED TO CONCEAL THE JOB WORK IN THE BILL BOOK, THAT THE JOB WORK WOULD NOT HAVE BEE N ENTERED IN THE BILL BOOK. IT SHOWS THE BONA FIDE INTENTION OF THE ASSESSEE THAT HE HAS NO IOTA OF ATTITUDE TO CONCEAL THE PARTICULARS OF INCOME. AS SUCH THERE IS NO MENS-REA AT ALL ON THE PART OF THE ASSESSEE. WHAT HAPPENED WAS ATTRIBUTABLE TO THE PART OF THE AUDITING WORK. 6. IT WAS FURTHER STATED THAT THE ASSESSEE IS A SEN IOR CITIZEN OF MORE THAN 66 YEARS OF AGE. HE WAS HAVING THREE SONS NAMELY NAREN DRA SHARMA, JITENDRA SHARMA AND BRIJENDRA SHARMA WHO WERE SELF INDEPENDE NT AND ALSO THEY ARE RUNNING THEIR OWN BUSINESS. THIS CONTENTIONS OF THE ASSESSEE WAS NOT CONTROVERTED BY THE AO AND HE LEVIED THE PENALTY U/ S 271(1)(C) OF THE ACT AGAINST WHICH APPEAL WAS FILED BEFORE THE CIT(A), BUT THE A SSESSEE DID NOT FIND FAVOUR WITH HIM. BUT WHILE DEALING THE ISSUE, THE CIT(A) H AS TOOK THE COGNIZANCE OF THE ADDITION ON ACCOUNT OF JOB WORK RECEIPT OF RS.2,99, 798/- REDUCED TO RS.1,43,903/- AS G.P. ON UNDISCLOSED JOB WORK RECEIPT ON WHICH TH E PENALTY WAS LEVIED. NOW, THE ASSESSEE IS BEFORE THE TRIBUNAL WITH THE SUBMIS SION THAT ON ACCOUNT OF NON ACCEPTANCE OF THE CONTENTION OF THE ASSESSEE ADDITI ON CAN BE MADE, BUT PENALTY U/S 271(1)(C) OF THE ACT BEING QUASI PROCEEDING SHO ULD NOT BE LEVIED FOR NON ACCEPTANCE OF THE CONTENTION OF THE ASSESSEE. HE FU RTHER CONTENDED THAT THERE 4 WAS NO INTENTION OF THE ASSESSEE TO FURNISH INACCUR ATE PARTICULARS OR CONCEAL ANY INCOME CHARGEABLE TO TAX. BESIDES, HE REITERATED TH E CONTENTION RAISED BEFORE THE LOWER AUTHORITIES. THE LD. DR ON THE OTHER HAND HA S PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). 7. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES, WE FIND THAT THE ASSESSEE HAS FURNISHED THE EXPLANATION FOR INAC CURATE PARTICULARS AND MAIN REASON WAS GIVEN THAT THE MISTAKE WAS OCCURRED DUE TO THE CHANGE OF ACCOUNTANT. THE EARLIER ACCOUNTANT, MR. KAILASH NAT H GUPTA WAS EXPIRED AND NEW ACCOUNTANT WAS ENGAGED AND ON ACCOUNT OF LACK OF CO MPLETE INFORMATION OF THE CORRESPONDING ENTRY MADE IN THE BALANCE SHEET MISTA KE WAS OCCURRED. UNDER GIVEN FACTS OF THE CASE, WE ARE OF THE VIEW THAT SI NCE THE CORRESPONDENCE ENTRY WAS MADE IN THE BILL BOOK, THERE COULD NOT BE AN IN TENTION OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. THE REVENUE M ADE AN ADDITION OF DIFFERENCE HAVING NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE BUT FOR THE SAME REASON THE PENALTY U/S 271(1)(C) CANNOT BE LEVIED. ACCORDINGL Y, WE DELETE THE PENALTY LEVIED FOR ADDITION ON ACCOUNT OF INCOME EARNED ON UNDISCL OSED JOB WORK. 8. ADDITION OF RS.1,60,205/-: ON ACCOUNT OF SALES MADE IN CASH IN THIS REGARD, I T IS NOTICED THAT DURING THE COURSE OF SURVEY, BILL BOOKS, NAMELY, BK 2/24 C ONTAINING BILLS IN RESPECT OF SALES MADE IN CASH WAS FOUND AND ACCORDING TO THIS BILL BOOK, THE ASSESSEE DURING THE PERIOD OF 2.04.2005 TO 31.03.2006 MADE CASH SAL ES AMOUNTING TO RS.1.60,205/-. SINCE THE CASH WAS NOT REFLECTED IN REGULAR BOOKS OF ACCOUNTS. THE AO MADE AN ADDITION OF SALE OUTSIDE THE BOOKS OF AC COUNTS. IN APPEAL, ASSESSEE DID NOT FIND FAVOUR WITH THE CIT(A) AND THE ADDITIO N WAS CONFIRMED. THE ASSESSING OFFICER HAS LEVIED THE PENALTY U/S 271(1) (C) OF THE ACT. IN THIS REGARD, THE ASSESSEE HAS CONTENDED THAT DISCREPANCY WAS OCC URRED ON ACCOUNT OF MAINTENANCE OF BOOKS OF ACCOUNTS AS BOOKS OF ACCOUN TS MAINTAINED BY OLD MUNIM NAMED KAILASH NATH GUPTA, WHO WAS WORKING FOR THE L AST 20-25 YEARS EXPIRED IN THE MONTH OF SEPTEMBER 2005. HE WAS AILING FOR MORE THAN A YEAR BEFORE HE 5 EXPIRED. SINCE HE WAS LOOKING AFTER ENTIRE MAINTEN ANCE OF ACCOUNTS BOOKS OF THE ASSESSEE AND WAS COMPLETING THE LEGAL FORMALITIES, ASSESSEE WAS NOT AWARE OF NON INCLUSION OF THE SALES MADE IN CASH IN THE BOOK S OF ACCOUNTS. AFTER HE PASSED AWAY ANOTHER ACCOUNTANT WAS ENGAGED BUT HE DID NOT TAKE THE COMPLETE FACTS INTO ACCOUNTS WHILE FINALIZING THE ACCOUNTS OF THE ASSESSEE, THEREFORE, THE DISCREPANCIES HAVE OCCURRED. WHILE DEALING WITH ISS UE, THE CIT(A) HIMSELF HAS OBSERVED THAT UNDISCLOSED SALES WAS OF RS.1,60,205/ - AND THE ENTIRE ADDITION IS NOT SUSTAINABLE. HE ACCORDINGLY WORKED OUT THE NET PROFIT AT THE RATE OF 25% WHICH COMES TO RS.40,051/- BUT HE HAS CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. NOW THE ASSESSEE IS BEFORE US AND REITERATED ITS SUBMISSION WHEREAS THE LD. DR HAS PL ACED RELIANCE ON THE ORDER OF THE LD. CIT(A). FROM A CAREFUL PERUSAL OF THE ORDER S OF THE AUTHORITIES BELOW, WE FIND THAT THE BOOKS OF ACCOUNT WERE MAINTAINED BY H IS MUNIM SHRI KAILASH WHO WAS WORKING WITH HIM FOR THE LAST 20-25 YEARS. BUT LATER ON HE PASSED AWAY IN THE MONTH OF SEPTEMBER 2005 AS HE WAS AILING FOR MORE T HAN A YEAR BEFORE HE EXPIRED. MEANING THEREBY, THE ASSESSEE HAS NO INTEN TION FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. WHATEVER LAPSES HAVE OCCURRED, IT WAS ON ACCOUNT OF CHANGE OF ACCOUNTANT AND ILL HEALTH OF THE EARLIER ACCOUNTANT SHRI KAILASH NATH GUPTA FOR WHICH THE AS SESSEE CANNOT BE HELD LIABLE FOR THE PENALTY U/S 271(1)(C) . WE ARE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE PENALTY. 9. G.P. ADDITION ON ACCOUNT OF UNACCOUNTED SALE OF RS. 91,39,327/- ON VERIFICATION FROM THE IMPOUNDED BOOKS, NAMELY, BK1/2 & BK2/20, WHICH ARE LEDGERS CONTAINING DETAILS OF SALES MADE TO VAR IOUS CUSTOMERS, THE AO OBSERVED THAT TOTAL SALES OF RS.91,39,327/- HAS BEE N MADE DURING THE F.Y. 2005- 06 RELEVANT TO AY 2006-07 AND THE SALE IS NOT BEING REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE AS NONE OF THE BILLS A PPEARING IN THESE BOOKS IS BEING REFLECTED IN THE ASSESSEES REGULAR BOOKS OF ACCOUN TS. THE AO FURTHER OBSERVED THAT ALL THE SALES WHICH HAVE BEEN RECORDED IN BK-1 /2 ARE BEING REFLECTED IN THE LEDGER BK-2/20 AND FOUND THAT THESE TWO BOOKS WERE CONTAINING THE TRADING 6 ACTIVITIES CARRIED OUT WITHOUT RECORDING IN THE REG ULAR BOOKS OF ACCOUNTS. THE ASSESSEE HAS CONTENDED BEFORE THE AO THAT THIS IS A LEDGER CONTAINING DETAILS OF TOTAL SALES MADE ON DAY TO DAY BASIS KEEPING THE RE CORDS OF SALES OF EACH AND EVERY CUSTOMER AS PER BILLS ISSUED AND SALES HAVE B EEN RECORDED IN ANNEXURE BK- 1/2, WHICH IS REFLECTED IN THE LEDGER BK-2/20. IT W AS FURTHER SUBMITTED THAT THE ASSESSEE WAS PROPOSING TO TAKE LOAN ON THE BASIS OF INFLATING MANUFACTURING AND SALES IRRESPECTIVE OF CAPACITY OF THE PRODUCTION OF ARTICLES BY THE PLANT AND MACHINERY. DURING THIS YEAR, THE ASSESSEE HAS TAKEN LOAN AND THE BALANCE AMOUNTING TO RS.29,45,525/- REMAINED BALANCE WHICH HAS BEEN SHOWN IN THE BALANCE SHEET. LIKEWISE, THE CLOSING STOCK WAS WORT H RS.38,14,871/- AS AGAINST RS.6,64,100/- OF THE LAST YEAR AS ON 31.03.2005. TH E AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND MADE ADDITION OF RS .91,39,327/- AGAINST WHICH THE APPEAL WAS FILED BEFORE THE CIT(A) BUT DID NOT FAVOUR WITH HIM. ACCORDINGLY, PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED AGAINST WHICH THE APPEAL WAS FILED BEFORE THE CIT(A) WITH THE SUBMISSION THAT AS THE A SSESSEE HAS NO EVIDENCE TO REBUT THE OBSERVATION OF THE AO THAT THE TOTAL SALE S DURING THE YEAR AMOUNTED TO RS.91,39,327/-, IT IS SUBMITTED THAT THIS MAY BE TA KEN FOR GRANTED TO BE TOTAL SALES AND THERE IS NO OTHER SALES INTER-ALIA THE SALES AM OUNTING TO RS.39,01,030/- SHOWN IN THE AUDITED TRADING AND PROFIT & LOSS ACCO UNT MAY BE TREATED AS PART OF THE TOTAL SALES OF RS.91,39,327/- WHICH IS BEING DO NE ONLY TO PURCHASE PEACE AND AVOID LITIGATION SUBJECT TO NO PANEL ACTION IN FUTU RE BECAUSE OF THE ASSESSEE IS OF THE AGE OF MORE THAN 66 YEARS AT PRESENT WHO IS SUF FERING FROM BLOOD PRESSURE, DIABETICS AND OTHER DECEASE. 10. THE CIT(A) REEXAMINE THE ISSUE OF LEVY OF PENAL TY IN THE LIGHT OF THE ASSESSEE CONTENTION BUT WAS NOT CONVINCED WITH IT A ND ACCORDINGLY CONFIRMED THE PENALTY. NOW THE ASSESSEE IS BEFORE US WITH THE SUB MISSION THAT FOR OBTAINING THE LOAN FROM THE FINANCIAL INSTITUTION THE PRODUCTION/ SALES AND CLOSING STOCKS WERE ENHANCED AND IT DOES NOT INVITE THE PENALTY U/S 271 (1)(C) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT NO ADDITION ON ACCOUNT OF UNACCOUNTED SALES CAN BE MADE. IF ANY ADDITION IS MADE IT WILL BE ONLY FOR THE PROFIT ON THE 7 UNACCOUNTED SALE. IN THE INSTANT CASE, THE ASSESSEE HAS FURNISHED THE EXPLANATION FOR ENHANCEMENT OF SALES AND CLOSING STOCK FOR OBTA INING LOAN FACILITY. THUS, THE PENALTY U/S 271(1)(C) OF THE ACT SHOULD NOT BE LEVI ED ON THE ADDITION SUSTAINED BY THE CIT(A). 11. LD. DR PLACED THE RELIANCE UPON THE ORDER OF TH E LD. CIT(A). 12. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWE R AUTHORITIES, IN THE LIGHT OF THE RIVAL SUBMISSION, WE FIND THAT ON THE BASIS OF IMPOUNDED CASH BOOK AND LEDGER, THE ASSESSING OFFICER HAS ESTIMATED THE UNA CCOUNTED SALE OUTSIDE THE BOOKS OF ACCOUNTS, WITH REGARD TO WHICH IT WAS CONT ENDED THAT THE DECLARED SALE IS ALSO PART OF THE SALES RECORDED IN BK-1/2. IT WA S FURTHER CONTENDED THAT FOR OBTAINING THE LOAN FROM THE FINANCIAL INSTITUTION, THE CLOSING STOCK AND SALES ARE GENERALLY PROJECTED AND FOR WHICH EVEN ADDITION IS NOT CALLED FOR. BUT IN THE INSTANT CASE, THE ADDITION WAS MADE BY THE AO AND C ONFIRMED BY THE APPELLATE AUTHORITIES. SO FAR AS PENALTY U/S 271(1)(C) OF THE ACT IS CONCERNED, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FURNISHED THE EXPLANATIO N FOR SUCH ENHANCED SALES AND CLOSING STOCK AND MORE SO WHATEVER LAPSES ARE OCCUR RED IT WAS ON ACCOUNT OF NEGLIGENCE OF THE ACCOUNTANT FOR WHICH THE ASSESSEE SHOULD NOT SUFFER. WE ARE ACCORDINGLY OF THE VIEW THAT FOR NON ACCEPTANCE OF THE EXPLANATION OF THE ASSESSEE THE ADDITION CAN BE MADE BUT PENALTY U/S 2 71(1)(C) OF THE ACT CANNOT BE LEVIED. MOREOVER THE CIT(A) HAS CONFIRMED THE ADDIT ION OF ENTIRE UNACCOUNTED SALES, WHEREAS THE ADDITION FOR GROSS PROFIT OF UNA CCOUNTED SALES CAN ONLY BE MADE. KEEPING IN VIEW, THE TOTALITY OF THE FACTS AN D CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT ON THE GIVEN FACTS, THE PEN ALTY U/S 271(1)(C) OF THE ACT ON THIS ADDITION IS NOT CALLED FOR. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE CIT(A) AND DELETE THE PENALTY. 13. UNACCOUNTED SALE OF RS.6,08,600/- THE FACTS BORN OUT FROM THE RECORD IN THIS REGARD ARE THAT GP ADDITION OF RS.32,20,458/- WAS MADE BY THE AO ON ACCOUNT OF UNA CCOUNTED SALES OF RS.82,28,846/- WHICH WAS LATER ON REDUCED BY THE LD . CIT(A) ONLY TO 8 RS.6,08,600/- AND THE G.P. THEREUPON WAS ACCORDINGL Y REDUCED TO RS.1,92,214/- + TAX OF RS.24,027/- FROM RS.31,20,458/- WHICH WAS CO MPUTED BY THE AO. THEREFORE, THE PENALTY WAS LEVIED PENALTY ONLY ON R EDUCED GROSS PROFIT OF RS.1,92,214 AND IN THIS REGARD IT WAS CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE CIT(A) THAT DURING THE COURSE O F SURVEY ANNEXURE BK-2/13 WAS FOUND AND SEIZED WHICH CONTAINED BILL NO. 251 T O 300 FOR THE PERIOD 30.07.2005 TO 26.08.2005 FOR THE SALES OF PLAYING C ARDS. IT WAS FURTHER CONTENDED THAT DUE TO DEATH OF HIS MUNIM, MR. KAILASH THE ACC OUNT BOOKS REMAINED KEPT AND THE BOOKS WERE NOT PROPERLY MAINTAINED. MOREOVER, B ILLS SEIZED RELATED TO 30.07.2005 TO 26.08.2005 FOR THE SALES OF PLAYING C ARDS THEREFORE UNDISCLOSED SALES FOR THE WHOLE YEAR CANNOT BE WORKED OUT. HE H AS ALSO TRIED TO EXPLAIN AS TO HOW MANY DAYS SHOP WAS ACTUALLY OPENED. THE EXPLANA TION FURNISHED BY THE ASSESSEE WAS NOT ACCEPTED BY THE CIT(A) AND HE CONF IRMED THE PENALTY AGAINST WHICH THE APPEAL WAS FILED BEFORE THE TRIBUNAL AND THE ASSESSEE HAS REITERATED ITS CONTENTION. WHILE DEALING WITH THE ISSUE, THE CIT(A ) HAS ALSO TAKEN A NOTE THAT THE ASSESSING OFFICER HAS EXTRAPOLATED THE UNACCOUN TED SALES FOR THE ACTUAL FIGURE OF RS.6,08,600/- TO RS.82,28,046/- FOR THE ENTIRE YEAR. THE CIT(A) DID NOT ACCEPT THE EXTRAPOLATION AS MADE BY THE AO AND THE CIT(A) HAS CONFIRMED THE ADDITION OF RS.6,08,600/- BUT WHILE CONFIRMING THE PENALTY U /S 271(1)(C) OF THE ACT HE HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE. 14. WE HAVE CAREFULLY EXAMINED THE EXPLANATION OF T HE ASSESSEE GIVEN DURING THE COURSE OF QUANTUM PROCEEDING AS WELL AS PENALTY PROCEEDING, WE FIND THAT THE ASSESSEE HAS SPECIFIC EXPLANATION WITH RESPECT TO T HE UNACCOUNTED SALES FOR PARTICULAR PERIOD BUT IT WAS NOT ACCEPTED BY THE LD . CIT(A) . IT IS SETTLED POSITION OF LAW, ON ACCOUNT OF NON ACCEPTANCE OF THE EXPLANA TION BY THE AO, THE ADDITION CAN BE MADE BUT WHILE CONFIRMING THE PENALTY IT IS TO BE ESTABLISHED THAT EXPLANATION FURNISHED BY THE ASSESSEE WAS WRONG, IN CORRECT AND THERE IS AN ELEMENT OF CONCEALMENT OF INCOME OR FURNISHING OR I NACCURATE PARTICULARS. IN THE ABSENCE OF THESE INGREDIENT, THE PENALTY U/S 271(1) (C) SHOULD NOT BE LEVIED. IN THE INSTANT CASE, THE ASSESSEE COULD NOT FURNISH TH E PLAUSIBLE EXPLANATION AND 9 NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO THAT T HE EXPLANATION IS INCORRECT, WRONG AND HAVING ELEMENT OF CONCEALMENT OF FURNISHE D OF INACCURATE PARTICULARS. WE, THEREFORE, FIND NO MERIT IN THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) A ND DELETE THE PENALTY. 15. THE PENALTY WAS ALSO LEVIED ON OTHER ADDITION O F RS.6,00,000/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT MADE FOR CARRYING OUT SUCH HUGE UNACCOUNTED TURNOVER. THE ADDITION OF RS.6,00,000/- WAS REDUCED TO RS.5,00,000/- BY THE CIT(A) AND THEREAFTER THE AO HAS LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT AGAINST WHICH THE APPEAL WAS FILED BEFORE THE CIT(A ) AND IT WAS CONTENDED THAT THIS ADDITION WAS MADE ON ESTIMATED BASIS WITHOUT B RINGING MATERIAL ON RECORD TO ESTABLISH THAT THERE WAS CONCEALMENT OF INCOME OR F URNISHING OF INACCURATE PARTICULAR ON THE PART OF THE ASSESSEE. THE CIT(A) CONFIRMED THE PENALTY AND NOW THE ASSESSEE IS BEFORE US AND REITERATED ITS CONTEN TION. ON PERUSAL OF THE RECORD, WE FIND THAT THE ASSESSING OFFICER HAS ESTIMATED TH E INVESTMENT AND UNEXPLAINED TURNOVER WITHOUT BRINGING ANY COGENT MATERIAL ON RE CORD, WE THEREFORE OF THE VIEW FOR ESTIMATION THAT ADDITION CAN BE ESTIMATED BUT P ENALTY U/S 271(1)(C) SHOULD NOT BE LEVIED. WE ACCORDINGLY DELETE THE PENALTY LEVIED IN THIS REGARD AFTER SETTING ASIDE THE ORDER OF THE CIT(A). ACCORDINGLY, THE PEN ALTY LEVIED IN THIS CASE U/S 271(1)(C) OF THE ACT HAS BEEN DELETED AFTER SETTIN G ASIDE THE ORDER OF THE CIT(A). 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (A.K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18/09/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASS TT. REGISTRAR