M/s Simclar Properties Private Limited, Hyderabad V. ITO, Ward 3(1), Hyderabad

ITA 531/HYD/2013

• Counselvise Citation: 53122514 RSA 2013
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Keywords: Depreciation; Agreed addition
• Section: 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO. 531 & 532/HYD/2013 ASSESSMENT YEARS 2007-2008 & 2008-2009 M/S. SIMCLAR PROPERTIES P. LTD. HYDERABAD 500 081. PAN AAICS7324Q VS. ITO, WARD 3 (1) HYDERABAD (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI K.C. DEVDAS (A.R.) FOR RESPONDENT : SHRI B. YADAGIRI (D.R.) DATE OF HEARING : 04.11.2013 DATE OF PRONOUNCEMENT : 31.12.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE CIT(A)-IV, HYDERABAD DATED 12.03.2013 FOR THE ASSESSMENT YEARS 2007-2008 AND 2008-2009. 2. BRIEF FACTS OF THE CASE LEADING TO INITIATION OF PENALTY UNDER SEC. 271(1)(C) ARE AS FOLLOWS : THE ASSESSEE IS IN THE BUSINESS OF CONSTRUC TION. A SURVEY U/S. 133A WAS CONDUCTED IN THE BUSINESS PREMI SES OF THE ASSESSEE ON 29-10-2007. SINCE THE ASSESSEE HAD NOT FILED RETURNS OF INCOME FOR ASSESSMENT YEARS 2007-2008 AN D 2008- 2009, A NOTICE U/S. 148 WAS ISSUED CALLING FOR THE RE TURN OF INCOME. IN RESPONSE TO THE SAME, THE ASSESSEE-COMPANY FILED ITS RETURN OF INCOME SHOWING A TOTAL INCOME FOR 2007-2 008 AT RS.46,82,540/- AND FOR THE ASSESSMENT YEAR 2008-200 9 DISCLOSING TOTAL INCOME AT RS.17,30,000/- FROM THE 2 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD. CONSTRUCTION BUSINESS. SINCE IT WAS A SURVEY CASE THE SAME WAS CONVERTED INTO SCRUTINY. THE ASSESSING OFFICER ES TIMATED THE INCOME FROM CONSTRUCTION AT RS.63,28,006/- I.E., 8% OF THE GROSS TURNOVER OF RS.7,91,00,078/- CLEAR OF ALL EXPENDITURE AND DEPRECIATION. FINALLY, THE INCOME WAS ASSESSED AT RS.63,40,757/-, AND RAISING A DEMAND OF RS.36,22,39 8/- FOR THE ASSESSMENT YEAR 2007-2008. FOR THE ASSESSMENT YEA R 2008-2009 THE ASSESSING OFFICER ESTIMATED THE INCOME F ROM CONSTRUCTION AT RS.17,18,720/- I.E., 8% OF GROSS TURN OVER OF RS.2,14,84,000/- CLEAR OF ALL EXPENDITURE AND DEPRE CIATION AND FINALLY THE INCOME WAS ASSESSED AT RS.22,37,868/- AND DEMANDED TAX PAYABLE AT RS.10,36,587/- FOR THE ASSESS MENT YEAR 2008-2009. THIS LED TO INITIATION OF PENALTY PRO CEEDINGS U/S 271(1)(C) OF THE IT ACT. 3. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESS EE COMPANY EXPRESSED ITS INABILITY TO PRODUCE THE BOOKS OF ACCOUNTS AS THE SAME WAS NOT READILY AVAILABLE. IT WAS SUBMITTED BECAUSE OF DISPUTE WITH SOME OF THE CREDITORS, BECAUSE OF NON-PAYMENT OF THEIR DUES DUE TO FINANCIAL DIFFICULTIES, THERE WAS SCUFFLE WITH THEM. IT WAS EXPLAIN ED BEFORE THE ASSESSING OFFICER THAT IN THE PROCESS BOO KS, COMPUTERS WERE TAKEN BY CREDITORS. BECAUSE OF THE INAB ILITY TO PRODUCE THE BOOKS OF ACCOUNTS A REQUEST WAS MADE TO ESTIMATE THE INCOME AT 6% OF GROSS RECEIPTS OF RS.7,91,00,078/- FOR THE ASSESSMENT YEAR 2007-2008 A ND RS.2,14,84,000/- FOR THE ASSESSMENT YEAR 2008-2009. THIS PROPOSAL OF THE ASSESSEE-COMPANY WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER FINALLY ES TIMATED THE PROFIT AT 8% ON GROSS TURNOVER OF RS.7,91,00,078/- FO R THE ASSESSMENT YEAR 2007-2008 AND RS.2,14,84,000/- FOR THE 3 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD. ASSESSMENT YEAR 2008-2009 CLEAR OF EXPENDITURE AND DEPRECIATION. THE TOTAL INCOME WAS ACCORDINGLY ESTIMATED AT RS.63,28,006/- FOR THE ASSESSMENT YEAR 2007-2008 AN D RS.22,37,868/- FOR THE ASSESSMENT YEAR 2008-2009. T HIS LED TO THE INITIATION OF PENALTY PROCEEDING FOR CONCEAL MENT OF INCOME. THE ASSESSING OFFICER IMPOSED PENALTY @ 100 % OF THE TAX SOUGHT TO BE ADDED. ACCORDINGLY, THE ASSESS ING OFFICER COMPUTED THE PENALTY AT RS.21,34,298/- FOR THE ASSESSMENT YEAR 2007-2008 AND RS.6,91,500/- FOR THE ASSESSMENT YEAR 2008-2009. 4. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AGAINST THE ORDER IMPOSING PENALTY UNDER SEC TION 271(1)(C) FOR THE ASSESSMENT YEARS 2007-2008 AND 20 08- 2009. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR T HE ASSESSEE BEFORE THE CIT(A) THAT ALTHOUGH THIS WAS A SURVEY CASE, NO INCRIMINATING MATERIAL WAS FOUND. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE B EFORE THE CIT(A) THAT IMPOSITION OF PENALTY IS NOT AUTOMATIC, AND MERELY BECAUSE ASSESSMENT PROCEEDING HAS BEEN COMPLETED RESULTING IN SOME ADDITION, PENALTY CANNOT BE IMPOS ED. IT WAS FURTHER SUBMITTED THAT LAW IS WELL ESTABLISHED AS A PRINCIPLE THAT, PENALTY PROCEEDING AND ASSESSMENT PROCEEDINGS ARE DIFFERENT. PENALTY PROCEEDINGS ARE NOT CONTINUATION OF ASSESSMENT PROCEEDINGS AND RELIED O N THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F JAIN BROTHS V UNION OF INDIA 42 ITR 216 SC WHEREIN IT HA S BEEN HELD THAT WHAT IS GOOD EVIDENCE FOR ASSESSMENT MAY NOT BE GOOD EVIDENCE FOR PENALTY. PENALTY IS NOT AUTOMATIC CONCOMITANT OF AN ASSESSMENT PROCEEDING. IT WAS CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE THE CIT(A) 4 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD. THAT THERE IS NO IDENTITY BETWEEN THE TWO PROCEEDIN GS AND A DECISION GIVEN IN THE ASSESSMENT PROCEEDING CANNOT BIND THE ASSESSING OFFICER WHO TRIES THE ASSESSEE FOR A DIFF ERENT OFFENCE I.E., FOR IMPOSITION OF PENALTY AND RELIED ON THE DECISION OF CIT V ABDUL BAKSI AND BROTHERS 160 ITR 94 AP FB. THEREFORE, IT WAS SUBMITTED THAT MERELY BECAUSE THE INCOME WAS ENHANCED BECAUSE OF ESTIMATION, THE SAME WOULD NOT LEAD TO IMPOSITION OF PENALTY FOR CONCEALMENT O F INCOME. 5. IT WAS FURTHER SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE THE CIT(A) THAT PENALTY CAN ONLY BE IMPOSED ON COMPUTED INCOME BUT NOT ON ESTIMATED INC OME AND THE LANGUAGE OF SECTION IS A CLEAR POINTER IN T HIS DIRECTION. IT WAS SUBMITTED THAT IT HAS BEEN HELD I N THE CASE OF SHIVLAL TAK VS. CIT 251 ITR 373 RAJ THAT THE INC OME SO ARRIVED BY ESTIMATE TAKES THE CHARACTER OF SUBSTITUTED INCOME BUT NOT COMPUTED INCOME WHICH ALONE WILL ATTRACT PENALTY. IT WAS POINTED OUT THAT THERE MAY BE CASES WHERE AN INCO ME MAY BE INFERRED FROM THE CIRCUMSTANCES OF A CASE, SO AS TO JUSTIFY ADDITION TO THE TOTAL INCOME FOR THE PURPOSE OF ASSESSMENT, BUT WHERE THERE IS NO POSITIVE EVIDENCE TH AT SUCH INCOME HAS BEEN RECEIVED BY THE ASSESSEE, PENALTY C ANNOT BE JUSTIFIED. THE LEARNED COUNSEL FURTHER SUBMITTED BEFOR E THE CIT(A) THAT THERE CAN BE NO PENALTY ON ESTIMATED INCOME AND IN SUPPORT OF HIS CONTENTION, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING CASE LAWS : (I) HARIGOPAL SINGH V CIT, 258 ITR 85 (P&H). (II) CIT VS. ARJUN PRASAD AJIT KUMAR (2008) 214 CTR 355 (ALLD.) (III) CIT VS. DHILLON RICE MILLS, 256 ITR 447 (P & H) (IV) SURESH KUMAR BANSAL, (2002) 254 ITR 130 (V) CIT VS. RAVILAL SINGH & CO 254 ITR 191 5 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD. (VI) CIT VS. SMT. MEENAKSHI KUTTY (2002) 258 ITR 49 4 (MAD.) (VII) CIT VS. VALIMK BHAI H PATEL (2006) 280 ITR 48 7 (GUJ.) (VIII) CIT VS. K A RAJAPPA CHETTIER 153 ITR 215 MAD 6. AFTER PERUSING THE MATERIAL AVAILABLE ON RECORD AS WELL AS SUBMISSIONS MADE BEFORE HIM BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE LEARNED CIT(A) HELD A S FOLLOWS : 5.3. . . . . . IN THIS CASE, THE APPELLANT HAD NO T FURNISHED ITS RETURN OF INCOME U/S. 139(1) FOR THE A.Y. 2007-08. THE ASSESSING OFFICER ISSUED A NOTICE U/S. 148 OF THE ACT ON 01.07.2009. THEREAFTER, THE APPELLANT FURNISHED ITS RETURN OF INCOME U/S. 148 OF THE ACT FOR A.Y. 2007-08 ON 05.10.2009 DISCLOSING TOTAL INCOME OF RS.46,82,540/-. SECONDLY, A SURVEY OPERATION U/S. 133A WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE APPELLANT COMPANY ON 29.10.2007 AND DURING THE SAID SURVEY OPERATION CERTAIN BOOKS OF ACCOUNTS AND DOCUMENTS PERTAINING TO THE APPELLANT COMPANY WERE FOUND AND IMPOUNDED BY THE SURVEY TEAM. HONBLE COURTS IN THE FOLLOWING CASES HAVE HELD THAT SUCH OFFER OF INCOME BY THE ASSESSEE MAY PROVIDE SOUND FOUNDATION FOR THE IMPOSITION OF PENALTY U/S.271(1)(C) OF THE ACT. 7. THE CIT(A) RELIED ON THE FOLLOWING DECISIONS WH ILE CONFIRMING THE PENALTY ORDER PASSED BY THE ASSESSIN G OFFICER UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961. (I) DURGA TIMBER WORKS VS. CIT (1971) 79 ITR 63 (DEL.) (II) BANARAS CHEMICAL FACTORY VS. CIT (1977) 108 IT R 96 (ALL.) (III) AYYASAMI NADAR & BROS. VS. CIT (1956) 30 ITR 565 (MAD.) 6 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD. (IV) INDIA SEA FOODS VS. CIT (1978) 114 ITR 124 (KE R.) (V) HV VENUGOPAL CHETTIAR VS. CIT (1985) 153 ITR 376 (MAD.) (VI) WESTERN AUTOMOBILES (INDIA) VS. CIT (1978) 112 ITR 1048 (BOM.) (VII) CIT VS. KRISHNA AND CO. (1979) 120 ITR 144 (MAD.) (VIII) CIT VS. PB SHAH & CO. P. LTD. (1978) 113 ITR 587 (CAL.) (IX) CIT VS. DR. R.C. GUPTA & CO.(1980) 122 ITR 567 (RAJ.) 7.1. FURTHER, THE CIT(A) ALSO DISCUSSED THE CASES OF (1) MAHAVIR META WORKS VS. CIT (1973) 92 ITR 51 3 (PUNJAB). (2) KP MADHUSUDHAN VS. CIT 251 ITR 99 (S.C.) (3) P. RAJASWAMY RAJA JEWELLERS VS. CIT (2010) 323 ITR 527 (KER.) (4) CIT VS. RAKESH SURI (2010) 233 CTR 184 (ALL.) 7.2. THE CIT(A) FURTHER DISCUSSED THE SUPREME COUR T CASES IN THE CASE OF UNION OF INDIA & OTHERS VS. DH ARMENDRA TEXTILE PROCESSORS 306 ITR 277 (SC). 8. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI K.C. DEVDAS, REITERATED THE CONTENTIONS RAISED BEFORE TH E CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER RELIED ON THE JUDGMENT IN THE CASE OF CIT VS. SANGRUR VANASPATI M ILLS LTD. (2008) 216 CTR (PUNJ. & HAR.) 92 WHEREIN IT WA S HELD THAT IN ORDER TO ATTRACT CLAUSE (C) OF SECTION 271 (1) OF THE INCOME TAX ACT, 1961, IT IS NECESSARY THAT THERE MU ST BE CONCEALMENT BY THE ASSESSEE OF THE PARTICULARS OF H IS INCOME 7 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD. OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INC OME. THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE NOT ATTRACTED TO CASES WHERE THE INCOME OF AN ASSESSEE IS ASSESSED O N ESTIMATE BASIS AND ADDITIONS ARE MADE THEREIN. WHEN THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF ESTIMATE A ND NOT ON ACCOUNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, THEN THE PENALTY IS NOT LEVIABLE. 8.1. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI K.C . DEVADAS, FURTHER SUBMITTED BEFORE US THAT MERE FACT OF AGREED ADDITION DOES NOT LEAD TO A CONCLUSION THAT THE AMOUNT AGREED TO BE ADDED AS INCOME IS CONCEALED IN COME. FOR THE PURPOSE, THE ASSESSING OFFICER SHOULD FURTH ER BRING SOME MATERIAL ON RECORD SO THAT IT IS CONCLUSIVELY ESTABLISHED THAT SUCH SURRENDER REPRESENTED THE REA L INCOME OR UNDISCLOSED INCOME OF THE ASSESSEE. IT WAS SUBMI TTED THAT IN THE CASE OF AGREED ADDITIONS, WITHOUT GOING INTO THE TECHNICALITIES OF LEVIABILITY OF PENALTY UNDER SECT ION 271(1)(C), PENALTY PROCEEDINGS COULD NOT BE INITIATED AND RELI ED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF ACIT VS. MALU ELECTRODES P. LTD. (2010) 127 TTJ 599 (NAG.). 9. THE LEARNED D.R. ON THE OTHER HAND, RELIED ON T HE ORDERS OF THE TAX AUTHORITIES. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE APEX COURT IN THE CASE OF MAK DATA (P.) LTD. V. CIT (2013) 38 TAXMANN.COM 448 (SC) HAS DEALT WITH CASES IN WHICH THE ASSESSEE HAD OFFERED INCOME VOLUNTARILY TO BUY PEACE AND AVOID LITIGATION . THE SUPREME COURT HELD THAT: 8 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD. 1) EXPLANATION TO SECTION 271(1) RAISES A PRESUMPTI ON OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE AS SESSING OFFICER, BETWEEN REPORTED AND ASSESSED INCOME. THE BURDEN THEN SHIFT ON THE ASSESSEE TO SHOW OTHERWISE, BY CO GENT AND RELIABLE EVIDENCE; 2) WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION, HAS BEEN DISCHARGED BY ASSESSEE, THE ONUS SHIFTS ON THE REVENUE TO SHOW THAT THE AMOUNT IN QUESTION CONSTIT UTED THE INCOME AND NOT OTHERWISE; 3) THE ASSESSING OFFICER SHALL NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESSEE LIKE VOLUNTARY DISCLOSURE, BUY PEACE, AVOID LITIGATION, AMICABLE SETTLEMENT, ETC., TO EXPLAIN ITS CONDUCT; 4) ASSESSEE HAD ONLY STATED THAT HE HAD SURRENDERED THE ADDITIONAL SUM WITH A VIEW TO AVOID LITIGATION, BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TOWARDS PRODUCTIVE WORK AND TO MAKE AMICABLE SETTLEMENT WIT H THE INCOME-TAX DEPARTMENT. STATUTE DOES NOT RECOGNIZE T HOSE TYPES OF DEFENCES UNDER THE EXPLANATION 1 TO SECTIO N 271(1)(C); 5) IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DO ES NOT FREE THE ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS UNDER SECTION 271(1)(C). THE LAW DOES NOT PROVIDE THAT WH EN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CONCEA LED INCOME, HE HAS TO BE ABSOLVED FROM PENALTY; 6) THE SURRENDER OF INCOME IN THIS CASE WAS NOT VOL UNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN V IEW OF DETECTION MADE BY THE ASSESSING OFFICER IN THE SEAR CH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE; 7) THE ASSESSING OFFICER HAD TO SATISFY WHETHER THE PENALTY PROCEEDINGS WERE INITIATED OR NOT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE ASSESSING OFFICER WA S NOT REQUIRED TO RECORD HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCE IT INTO WRITING. THUS, THERE WAS NO ILLEGALI TY IN ACTION OF DEPARTMENT IN INITIATING PENALTY PROCEEDINGS - 9 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD. 11. IN THE INSTANT CASE, FOR THE ASSESSMENT YEAR 20 07- 2008 THERE WAS A SURVEY IN THE PREMISES OF M/S SIMC LAR CONSTRUCTIONS (FIRM) ON 29.10.2007, WHEREIN CERTAIN BOOKS OF ACCOUNTS AND DOCUMENTS OF THE ASSESSEE WERE FOUND A ND IMPOUNDED. A NOTICE U/S 148 WAS ISSUED ON 1.7.2009. IN RESPONSE TO THE NOTICE ISSUED THE ASSESSEE FILED A RETURN OF INCOME ON 5.10.2009 DECLARING AN INCOME OF RS. 46,8 2,540/-. IN THE COURSE OF ASSESSMENT THE MD OF THE ASSESSEE HAD INDICATED THAT THEIR BOOKS AND COMPUTERS WERE FORCIBLY TAKEN AWAY FROM THEIR OFFICE BY A COUPLE OF SUPPLIERS WHO WERE NOT PAID BY THE ASSESSEE. THEY HAD REQUESTED THE INCOME TO BE DETER MINED AT 6% OF THE TOTAL RECEIPTS. THE AO COMPLETED THE REASSES SMENT DETERMINING THE INCOME AT 8% OF THE TURNOVER AT 63, 40,757/-. THE TAX ON THE SAME WORKED OUT TO RS. 21,34,298/- A ND THE OFFICER HAS LEVIED MINIMUM PENALTY OF RS. 21,34,298 /-. APPLYING THE RATIO OF THE DECISION OF THE SUPREME COURT, THE ASSESSEE HAD NOT GIVEN ANY REASONABLE EXPLANATION FOR NOT OFFERI NG THE INCOME HE HAD OFFERED IN THE RETURN FILED PURSUANT TO THE NOTICE ISSUED U/S 148. AGAIN THIS ACTION HAS EMANATED FROM THE RE SULT OF SURVEY CONDUCTED IN THE PREMISES OF ASSOCIATE CONCE RN M/S SIMCLAR CONSTRUCTIONS (FIRM) ON 29.10.2007. THEREFO RE WE CANNOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT T HIS AMOUNT WAS RETURNED VOLUNTARILY AND HENCE PENALTY CANNOT B E LEVIED. THE BURDEN IS ON THE ASSESSEE TO EXPLAIN WHY HE HAD NOT OFFERED THIS INCOME EARLIER. THE ASSESSEE HAD NO EXPLANATION TO OFFER ON THIS GROUND. THEREFORE WE HOLD THAT SUCH INCOME OFFERED IN THE RETURN FILED IS CONCEALED INCOME AND EXIGIBLE TO PENALTY U /S 271(1)(C). HOWEVER AS REGARDS THE QUANTUM OF CONCEALED INCOME, WE HOLD THAT ONLY INCOME WHICH WAS RETURNED IN THE RETURN F ILED BY THE ASSESSEE SHOULD BE CONSIDERED AS CONCEALED INCOME. IN THE REASSESSMENT THE AO HAS ACCEPTED THE TURNOVER AND D EPRECIATION 10 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD. AS RETURNED BY THE ASSESSEE. THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE REASSESSMENT ORDER IS MERE LY BASED ON HIS ESTIMATE THAT PROFITABILITY SHOULD BE AT 8% IN THE PLACE OF THE PROFITS OFFERED BY THE ASSESSEE. THIS IS MERELY AN ADHOC ESTIMATE MADE BY THE AO WITHOUT ANY COGENT REASON FOR ADOPTI NG SUCH PERCENTAGE. THIS ADDITION THEREFORE CANNOT BE CONSI DERED AS CONCEALED INCOME OF THE ASSESSEE. 12. WE, THEREFORE, DIRECT THAT THE ASSESSING OFFICE R TO DETERMINE THE INCOME ELIGIBLE FOR PENALTY AT THE IN COME RETURNED BY THE ASSESSEE IN HIS RETURN OF INCOME FILED ON 5. 10.2009 AND RE-WORK AND LEVY MINIMUM PENALTY BASED ON THE INCOM E FILED BY THE ASSESSEE IN HIS RETURN OF INCOME. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO 531/H/13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA.NO.532/HYD/2013 - AY 2008-09 14. THE FACTS FOR AY IS SIMILAR TO THOSE OF AY 2007 -08. AFTER THE SURVEY AND ISSUE OF NOTICE U/S 148, DT 1. 7.2009, THE ASSESSEE FILED A RETURN OF INCOME ON 5.10.2009 DECL ARING A TOTAL INCOME OF RS. 17,30,000/-. THE ASSESSING OFFICER RE WORKED THE INCOME, ADOPTING THE PROFITABILITY OF 8% AND DETERM INED THE INCOME AT RS. 22,37,868/-. THE AO DETERMINED THE TA X LIABILITY AT RS. 6,91,500/- AND LEVIED THE MINIMUM PENALTY OF TH AT AMOUNT VIZ., RS. 6,91,500/- 15. AS HELD BY US IN THE ASSESSEES CASE FOR AY 200 7-08 SUPRA, WE UPHOLD THE LEVY OF PENALTY U/S 271(1)(C) AS THE ASSESSEE HAD NOT PROVIDED REASON FOR NOT OFFERING T HE INCOME EARLIER AND HENCE THE AMOUNT RETURNED BY HIM SHOULD BE TREATED AS CONCEALED INCOME ON WHICH PENALTY IS LEVIABLE. B UT AS HELD IN THAT APPEAL, THE AO DID NOT ACCEPT THE PROFITABILIT Y RETURNED BY 11 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD. THE ASSESSEE BUT ADOPTED 8% WITHOUT GIVING ANY BASI S FOR ADOPTING THAT PERCENTAGE. WE THEREFORE HOLD THAT TH E CONCEALED INCOME SHOULD BE TAKEN AS THE INCOME OFFERED BY THE ASSESSEE IN HIS RETURN OF INCOME. THE ADDITION MADE BY THE AO B Y ADOPTING AN ADHOC PERCENTAGE OF PROFITABILITY CANNOT BE CONS IDERED AS INCOME CONCEALED BY THE ASSESSEE. 16. THEREFORE, FOLLOWING OUR DECISION IN THE ASSESS EES CASE FOR EARLIER AY 2007-08 IN ITA NO 531/H/13 SUPR A, FOR THIS YEAR ALSO WE DIRECT THAT THE ASSESSING OFFICER DETE RMINE THE INCOME ELIGIBLE FOR PENALTY AT THE INCOME RETURNED BY THE ASSESSEE IN HIS RETURN OF INCOME FILED ON 5.10.2009 AND REWORK AND LEVY MINIMUM PENALTY BASED ON THE TAX LIABILITY COMPUTED ON THE INCOME OFFERED BY THE ASSESSEE IN HIS RETURN OF INCOME. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IN 532/H/ 13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 18. TO SUM-UP, ITA.NO.531 & 532/HYD/2013 OF THE ASSESSEE FOR THE A.Y. 2007-2008 AND 2008-2009 ARE P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.12.2013. SD/- SD/- (B. RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD DATE 31 ST DECEMBER, 2013. VBP/- COPY TO 1. M/S. SIMCLAR PROPERTIES P. LTD. HABEEB MANSION, FLAT NO.202, PLOT 476, AYYAPPA SOCIETY, NEAR 100 FT. ROAD, M ADHAPUR, HYDERABAD 500 081. 2. ITO, WARD 3(1), I.T. TOWERS, HYDERABAD. 3. CIT(A)-9 MUMBAI, CAMP AT HAVING CONCURRENT JURI SDICTION CIT(A) - IV, HYDERABAD 4. CIT-III, HYDERABAD 5. D.R. A BENCH, ITAT HYDERABAD 12 ITA.NO.531/HYD/2013 M/S. SIMCLAR PROPERTIES P. LTD. HYD.