Sh. Laxmi Narayan Ramswaroop Shihare, Gwalior V. A.C.I.T., Gwalior

ITA 545/AGR/2012

• Counselvise Citation: 54520314 RSA 2012
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income; Question of law; Revised return
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 545/AGRA/ 2012 ASSESSMENT YEAR 2008-2009 SHRI LAXMI NARAYAN RAMSWAROOP VS. ASSTT. C.I.T. SHIVHARE, GWALIOR. 47, DURGAPURI, TANSEN ROAD, GWALIOR. (PAN AACFL 1133 B) ITA NO. 547/AGRA/ 2012 ASSESSMENT YEAR 2008-2009 SHRI LAXMI NARAYAN RAMSWAROOP VS. ASSTT. C.I.T. SHIVHARE & CO., GWALIOR. 47, DURGAPURI, TANSEN ROAD, GWALIOR. (PAN AACFL 5233 A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJENDRA SHARMA, ADVOCATE RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 06.08.2013 DATE OF PRONOUNCEMENT : 14.08.2013 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER BOTH THE APPEALS BY DIFFERENT ASSESSEES ARE DIRECTE D AGAINST DIFFERENT ORDERS OF LD. CIT(A), GWALIOR, DATED 04.10.2012 FOR A.Y. 2008-09 CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 2 2. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. IN ITA NO. 5 45/AGRA/2012, THE A.O. PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT DATED 27.12.2010. THE A.O. NOTED IN THE ASSESSMENT ORDER THAT THE ASSESSEE DERIVES ITS INCOME FROM BUSINESS OF LIQUOR. THE SALES HAVE BEEN SHOWN AT RS.11,44,10,094/- ON WHICH NET PROFIT OF RS.26,25,9 23/- HAS BEEN DISCLOSED GIVING NET PROFIT RATE OF 2.29%. SINCE THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE IN SUPPORT OF PURCHASE AS WELL AS ALL THE EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT. THE GENUINENESS OF PURCHASES, SALES AND EXPENSES REMAINED UNVERIFIED. THE A.O. ASKED THE AS SESSEE AS TO WHY BOOK RESULTS SHOULD NOT BE REJECTED FOR THE ABOVE DEFECT S AND SALES SHOULD NOT BE ESTIMATED AT RS.11,15,00,000/- AS AGAINST THE SALES SHOWN ABOVE AND WHY THE NET PROFIT RATE OF 3% SHOULD NOT BE APPLIED AGAINST THE PROFIT RATE DISCLOSED AT 2.29%. THE ASSESSEES COUNSEL SUBMITTED IN THE STATEMENT SIGNED BY SMT. KALPANA SHIVHARE IN WHICH SHE HAS SURRENDERED RS.4,00,000/- FOR POSS IBLE LEAKAGE OF INCOME FOR NON MAINTENANCE OF SOME DOCUM ENTS AND VOUCHERS IN PROPER MANNER. IN RESPECT OF COMPANY, IT WAS ALSO S UBMITTED THAT ASSESSEE IS FILING RETURN OF INCOME REGULARLY AND ALL SALES, PU RCHASES AND EXPENSES ARE FULLY VERIFIABLE AND GOODS ARE PURCHASED FROM THE E XCISE DEPARTMENT AND REMAINED UNDER THE CONTROL OF EXCISE ACT. THE BOOKS OF ACCOUNT ARE AUDITED. SINCE SHOPS ARE LOCATED AT DIFFERENT LOCATIONS, THE REFORE, THE DOCUMENTS COULD ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 3 NOT BE PRODUCED AND SOME OF THE DOCUMENTS HAVE BEEN DESTROYED OR ARE NOT TRACEABLE. IT WAS ALSO EXPLAINED THAT SHE IS HEART PATIENT AND COMPLETELY BROKEN AND SHATTERED IN HER FAMILY LIFE AS WELL AS BUSINES S. THEREFORE, ASSESSEE DID NOT CONTEST THE ISSUE. THEREFORE, IN ORDER TO PURCHASE PEACE, ASSESSEE IS READY TO PAY INCOME TAX ON THE ADDITION OF RS.4,00,000/- BY WAY OF SURRENDER MADE BY THE ASSESSEE PROVIDED IT DOES NOT ATTRACT ANY PENAL CONSEQUENCES AND/OR PROSECUTION. THE A.O. CONSIDERED THE ABOVE SUBMISSI ON OF THE ASSESSEE AND ON SURRENDER FOUND THAT THE PROPOSAL OF THE ASSESSEE T O BE REASONABLE AND ACCEPTABLE. ACCORDINGLY ADDITION OF RS.4,00,000/- W AS MADE TO THE RETURNED INCOME AS WAS SURRENDERED BY THE ASSESSEE AND INCOM E WAS COMPUTED AT RS.30,25 , 922 /-. THE A.O. LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING THE INACCURATE PARTICULARS. THE LD.CIT(A) CONFIRMED THE PENALTY AND DISMISSED THE APPEAL OF THE ASSESSEE. 3. IN ITA NO. 547/AGRA/2012, THE FACTS ARE IDENTICA L AND A.O. PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT ON 10.12.2010. THIS ASSESSEE IS ALSO IN THE BUSINESS OF LIQUOR AND IN A BSENCE OF PURCHASE VOUCHERS OF ALL VARIOUS EXPENSES, THE A.O. PROPOSED TO REJEC T THE BOOK RESULT UNDER SECTION 145 OF THE ACT. THE ASSESSEE WAS ASKED AS T O WHY SALES SHOULD NOT BE ESTIMATED AT RS.75 CRORE AS AGAINST DISCLOSED SALES OF 74.87 CRORES AND WHY NET PROFIT RATE 3% SHOULD NOT BE APPLIED AGAINST DISCLO SED NET PROFIT RATE 1.77%. THE ASSESSEE SIMILARLY SURRENDER RS.55.00 LAKHS FOR POSSIBLE LEAKAGE OF ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 4 INCOME FOR NON MAINTENANCE OF CERTAIN DOCUMENTS AN D SIMILAR REPLY WAS FILED THAT ASSESSEE MAINTAINED ALL BOOKS OF ACCOUNT, SALE S AND PURCHASED VOUCHERS WITH EXPENSES UNDER THE EXCISE CONTROL, BUT DUE TO CERTAIN REASONS THE DOCUMENTS COULD NOT BE PRODUCED BECAUSE THEY ARE DE STROYED OR NOT TRACEABLE. THE PERSONAL ELEMENT WAS ALSO EXPLAINED AND FOR FAI LURE OF THE BUSINESS THE A.O. ACCEPTED THE PROPOSAL OF THE ASSESSEE OF SURRE NDER OF RS.55.00 LAKHS, WHICH APPEARS TO BE REASONABLE AND ACCEPTABLE. THE INCOME OF THE ASSESSEE WAS, THEREFORE, COMPUTED AFTER ACCEPTING SURRENDER OF RS.55.00 LAKHS AT RS.1,87,95,773. THE A.O. LEVIED PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT FOR FILING INACCURATE PARTICULARS OF INCOME AND LD. CIT(A) CONFIRMED THE LEVY OF PENALTY AND DISMISSED THE APPEAL OF THE ASSESSEE . 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSE SSEE AGREED TO THE SURRENDER FOR WANT OF PRODUCTION OF CERTAIN VOUCHER S OF PURCHASE AND EXPENSES AND ULTIMATELY INCOME OF THE ASSESSEE WOULD HAVE BE EN ESTIMATED BY ENHANCING THE SALES AND NET PROFIT RATE. THEREFORE, ASSESSEE AGREED TO MAKE SURRENDER AND SURRENDER OF THE ASSESSEE HAS BEEN AC CEPTED BY THE A.O., THEREFORE, IT IS NOT A CASE OF FILING INACCURATE PA RTICULARS OF INCOME. HE HAS SUBMITTED THAT A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE AS TO HOW IT IS A CASE OF FILING INACCURATE PARTICULARS OF IN COME. HE HAS SUBMITTED THAT FOR FILING OF INACCURATE PARTICULARS, EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT WOULD NOT BE ATTRACTED BECAUSE IT APPLIES TO THE CO NCEALMENT OF PARTICULARS OF ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 5 INCOME. LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SU BMITTED THAT SINCE IT IS A ESTIMATED INCOME, THEREFORE, NO PENALTY IS LEVIABLE AND RELIED UPON THE DECISION OF THE HONBLE CHHATTISGARH HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. VIJAY KUMAR JAIN 232 CTR 255 IN WHICH IT WAS HELD-- PENALTY UNDER S. 271(1)(C)-CONCEALMENT ---ADDITION ON ACCOUNT OF APPLICATION OF HIGHER NET PROFIT RATESINCE THE ASS ESSEE DID NOT PRODUCE ANY EVIDENCE AND BOOKS OF ACCOUNT INCLUDING THE BALANCE SHEET, NET PROFIT WAS ESTIMATED @ 10 PER CENT ON TH E RECEIPTS FROM ALL SOURCE AS AGAINST 6.36 PER CENT SHOWN BY THE ASSESS EE---IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE CONCEALED PAR TICULARS OF HIS INCOME OR THE PARTICULARS OF INCOME FURNISHED BY HI M WERE FOUND TO BE INACCURATE BY THE AO---IN SIMILAR CASES, AO HAS ACC EPTED NET PROFIT EVEN LOWER THAN 6.36 PER CENT DECLARED BY THE ASSES SEEPENALTY UNDER S. 271(1)(C)RIGHTLY CANCELLED. 4.1 HE HAS ALSO RELIED UPON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. AERO TRADERS (P) LTD. (2010) 3 22 ITR 316 IN WHICH IT WAS HELD TRIBUNAL HAVING UPHELD THE ORDER OF THE CIT(A) DEL ETING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) ON THE GROUND THAT THE ADDITION WAS MADE BY THE AO ON THE BASIS OF ESTIMATED PROFIT AND THE SAME HAS BEEN SUBSTANTIALLY REDUCED IN APPEAL, THE FINDING ARRIVE D AT BY THE TRIBUNAL DOES NOT WARRANT ANY INTERFERENCE AS IT IS PURELY A S FINDING OF FACT AND NO PERVERSITY HAS BEEN POINTED OUT THEREIN. 4.2 HE HAS ALSO RELIED UPON THE DECISION OF THE HON BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. SURESH CHANDRA MI TTAL (2000) 241 ITR 124 (MP) IN WHICH IT WAS HELD THOUGH THE ASSESSEE HAD DECLARED ADDITIONAL INCOME BY WAY OF REVISED RETURNS AFTER PERSISTENT QUERIES BY AO, ONC E THE REVISED RETURNS HAVE BEEN REGULARIZED BY REVENUE THE EXPLANATION OF THE ASSESSEE THAT ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 6 HE HAS DECLARED ADDITIONAL INCOME TO BURY PEACE AND TO COME OUT OF VEXED LITIGATION COULD BE TREATED AS BONA FIDE AND PENALTY UNDER S. 271(1)(C) WAS NOT LEVIABLE. 4.3 HE HAS ALSO RELIED UPON THE ORDER OF ITAT AGRA BENCH, AGRA IN ITA NO. 132/AGRA/2013 M/S OSHO ASSOCIATES DATED 05.07.2 013 IN WHICH IN PARA NOS. 4 TO 6 IT WAS HELD AS UNDER :- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD. THE FACTS NOTED ABOVE ARE NOT IN DISPUTE . ITAT, AGRA BENCH IN THE CASE OF LAXMI NARAYAN SHIVHARE VS. JCI T (SUPRA) VIE ORDER DATED 28.06.2013 HELD AS UNDER : 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND T HE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE A SSESSEE DID NOT PRODUCE THE RECORD/DETAILS BEFORE THE AO. THE ASSES SEE ALSO DID NOT PRODUCE BOOKS OF ACCOUNT AND VOUCHERS. THEREFOR E, THE AO HAS TO RESORT TO ESTIMATE OF INCOME. THE MATTER ULT IMATELY TRAVELED TO THE TRIBUNAL AND HIGHER PROFIT RATE WAS FURTHER REDUCED AND ULTIMATELY ADDITION WAS MADE TO THE EXT ENT OF RS.9,38,907/-. THE ASSESSEE HAS DISCLOSED ALL THE P ARTICULARS OF INCOME IN THE RETURN OF INCOME. MERELY BECAUSE SUPP ORTING EVIDENCES COULD NOT BE PRODUCED, HIGHER INCOME WAS ESTIMATED. HONBLE CHATTISGARH HIGH COURT IN THE CASE OF CIT V S. VIJAY KUMAR JAIN (SUPRA) HELD THAT NON-PRODUCTION OF BOOK S OF ACCOUNT AND ESTIMATE OF HIGHER NET PROFIT DID NOT FIND IT J USTIFIED TO LEVY THE PENALTY. THE OTHER DECISIONS CITED BY THE LD. C OUNSEL FOR THE ASSESSEE CLEARLY SUPPORT THE CASE OF THE ASSESSEE T HAT ON MERE ESTIMATE OF INCOME, PENALTY IS NOT LEVIABLE. HONBL E ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. ARJUN PRASAD AJIT KUMAR (SUPRA) HELD THAT PENALTY COULD NOT BE IMPOSED ON T HE BASIS OF ESTIMATING SALES AND APPLYING NET PROFIT FOR THE PU RPOSE OF MAKING ADDITION. ALL THESE DECISIONS CITED BY THE L D. COUNSEL FOR THE ASSESSEE CLEARLY SUPPORT THE CONTENTION OF THE ASSESSEE THAT PENALTY IS NOT LEVIABLE ON ESTIMATE OF INCOME. FOLL OWING THE SAME DECISIONS, WE DO NOT FIND IT TO BE A FIT CASE FOR L EVY OF PENALTY. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND CANCEL THE PENALTY. ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 7 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 5. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE ABOVE DECISION, WE ARE OF THE VIEW THAT THE PENALTY IS NO T LEVIABLE IN THE MATTER. THE LD. CIT(A) IN THE QUANTUM ORDER DATED 2 1.08.2008 WHILE CONFIRMING THE ADDITION OF RS.1,00,000/- HAS SPECIFICALLY NOTED IN THE ORDER THAT THE AO HAS NOT MADE OUT ANY CASE OF REJECTION OF ACCOUNTS BECAUSE THE ACCOUNTS BOOKS WE RE ALREADY IN POSSESSION OF THE DEPARTMENT AS IMPOUNDED DURING TH E SURVEY. ADDITION OF RS.1,00,000/- WAS, HOWEVER, CONFIRMED O N THE REASONS TO TAKE CARE OF INADMISSIBLE AND PART EXPEN DITURES CLAIMED BUT NOT RELATED TO THE BUSINESS OF THE ASSE SSEE. AFORESAID ORDER OF THE LD. CIT(A) HAS BEEN CONFIRMED BY THE T RIBUNAL BY DISMISSING THE APPEAL OF THE REVENUE VIDE ORDER DAT ED 17.09.2010. THEREFORE, MERE ADDITION TO INCOME OF T HE ASSESSEE ON THE ABOVE REASONS, WOULD NOT BE SUFFICIENT TO HO LD THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULARS OF INCOME. PENALTY IS, THERE FORE, NOT LEVIABLE IN THE MATTER. BY FOLLOWING THE DECISION I N THE CASE OF LAXMI NARAYAN SHIVHARE VS. JCIT (SUPRA), WE SET ASI DE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENA LTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 5. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. IN BOTH THE CASES THE ASSESSEES ARE IN THE BUSINESS OF LIQUOR AND FILED THE RETURN OF INCOME DISCLOSING SUBSTANTI AL INCOME FROM THE BUSINESS. THE A.O. TOOK UP THE MATTER FOR ASSESSMENT ON THE I SSUE OF NET PROFIT. THE ASSESSEE COULD NOT PRODUCE CERTAIN VOUCHERS OF PURC HASE AND EXPENSES. THEREFORE, A.O. DIRECTED TO REJECT BOOK RESULT UNDE R SECTION 145(3) OF THE ACT AND ALSO DIRECTED AS TO WHY THE SALES SHOULD NOT BE ENHANCED AND HIGHER N.P. ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 8 RATE SHOULD NOT BE APPLIED AS AGAINST SALES AND N.P . DECLARED BY THE ASSESSEE. IN ITA NO. 545/AGRA/2012 EVEN THE A.O. PROPOSED TO ESTIMATE THE SALES AT THE LESSER TURNOVER AT 11.15 CRORES AS AGAINST 11.44 CR ORES DISCLOSED BY THE ASSESSEE. THE VARIATION OF N.P. RATE DECLARED BY TH E ASSESSEE AND PROPOSED BY THE A.O. WAS ALSO NOT SIGNIFICANTLY HIGHER. SAME IS POSITION IN OTHER APPEAL IN ITA NO. 547/AGR/2012. IT IS, THEREFORE, CLEAR THAT THE A.O. WANTED TO MAKE ADDITION AGAINST THE NET PROFIT OF THE ASSESSEE BY ESTIMATING THE INCOME OF THE ASSESSEE. HOWEVER, THE ASSESSEE EXPLAINED BEFORE A. O. THAT BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED AND THE PURCHASES ARE M ADE FROM THE EXCISE DEPARTMENT AND BUSINESS IS UNDER THE CONTROL OF EXC ISE ACT. THIS SUBMISSION OF THE ASSESSEE HAS NOT BEEN DISPUTED BY THE A.O. I N OUR VIEW ALSO THIS SUBMISSION COULD NOT HAVE BEEN DISPUTED BY THE A.O. BECAUSE IN THE LIQUOR BUSINESS THE PURCHASE ARE ALWAYS MADE FROM THE EXCI SE DEPARTMENT AND THE BUSINESS IS ALWAYS UNDER CONTROL OF EXCISE DEPARTME NT. THEREFORE, THERE SHOULD NOT HAVE BEEN ANY DOUBT REGARDING GENUINENES S OF THE PURCHASE MADE FROM THE EXCISE DEPARTMENT. AT THE MOST, THE SALES WOULD NOT HAVE BEEN VERIFIABLE, BUT IN THE LIQUOR BUSINESS THE SALES AR E GENERALLY MADE IN CASH, THEREFORE, THERE IS NO QUESTION OF VERIFICATION OF THE CASH SALES MADE BY THE ASSESSEE. THEREFORE, THE NON-PRODUCTION OF THE PURC HASE BILLS ON EXPENSES WOULD NOT BE MUCH SIGNIFICANT TO PROVE THAT ASSESSE E HAS FILED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE PARTICULARS OF INCOME. THE ASSESSEE ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 9 ALSO EXPLAINED THAT DUE TO HEALTH PROBLEM AND BUSIN ESS IS NOT BEING RUN SMOOTHLY, THEREFORE, IN ORDER TO BUY PEACE THE ASSESSEE MADE SURRENDER IN BOTH THE CASES FOR POSSIBLE LEAKAGE OF INCOME FOR NON-MA INTENANCE OF DOCUMENTS AND VOUCHERS. IT WOULD, THEREFORE, PROVE THAT THERE WAS NO DEFINITE FINDING OF FACT RECORDED BY THE A.O. THAT IT IS A CASE OF FILI NG OF INACCURATE PARTICULARS OF INCOME. THE EXPLANATION OF THE ASSESSEE HAS BEEN FO UND TO BE REASONABLE AND ACCEPTABLE TO THE A.O. AND THE OFFER OF SURRENDER MADE BY THE ASSESSEE IN RESPONSE TO THE REJECTION OF THE BOOKS OF ACCOUNTS HAVE BEEN ULTIMATELY ACCEPTED BY THE A.O. WHEN A.O. ACCEPTED SURRENDER I N BOTH THE CASES AS AGAINST PROPOSED REJECTION OF THE BOOKS OF ACCOUNTS AND ESTIMATE OF INCOME, THE A.O. SHOULD NOT HAVE INITIATED THE PENALTY PROC EEDINGS AGAINST THE ASSESSEE. 7. WE MAY ALSO NOTE HERE THAT IN ITA NO.545/AGR/201 2 IF AS PER PROPOSED NOTICE OF THE A.O. THE ENHANCED TURNOVER AND ENHAN CED N.P. RATE IS TAKEN INTO CONSIDERATION, THE TOTAL INCOME SHOULD BE COMPUTED AT RS.33,45,000/- BUT THE A.O. AFTER ACCEPTING THE SURRENDER OF RS.4,00,000/- COMPUTED TO THE TOTAL INCOME ON ESTIMATE OF RS.30,25,922/-. THUS, EVEN THE A.O. ACCEPTED LESSER SURRENDER FROM THE ASSESSEE. SIMILARLY IN ITA NO.54 7/AGRA/2012 IF THE PROPOSED TURN OVER OF THE A.O. AND N.P. ARE TAKEN INTO CONSIDERATION INCOME SHOULD HAVE BEEN COMPUTED OF RS.2,25,00,000/- BUT THE A.O. AFTER ACCEPTED SURRENDER OF RS.55,00,000/- COMPUTED THE INCOME OF THE ASSESSEE AT ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 10 RS.1,87,95,773/-. THUS, IN BOTH THE CASES THE A.O. ISSUED PROPOSED NOTICE TO ESTIMATE THE HIGHER INCOME BUT ULTIMATELY ACCEPTED LOWER SURRENDER MADE BY THE ASSESSEE. THEREFORE, IT IS CLEAR FROM THE ABOVE FINDINGS OF FACT THAT THE PROPOSED NOTICE OF THE A.O. TO ENHANCE INCOME OF TH E ASSESSEE WAS NOT BASED UPON ANY MATERIAL OR FACT. THE PROPOSED NOTICE OF T HE A.O. THUS WOULD NOT DISCLOSE IN ANY MANNER AS TO HOW THE A.O. WAS SATIS FIED BY SUCH FIGURE TO MAKE ESTIMATE OF INCOME. THE PROPOSED ESTIMATE OF I NCOME BY THE A.O. WAS FOUND NOT ACCURATE TO THE KNOWLEDGE OF THE A.O. THU S, HOW A.O. CAN GIVE FINDING AGAINST THE ASSESSEE THAT ASSESSEE FILED IN ACCURATE PARTICULARS OF INCOME IN THE PENALTY ORDER. THE ASSESSEE HAS MADE SURRENDER OF THE AMOUNT IN QUESTION FOR POSSIBLE LEAKAGE OF INCOME FOR NON MAI NTENANCE OF SOME DOCUMENTS AND VOUCHERS IN PROPER MANNER. THEREFORE, THE ASSESSEE NEVER ACCEPTED BEFORE A.O. THAT ASSESSEE HAS FILED INACCU RATE PARTICULARS OF INCOME IN THE RETURN OF INCOME. THE A.O. DID NOT STATE IN ASSESSMENT ORDER AS TO HOW THE PARTICULARS OF INCOME DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME WERE INACCURATE. ULTIMATELY, THE ESTIMATED INCOME I S COMPUTED BY THE A.O. IN THE ASSESSMENT ORDER. IT IS WELL SETTLED LAW THAT T HE ADDITION MADE ON THE BASIS OF ESTIMATE AND NOT ON CONCRETE EVIDENCE OF CONCEAL MENT OF INCOME OR FURNISHING INACCURATE PARTICULARS, THEREFORE, NO PE NALTY IS LEVIABLE. WE RELY UPON THE DECISIONS OF THE HONBLE PUNJAB AND HARYAN A HIGH COURT IN THE CASE OF CIT VS. DHILLON RICE MILLS (2002) 256 ITR 447, CIT VS. RAVAIL SINGH AND ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 11 CO. (2002) 254 ITR 191 AND HARIGOPAL SINGH VS.CIT (2002) 258 ITR 85. HONBLE SUPREME COURT IN THE CASE OF M/S RAJASTHAN SPINNING AND WEAVING MILLS 2009-TIOL-63 HELD THAT ON EVERY DEFAULT PENAL TY IS NOT AUTOMATIC. THE HONBLE MADRAS HIGH COURT IN THE CASE OF COMMISSION ER OF INCOME-TAX VS. K.R. CHINNI KRISHNA CHETTY (2000) 246 ITR 121 HELD HELD, THAT UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING AUTHORITY IS GIVEN THE DISCRETION TO LEVY A PENALTY IF THERE IS CONCEALMENT OF PARTICULARS OF INCOME AND EVEN AS REGARDS THE QUANT UM OF THE PENALTY THERE IS A DISCRETION. THAT DISCRETION WAS AVAILABL E TO THE TRIBUNAL AS WELL WHEN IT CONSIDERED THE MATTER IN APPEAL. OF GR EATER IMPORTANCE IS THE NECESSITY FOR A DEFINITE FINDING THAT THERE IS CONCEALMENT, AS WITHOUT SUCH A FINDING OF CONCEALMENT, THERE CAN BE NO QUES TION OF IMPOSING ANY PENALTY. THE MERE REVISION OF THE INCOME TO A H IGHER FIGURE BY THE ASSESSING AUTHORITY DID NOT AUTOMATICALLY WARRANT A N INFERENCE OF CONCEALMENT OF THE EXPENDITURE ON THE CONSTRUCTION. THE ADDITION TO THE INCOME OF THE ASSESSEE BASED ON THE REPORT OF THE V ALUER WAS RIGHTLY REGARDED BY THE TRIBUNAL AS BEING INSUFFICIENT FOR RECORDING A FINDING OF CONCEALMENT OF INCOME. CONCEALMENT IMPLIES SOME DEL IBERATE ACT ON THE PART OF THE ASSESSEE IN WITHHOLDING THE TRUE FA CTS FROM THE AUTHORITIES. THE FACT THAT THE VALUER ASSESSED THE BUILDING AT A FIGURE HIGHER THAN THE ONE REPORTED BY THE ASSESSEE DID NO T BY ITSELF LEAD TO THE INFERENCE THAT THERE HAD BEEN CONCEALMENT. THERE WA S NO EVIDENCE TO SHOW THAT THE ASSESSEE HAD DELIBERATELY CONCEALED T HE COST OF CONSTRUCTION. THE ASSESSEE WAS NOT REQUIRED TO REPO RT THE PROGRESS OF THE CONSTRUCTION AS THE RETURN DID NOT REQUIRE HIM TO DO SO. THEREFORE, THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS NOT VALID. 7.1 HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MOOL CHAND SIRI KISHAN DASS (2001) 248 ITR 463 HELD THE ASSESSEE FILED A RETURN OF INCOME FROM SALARY AT RS.1,800. ACTION WAS TAKEN UNDER SECTION 34 OF THE INDIAN INCOME-TAX ACT, 1922, AND REASSESSMENT WAS COMPLETED ON AUGUST 28, 1958, FOR THE ASSESSMENT YEAR 1954-55, WHICH WAS SET ASIDE BY THE APPELLATE ASSISTANT COMMISSIONER ON NOVEMBER 6, 1959. WHILE MAKING A FR ESH ASSESSMENT, ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 12 THE ASSESSING OFFICER MADE ENQUIRIES INTO THE BUSIN ESS ACTIVITIES OF THE ASSESSEE WHO ULTIMATELY AGREED FOR ASSESSMENT ON A TOTAL INCOME OF RS.29,900 AS PER THE ENDORSEMENT IN THE ORDER-SHEET OF THE ASSESSING OFFICER DATED FEBRUARY 7, 1973. THE INCOME-TAX OFFI CER INITIATED PENAL PROCEEDINGS AND IMPOSED PENALTY. ON APPEAL, THE APP ELLATE ASSISANT COMMISSIONER UPHELD THE DECISION OF THE ASSESSING O FFICER. ON FURTHER APPEAL, THE TRIBUNAL HELD THAT MERELY BECAUSE THERE WAS AN AGREEMENT FOR ASSESSMENT AT A PARTICULAR FIGURE THAT DID NOT PER SE BRING IN THE CONCEPT OF CONCEALMENT. THE REVENUE DID NOT PROVE C ONCEALMENT WHICH WOULD ENABLE IT TO LEVY PENALTY UNDER SECTION 271(1 )(C) OF THE INCOME- TAX ACT, 1961. ON A REFERENCE: HELD, THAT THE RETURN WAS FILED MUCH EARLIER TO AP RIL 1, 1964, AND REASSESSMENT WAS COMPLETED ON AUGUST 28, 1958, WHIC H AGAIN WAS SET ASIDE BY THE APPELLATE ASSISTANT COMMISSIONER ON NO VEMBER 6, 1959. THAT BEING THE POSITION, THE REVENUE WAS REQUIRED T O PROVE CONCEALMENT. HENCE, THE TRIBUNAL WAS RIGHT IN HOLDI NG THAT PENALTY UNDER SECTION 271(1)(C) COULD NOT BE IMPOSED. 7.2 HONBLE M.P. HIGH COURT IN THE CASE OF CIT VS. BETA NEPTHOL LTD. (2005) 272 ITR 323 HELD HELD, DISMISSING THE APPEAL, THAT THE ASSESSEE HA D SURRENDERED THE DISPUTED ITEMS AND PAID TAX THEREON. IN THE OPINION OF BOTH THE AUTHORITIES, I.E., THE COMMISSIONER (APPEALS) AND T HE TRIBUNAL, NO CASE WHATSOEVER WAS MADE OUT TO INVOKE THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, AND HENCE, THE ORDER O F PENALTY PASSED BY THE ASSESSING OFFICER WAS NOT SUSTAINABLE. THIS WAS CORRECT AND DID NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. 7.3 I.T.A.T. HYDERABAD BENCH IN THE CASE OF BALARAM KRISHNA ENGG. CONTRS. CORPN VS. DEPUTY COMMISSIONER OF INCOME-TAX (1996) 56 ITD 411 HELD SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 PE NALTY- FOR CONCEALMENT OF INCOME- WHETHER, ON FACTS STATED UND ER HEAD BEST JUDGMENT ASSESSMENT, GROSS PROFIT ADDITION WOULD B E A MATTER OF ESTIMATING PROFIT OR DISALLOWANCE OF ROUTINE NATURE AND WOULD NOT CONSTITUTE CONCEALMENT ON PART OF ASSESSEE AND NO P ENALTY WOULD BE LEVIABLE ON THIS ACCOUNT HELD, YES WHETHER THOU GH SUM OF ITA NOS.545 /AGRA/2012 547/AGR/2012, A.YS. 2008-09 13 RS.8,28,781/- REPRESENTED CONCEALMENT BECAUSE OF SU PPRESSION OF RECEIPTS, YET NO PENALTY WITH RESPECT THERETO COULD BE LEVIED BECAUSE RETURNED INCOME AS WELL AS ASSESSED INCOME WAS A LO SS AND THERE WAS NO TAX PAYABLE BY ASSESSEE HELD, YES 8. CONSIDERING THE ABOVE DISCUSSION, IN THE LIGHT O F THE ABOVE DECISIONS, IT IS CLEAR THAT NO DEFINITE FINDING OF FACT OR ANY CO NTRARY MATERIAL HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE ASSESSEE HAS FI LED INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE ANY DETAILED DISCUSSION, ANY MATERIAL ON RECORD, WE ARE OF THE VIEW THAT LEVY OF PENALTY UNDER SECTION 271( 1)(C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AT ESTIMATE OF INCOME , WOULD NOT BE WARRANTED. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORI TIES BELOW AND CANCEL THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT.) SD/- SD/- (A.L. GEHLOT) (BHAV NESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- APPELLANT, RESPONDENT, CIT (APPEALS) CONCERNED CIT CONCERNED, D.R., ITAT, AGRA BENCH, AGRA GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY