VIVEK SHYAM JOHRI, MUMBAI V. ADDL CIT RG 14(3), MUMBAI

ITA 5617/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3096 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 01-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S SENT H IL KUMARAN
• Keywords: Rejection of books of accounts; Opportunity of being heard; Principle of natural justice; Difference of opinion
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' F ' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 5617 /MUM/201 3 (ASSESSMENT YEAR: 2009 - 10 ) SHRI VIVEK SHYAM JOHRI VS. ADDL. CIT, RANGE 14(3) 3 RD FLOOR, KADEL MANSION 65 - 67, CAWEL CROSS LANE - 3 RAMWADI, MUMBAI 400002 EARNEST HOUSE NARIMAN POINT MUMBAI 400021 PAN - AIDPJ8746K APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI S. SENTHIL KUMARAN DATE OF HEARING: 02 .06 .2016 DATE OF PRONOUNCEMENT: 07 .0 6 .2016 O R D E R PER JASON P. BOAZ, A.M . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 25 , MUMBAI DATED 31 . 07 .201 3 FOR A.Y. 2009 - 10 IN RESPECT OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 . THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE IS ENGAGED IN RETAIL TRADING OF DIAMONDS. IN THE CASE ON HAND THE ASSESSMENT FOR A.Y. 2009 - 10 WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 23.12.2011 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT ` 30,63,850/ - AS AGAINS T THE RETURNED INCOME OF ` 5,05,851/ - IN VIEW OF THE ADDITION OF ` 25,58,000/ - @0.5% OF TURNOVER ON ACCOUNT OF LOW G.P. SHOWN IN THE YEAR UNDER CONSIDERATION VIS - A - VIS THE IMMEDIATELY PRECEDING YEAR AND ALSO TAKING INTO ACCOUNT THE LOW DRAWINGS OF THE ASSESS EE. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WAS SIMULTANEOUSLY INITIATED BY ISSUE OF NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) DATED 23.12.2011. ON APPEAL, THE LEARNED CIT(A) DISPOSED OFF THE ASSESSEES APPEAL VIDE ORDER DATED 12.07.2012 ALL OWING THE ASSESSEE IT A NO. 5617 /MUM/2013 SHRI VIVEK SHYAM JOHRI 2 PARTIAL RELIEF WHEREIN THE ADDITION ON ACCOUNT OF LOW G.P. WAS RESTRICTED TO ` 5,11,785/ - AS AGAINST ` 25,58,000/ - @0.1% OF TURNOVER. 2.2 PURSUANT TO THE ORDER OF THE CIT(A) - 25, MUMBAI DATED 12.07.2012 IN THE QUANTUM PROCEEDINGS, THE ASSES SING OFFICER (AO) TOOK UP THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THE ADDITION OF ` 5,11,785/ - BY ISSUE OF LETTER DATED 19.12.2012 TO THE ASSESSEE AFFORDING HIM OPPORTUNITY TO SHOW CAUSE WHY PENALTY UNDER SECTION 271(1)(C) O F THE ACT SHOULD NOT BE LEVIED IN HIS CASE. IN REPLY THERETO, THE LEARNED A.R. FOR THE ASSESSEE VIDE LETTER DATED 21.12.2012 STATED THAT THE ASSESSEES REPLY IN THE MATTER WAS FILED VIDE LETTER DATED 05.01.2012 AND 24.05.2012. THE AO AFTER CONSIDERING THE ASSESSEES REPLY REJECTED IT AND PROCEEDED TO LEVY PENALTY OF ` 1,73,954/ - UNDER SECTION 271(1)(C) OF THE ACT @100% OF TAX SOUGHT TO BE EVADED ON THE CONCEALED INCOME OF ` 5,11,784/ - VIDE ORDER DATED 20.02.2013 . 2.3 AGGRIEVED BY THE ORDER OF THE AO DATED 20 .02.2013 LEVYING PENALTY OF ` 1,73,954/ - UNDER SECTION 271(1)(C) OF THE ACT FOR A.Y. 2009 - 10, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) - 25, MUMBAI, WHO DISMISSED THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 31.07.2013. 3 . THE ASSESSEE, BEING AG GRIEVED BY THE IMPUGNED ORDER OF THE CIT(A) - 25, MUMBAI DATED 31.07.2013 FOR A.Y. 2009 - 10 UPHOLDING THE LEVY OF PENALTY OF ` 1,73,954/ - UNDER SECTION 271(1)(C) OF THE ACT BY THE AO, HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS: - 1. THE LEARNED C IT(A) ERRED IN CONFIRMING THE PENALTY U/S. 271(1)(C) OF RS.1,73,954/ - LEVIED BY ITO 14(2) - 4 WITHOUT APPRECIATING THE FACT THAT THERE WAS NEITHER CONCEALMENT NOR FILING OF INACCURATE PARTICULARS OF INCOME. THE SAME IS BAD IN LAW AND AGAINST CANONS OF EQUITY , NATURAL JUSTICE, GOOD CONSCIENCE AND FAIR PLAY. 2. THE LEARNED CIT(A) HAD WRONGLY TAKEN THE ESTIMATION OF G.P. IN THE ASSESSMENT AS CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. 4 . THE CASE ON HAND WAS FIXED FOR HEARING ON VARIOUS DATES. ON THE DATES ON WHICH THE BENCH DID NOT FUNCTION, THE CASE WAS ADJOURNED AND THE DATES OF HEARING WERE INFORMED THROUGH THE NOTICE BOARD. ON OTHER DATES THE CASE WAS ADJOURNED ON THE REQUEST OF THE L EARNED A.R. FOR THE IT A NO. 5617 /MUM/2013 SHRI VIVEK SHYAM JOHRI 3 ASSESSEE. WHEN THE CASE WAS CALLED FOR HEARING ON 02.06.2016, NONE WAS PRESENT FOR THE ASSESSEE BUT THE LEARNED D.R. FOR REVENUE WAS PRESENT AND READY TO PRESENT THE CASE. IN THE CIRCUMSTANCES, AS DISCUSSED ABOVE, IT APPEARS TO US T HAT THE ASSESSEE IS NOT SERIOUS ABOUT PURSUING THIS APPEAL AND WE THEREFORE PROCEED TO DISPOSE THIS APPEAL WITH THE ASSISTANCE OF THE LEARNED D.R. AND THE MATERIAL ON RECORD. 5.1 THE GROUNDS RAISED (SUPRA) PERTAIN TO THE ISSUE OF LEVY OF PENALTY OF ` 1,73, 954/ - UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE CONTENDS THEREIN THAT IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR A.Y. 2009 - 10, THE LEARNED CIT(A) HAD ERRED IN NOT APPRECIATING THE FACT THAT THERE WAS NEITHER CONCEALMENT OF INCOME NOR FILING OF INACCURATE PARTICULARS OF INCOME. IT IS FURTHER CONTENDED THAT THE LEARNED CIT(A) HAD WRONGLY TAKEN THE ESTIMATION OF G.P. AS CONCEALMENT OF INCOME O R FILING OF INACCURATE PARTICULARS OF INCOME. 5.2 THE LEARNED D.R. EMPHATICALLY SU PPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN CONFIRMING THE LEVY OF PENALTY OF ` 1,73,954/ - UNDER SECTION 271(1)(C) OF THE ACT FOR A.Y. 2009 - 10. IT WAS BROUGHT TO THE NOTICE OF THE BENCH THAT IN QUANTUM PROCEEDINGS, A COORDINATE BENCH OF THIS TRIBUNA L HAD, IN ITS ORDER DATED 05.11.2015, UPHELD THE G.P. ADDITION TO THE EXTENT OF 0.1% THEREBY CONFIRMING THE ORDER OF THE LEARNED CIT(A) DATED 12.07.2012 AND THEREBY DISMISSED BOTH THE APPEAL BY REVENUE AND THE ASSESSEES CROSS OBJECTION WHICH CHALLENGED T HE LEARNED CIT(A)S ORDER IN SUSTAINING THE ADDITION 0.1% OF TURNOVER. ACCORDING TO THE LEARNED D.R. THE LEARNED CIT(A), IN THE IMPUGNED ORDER, UPHOLDING THE LEVY OF MAXIMUM PENALTY OF ` 1,73,954/ - UNDER SECTION 271(1)(C) OF THE ACT, HAD CONSIDERED THE DETA ILED SUBMISSIONS OF THE ASSESSEE , INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED AND THE FINDING OF THE AUTHORITIES BELOW FROM THE ORDER OF ASSESSMENT FOR A.Y. 2009 - 10 DATED 23.12.2011 UPTO THE ORDER OF THE AO LEVYING PENALTY OF ` 1,73,954/ - UNDER SECTION 271(1 )(C) OF THE ACT. IT IS CONTENDED THAT SINCE THE ASSESSEE HAD FAILED TO BRING ON RECORD ANY MATERIAL EVIDENCE TO CONTRAVENE THE FINDINGS OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER IN RESPECT OF THE SUSTAINING OF PENALTY OF ` 1,73,954/ - IT A NO. 5617 /MUM/2013 SHRI VIVEK SHYAM JOHRI 4 LEVIED UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSEES APPEAL OUGHT TO BE DISMISSED. 5.3.1 WE HAVE HEARD THE LEARNED D.R. FOR REVENUE AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. ON A PERUSAL THEREOF IT IS SEEN THAT THE LEARNED CIT(A) IN THE IMPUGNED ORDER H AS CONSIDERED THE ISSUE OF LEVY OF PENALTY OF ` 1,73,954/ - UNDER SECTION 271(1)(C) OF THE ACT IN DETAIL AT PARA 4 TO 12 THEREOF AS UNDER: - 4. BEFORE ME, THE A.R. OF THE APPELLANT, SHRI M.S. VYAS, C.A. APPEARED AND FILED WRITTEN SUBMISSIONS AND ALSO DISCUSSED THE CASE. DURING THE COURSE OF APPELLATE PROCEEDINGS. THE APPELLANT CONTENDED THAT HE HAD NEITHER CONCEALED THE INCOME NOR FILED INACCURATE PARTICULARS OF INCOME AND THUS WAS NOT LIABLE TO PENALTY U/S 271(1)(C). HE POINTED OUT THAT THE PENALTY WAS LEVIED ON THE BASIS OF ASSESSMENT WHEREIN THE INCOME WAS ARBITRARILY ESTIMATED BY ADDING 0.5% (LATER REVISED TO 0.1%) IN G.P. ON SALES AND WHEN THE INCOME IS ESTIMATED BY ENHANCING G.P., THE QUESTION OF LEVY OF PENALTY DOES NOT ARISE. THE APPELLANT RELI ED UPON THE FOLLOWING JUDGMENTS: 1 . CIT VS. BOMBAY HARDWARE SYNDICATE (114 ITR 586) MAD. 2 . CIT VS. SANGRUR VANASPATI MILLS LTD. (303 ITR 53) PUNJ. & HAR. 3 . CIT VS. METAL PRODUCTS LTD. (150 ITR 714) PUNJ. & HAR. 4 . CIT VS. AJAY HARI DALMIA (157 ITR 145) DELHI 5 . CIT VS. SUBHAS TRADING CO. (221 ITR 110) GUJ. 6 . CIT VS. GORDHANDAS MOOLCHAND (116 IT R 893) MAD. 7 . CIT VS. HINDUSTAN STEEL CO. (83 ITR 26) SC 8 . TVL KATHIRESON YARN STORE VS. STATE OF TARNILNADU (TAX LR 2176) 9 . B. RAV I VS. STATE OF TARNILNADU (48 ST C 274) 10 . RELIANCE PETROPRODUCTS PVT. LTD. VS. SIRPURKAR J. (ARISING OUT OF SLP(C) NO. 27161 OF 2008) 11 . HARIGOPAL SINGH VS. CIT (125 TAXMAN 242) PUNJ. & HAR. 12 . SADHU RAM GOYAL VS. DCIT (128 LTD 436) JP 13 . SHIV LAL TAK VS. CIT (121 TAXMAN 99) RAJ. 5. IN CONTRAST, THE FOLLOWING RELEVANT OBSERVATIONS ARE MADE FROM THE ASSESSMENT ORDER. 5.1 IT APPEARS THAT THE AO WAS NOT SATISFIED WITH THE STOCK REGISTER MAINTAINED BY THE ASSESSEE FOR THE REASON THAT IT DOES NOT CONTAIN THE DETAILS ABOUT THE QUALITY OF DIAMONDS. THE AO HAS POINTED OUT THAT THE RATE OF DIAMOND PURCHASED BY THE ASSESSEE VAR Y FROM RS.14,000/ - PER CARAT TO RS.1,22,677/ - PER CARAT AND THERE IS NO DIFFERENTIAL TREATMENT GIVEN TO THESE ITEMS IN THE STOCK REGISTER. THERE IS NO WAY TO IDENTIFY THE ITEM OF WHICH RATE IS BEING SOLD TO WHICH PERSON. THUS THERE IS ENOUGH SCOPE FOR MANIPULATION ACCORDING TO THE AO. 5.2 THE AO HAS POINTED OUT THAT THE ASSESSEE HAS FAILED TO LINK THE PURCHASES WITH CORRESPONDING SALES IN THE CASE OF 3 GIVEN PARTIES IT A NO. 5617 /MUM/2013 SHRI VIVEK SHYAM JOHRI 5 NAMELY CROWN GALLANT LTD., RICH STYLE LTD. AND STAR GRACE LTD. HE HAS ONLY SUBMITTED THAT HE HAS FILED THE COPY OF STOCK REGISTER AND ALL THE TRANSACTIONS ARE EXPLAINED THERE. 5.3 THE AO HAS POINTED OUT IN ASSESSMENT ORDER THAT THE ASSESSEE HAS FAILED TO PRODUCE ALL THE JANGADS MAINTAINED. PERUSAL OF SOME OF THE JANGADS PRODUCED BEFORE HIM REVEALS THAT ONLY THE QUANTITY AND RATE IS MENTIONED. THERE IS NO MENTION OF SIZE, COLOUR, CLARITY, SHAPE ETC. 5.4 THE AO HAS MADE A COMPARATIVE STATEMENT OF TWO DIAMOND TRADERS M/S P. ASHOK KUMAR & CO . & M/S DEEPAK DIAMONDS, IN MUM BAI REGION DURING T HE SAME PERIOD SHOWING G.P. RATE OF 8.30% & 8.64% RESPECTIVELY. FURTHER, AFTER GIVING EFFECT TO THE EXCHANGE FLUCTUATION, THE G.P. MARGINS OF SAID TRADERS WERE 7.76% & ( - ) 6.38%. 5.5 THE AO OBSERVED THAT DURING THE GLOBAL ECONOMIC R ECESSION IN F.Y. 2008 - 09 , THE ASSE SSEE'S TURNOVER HAS INCREASED FROM RS.2.27 CRORES LAST YEAR TO RS. 51.17 CRORES 5.6 THE AO HAS POINTED OUT REASONS FOR NOT ACCEPTING THE COMPARATIVE DETAILS FILED BY THE ASSESSEE IN PARA 5.5 OF THE ASSESSMENT ORDER AND GIVEN REASONS FOR DISTINGUISHING THE SAME FROM THE CASE OF ASSESSEE. 6. BASED ON AFORESAID FACTS, THE AO HAS OBSERVED THAT THE ASSESSEE IS NOT MAINTAINING HIS BOOKS OF ACCOUNTS IN PROPER MANNER AND THERE IS ENOUGH SCOPE FOR MANIPULATION IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THEREFORE, HE REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145(3) OF THE I.T. ACT, 1961. HE PLACED RELIANCE ON THE CASE OF CIT VS. BRITISH PAINT INDIA LTD. REPORTED IN 188 ITR 44 (SC) WHEREAS HON'BLE APEX COURT HAS HELD THAT IT IS NOT ONLY THE RIGHT, BUT THE DUTY OF THE ASSESSING OFFICER TO CONSIDER WHETHER OR NOT THE BOOKS DISCLOSE THE TRUE STATE OF ACCOUNTS AND THE CORRECT INCOME CAN BE DEDUCED THERE FROM. THEREFORE, AFTER CONSIDERING ALL THE FACTS AND GIVING THE ASSESSEE THE BENEFIT OF ADVERSE MARKET SITUATION, THE AO MADE ADDITION OF MERE 0.5% OF TURNOVER AND LEVIED THE PENALTY ACCORDINGLY. 7. THE AO HAS FURTHER OBSERVED THAT THE AS SESSEE HAVING A TURNOVER OF RS. 55 CRORES HAD ANNUAL EXPENDITURE OF RS. 30,000/ - ONLY. THE REASONS SUBMIT TED BY THE ASSESSEE WERE NOT ACCEPTABLE AS THE DRAWINGS SHOWN BY HIM WERE HIGHLY INADEQUATE. THIS ALSO CONFIRMED THE VIEW OF AO WHY ADDITION SHOULD BE MADE IN THE GROSS PROFIT OF THE ASSESSEE'S BUSINESS. HOWEVER, HE DID NOT MAKE SEPARATE ADDITION IN THIS B EHALF, AS THE ADDITION ON ACCOUNT OF LOW DRAWINGS IS COVERED BY THE ADDITION MADE ON ACCOUNT OF LOW PROFIT. 8. I HAVE C ONSIDERED THE RIVAL SUBMISSIONS AND FIND THAT THE AO HAS GIVEN ENOUGH REASONS IN THE ASSESSMENT ORDER TO PROVE THAT THE ASSESSEE HAS UNDER STATED HIS PROFITS. MOREOVER, THE ADDITIONS MADE BY THE AO OF 0.5% OF TURNOVER WAS FURTHER RESTRICTED TO 0.1% OF TURNOVER BY THE APPELLATE ORDER DATED 12.07.2012. NOW, THE QUESTION IN APPEAL IS WHETHER OR NOT SUCH ADDITIONS SHOULD ATTRACT PENALTY U/S 271(1)(C) OF I.T. ACT, 1961. IT A NO. 5617 /MUM/2013 SHRI VIVEK SHYAM JOHRI 6 9. ON GOING THROUGH VARIOUS CASE LAWS RELIED UPON BY THE APPELLANT, IT APPEARS THAT THE CIRCUMSTANCES ARE DISTINGUISHABLE ON FACTS OF EACH CASE. FOR EXAMPLE: IN THE CASE CIT VS. BOMBAY HARDWARE SYNDICATE (SUPRA), IT WAS OBSERVED THAT MERE ESTIMATE MADE, HOWEVER WELL FOUNDED IT MAY BE, BY ITSELF WOULD NOT NORMALLY CONSTITUTE MATERIAL FOR HOLDING THAT INCOME THAT HAS BEEN ADDED ON BASIS OF ESTIMATE WAS INCOME THAT HAS BEEN CONCEALE D, RATHER IT IS ALSO NECESSARY TO ESTABLISH THE QUANTUM OF THE INCOME THAT HAD ESCAPED ASSESSMENT, ON THE BASIS OF WHICH ALONE IT IS POSSIBLE TO FIND THE INCOME - TAX AND SUPER - TAX WHICH WOULD HAVE BEEN AVOIDED, HAD THE RETURN SUBMITTED BY THE ASSESSEE BEEN ACCEPTED, AND IN THIS CASE IT WAS OBSERVED THAT THERE IS NO SUCH FINDING ENTERED BY THE TRIBUNAL REGARDING THIS. IN THE CASE OF CIT VS. SANGRUR VANASPATI MILLS LTD. (SUPRA), IT WAS HELD THAT WHEN ADDITION HAD BEEN MADE ON BASIS OF ESTIMATE AND NOT O N ACCO UNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, THEN PENALTY UNDER SECTION 271(1)(C) WAS NOT LEVIABLE. IN THE CASE OF CIT VS. METAL PRODUCTS OF INDIA (SUPRA), THE PENALTY FOR CONCEALMENT LEVIED WAS CANCELLED BY TRIBUNAL, ON GROUNDS THAT ASSESSEE HAD DISCHARGE D ONUS CAST ON IT BY PRODUCING REGULAR BOOKS OF ACCOUNT, AND THAT THOUGH THERE WAS DISCREPANCY IN VALUE OF STOCK AS PER BOOKS OF ACCOUNT, NO ADDITION HAD SPECIFICALLY BEEN MADE ON THIS ACCOUNT. IN THE CASE OF CIT VS. AJAY HARI DALMIA (SUPRA), THE PENALTY W AS CANCELLED ON GROUND THAT AS PARTICULARS OF CONCEALMENT HAD NOT BEEN DISCLOSED TO ASSESSEE, HE WAS NOT IN POSITION TO DEFEND HIMSELF AND AS SUCH HE COULD NOT BE SAID TO HAVE BEEN GRANTED REASONABLE OPPORTUNITY OF BEING HEARD. IN THE CASE OF CIT VS. SUBASH TRADING CO. (SUPRA), IT WAS OBSERVED THAT THERE WAS NO EVIDENCE TO CONCLUDE A POSITIVE FINDING ABOUT CONCEALMENT AND HENCE THE PENALTY WAS DELETED. IT WAS HELD THAT IN ABSENCE OF ANY OTHER MATERIAL WHICH MIGHT REFLECT ON CONDUCT OF ASSESSEE ABOUT DE LIBERATE ATTEMPT TO MAINTAIN FALSE BOOKS OF A CCOUNT, ON A PREPONDERANCE OF PROBABILITIES, NO OTHER CONCLUSION COULD BE REACHED BUT THAT FAILURE TO RETURN TOTAL ASSESSED INCOME WAS NOT ON ACCOUNT OF ANY FRAUD OR GROSS OR WILLFUL NEGLECT ON PART OF ASSESSEE . IN THE CASE OF CIT VS. GORDHANDAS MOOLCHAND (SUPRA), THE TRIBUNAL HELD THAT WHAT WAS BROUGHT TO TAX COULD NOT BE REFERRED TO ANY PARTICULAR ASSESSMENT YEAR AND THERE WAS NO EVIDENCE TO SHOW THAT SAID SUM ADDED COULD BE RELA TED TO RELEVANT ASSESSMENT YEAR, AND HENCE PENALTY WAS CANCELLED. IN THE CASE OF HINDUSTAN STEEL CO. (SUPRA), IT WAS OBSERVED THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI - CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE I MPOSED UNLESS THE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. IT A NO. 5617 /MUM/2013 SHRI VIVEK SHYAM JOHRI 7 IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), IT WAS OBSERVED TH AT THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IN THE CASE OF HARIGOPAL SINGH (SU PRA), IT WAS OBSERVED THAT THERE WAS NOT EVEN AN IOTA OF EVIDENCE ON THE RECORD TO SHOW THAT THE INCOME OF THE ASSESSEE DURING THE YEAR UNDER APPEAL WAS MORE THAN THE INCOME RETURNED BY HIM. IN THE CASE OF SADHU RAM GOYAL (SUPRA), IT WAS NOTED THAT ON QUESTION OF QUANTUM OF ADDITION, ALL AUTHORITIES INCLUDING TRIBUNAL WERE HAVING DIFFERENCE OF OPINION AND THE ASSESSEE'S APPEAL AGAINST QUANTUM ADDITION WAS ADMITTED BY HIGH COURT. IN THE CASE OF SHIV LAL TAK (SUPRA), IT WAS OBSERVED THAT WHERE BOOKS OF AC COUNTS ARE REJECTED AND INCOME IS ASSESSED BY APPLYING GROSS PROFIT RATE WHICH RESULTS IN ADDITION OF INCOME, THOUGH PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C) MAY BE ATTRACTED FOR PURPOSE OF INITIATING PENALTY PROCEEDINGS BY RAISING PRESUMPTION UNDE R EXPLANATION 1, SAME BY ITSELF CANNOT TAKE PLACE OF CONCLUSIVE PROOF SO AS TO DISCARD EVIDENCE AND ATTENDING CIRCUMSTANCES ON THAT BASIS ALONE. 10. IT CAN BE DEDUCED FROM AFORESAID JUDGMENTS RELIED UPON BY THE APPELLANT THAT MERE ADDITION ON ESTIMATE BASI S IS NOT SUFFICIENT TO LEVY PENALTY U/S 271(1)(C) OF THE ACT, INSTEAD THE WHOLE FACTS AND INTENTION OF ASSESSEE NEED TO BE LOOKED INTO ON CASE TO CASE BASIS. IN THE PRESENT CASE, THE AO HAS SUFFICIENTLY SHOWN THAT THE STOCK RECORDS MAINTAINED BY THE ASSESS EE WERE GROSSLY UNSATISFACTORY, SINCE IT DID NOT MAKE ANY DISTINCTION BASED ON VALUE, SIZE, COLOUR, CLARITY, SHAPE ETC. OF DIAMOND, AND THAT TOO IN A SITUATION WHERE THE RATE OF DIAMONDS PURCHASED BY THE ASSESSEE VARIED VASTLY FROM RS. 14,000/ - PER CARAT T O RS. 1,22,677/ - PER CARAT. FURTHER, THE ASSESSEE FAILED TO LINK THE PURCHASES AND SALES IN RESPECT OF 3 PARTIES S PECIFICALLY POINTED OUT BY THE AO. IN THESE CIRCUMSTANCES, THE AO HAS PROVIDED AMPLE EVIDENCE TO BELIEVE THAT THE ASSESSEE HAS MADE CONSCIOUS CONCEALMENT OF THE PARTICULARS OF INCOME BY UNDERSTATING THE GROSS PROFITS. THIS BELIEF WAS FURTHER FORTIFIED WITH THE PALTRY ANNUAL DRAWINGS SHOWN BY THE ASSESSEE. HENCE, THE FACTS AND EVIDENCES OF THE CASE ARE CLEARLY AGAINST THE APPELLANT. 11. THE HON'B LE SUPREME COURT IN THE LANDMARK CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC) HAS HELD AS UNDER: 'THE EXPLANATION APPENDED TO SECTION 271(1)(C) ENTIRELY INDICATE THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS OF INCOME WHILE FILING RETURN....... OBJECT BEHIND ENACTMENT OF SECTION 271(1)(C) READ WITH THE EXPLANATIONS T HERETO, INDICATES THAT THE SAID SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A CIVIL IT A NO. 5617 /MUM/2013 SHRI VIVEK SHYAM JOHRI 8 LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY, AS IS THE CASE IN THE MATTER OF PROSECUTION UNDER SECTION 276C.' 12. IN CASE OF DHARAMENDRA TEXTILE PROCESSORS (SUPRA), THE HON'BLE SUPREME COURT HAS CLEARLY HELD THAT THERE IS AN ELEMENT OF STRICT LIABILITY ON THE ASSESSEE U/S 271(1)(C) TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE AND IT IS APPLICABLE EVEN IF THERE IS N O WILLFUL CONCEALMENT. IN THE PRESENT CASE, THE AO HAS AMPLY PROVED THAT THE ASSESSEE HAS MADE CONSCIOUS ATTEMPT TO SUBMIT INACCURATE PARTICULARS OF INCOME, AND HENCE, FOLLOWING THE SAID JUDGMENT OF HON'BLE SUPREME COURT, THE PENALTY LEVIED U/S 271(1)(C) O N THE ASSESSEE OF RS.1,73,954/ - IS CONFIRMED. 5.3.2 IT IS SEEN FROM A PERUSAL OF THE RELEVANT PORTION OF THE IMPUGNED ORDER EXTRACTED ABOVE (SU PRA) AND THE MATERIAL ON RECORD THAT THE LEARNED CIT(A) HAS CONSIDERED IN A DETAILED MANNER AND JUDICIOUSLY ALL THE CONTENTIONS PUT FORTH AND JUDICIAL PRONOUNCEMENTS CITED BY THE ASSESSEE AND AO FROM THE STAGE OF ASSESSMENT TO THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE FIND, FROM THE RECORD, THAT THE ASSESSEE HAS FAILED TO BRING ON RECORD MATERIAL EV IDENCE TO CONTROVERT THE FINDINGS OF THE LEARNED CIT(A) IN UPHOLDING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. MOREOVER, A COORDINATE BENCH OF THIS TRIBUNAL HAS UPHELD THE QUANTUM ADDITION OF ` 5,11,784/ - @0.1% OF TURNOVER, WHICH IS THE BASIS FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT VIDE ORDER IN THE CASE ON HAND IN ORDER IN ITA NO. 5799/MUM/2012 AND CO NO. 99/MUM/2014 DATED 05.11.2015. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO REASON FOR US TO INTERFE RE WITH OR DEVIATE FROM THE FINDINGS OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER AND THEREFORE UPHOLD THE CIT(A)S ACTION IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR A.Y. 2009 - 10. CONSEQUENTLY, THE GROUNDS 1 AND 2 RAISED BY THE ASSESSEE ARE DISMISSED. 6 . IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2009 - 10 IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JUNE , 2016. SD/ - SD/ - ( SANDEEP GOSAIN ) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 7 TH JUNE , 2016 IT A NO. 5617 /MUM/2013 SHRI VIVEK SHYAM JOHRI 9 COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) - 25 , MUMBAI 4 . THE CIT - 14 , MUMBAI 5 . THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.