ACIT, Chandigarh V. Sh. Gurinder Pal Singh, Chandigarh

ITA 781/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73491 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ATUL MANDHAR
• Keywords: Unexplained investment; Depreciation
• Section: 40A(3); 133A; 234B; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.781 /CHD/2013 ASSESSMENT YEAR : 2009-10 THE A.C.I.T., VS. SH.GURINDER PAL SINGH, CENTRAL CIRCLE 5(1), # 66, SECTOR 27-A, CHANDIGARH. CHANDIGARH. PAN: ACNPS7888M AND ITA NO.782 /CHD/2013 ASSESSMENT YEAR : 2009-10 THE A.C.I.T., VS. GRAFCON INFRASTRUCTURES CENTRAL CIRCLE 5(1), # 66, SECTOR 27-A, CHANDIGARH. CHANDIGARH. PAN: AAAAG2509B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA, DR RESPONDENT BY : SHRI ATUL MANDHAR DATE OF HEARING : 27.01.2014 DATE OF PRONOUNCEMENT : 26.02.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THESE TWO APPEALS FILED BY THE REVENUE ARE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH BOTH DATED 02.04.2013, IN THE CASE OF TWO DIFFERENT ASSE SSEES RELATING TO ASSESSMENT YEAR 2009-10 AGAINST THE DELETION OF PEN ALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT). 2 2. THE REVENUE HAS RAISED THE FOLLOWING COMMON GRO UNDS OF APPEAL IN BOTH THE APPEALS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT AP PRECIATING THE FACTS OF THE CASE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD.CIT( A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(L)(C). 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD.CIT( A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(L)(C) BY COMING TO THE CONCL USION THAT ADDITIONS ON AN ESTIMATE BASIS BY ITSELF DOES NOT LEAD TO THE CONCLUSION THA T THE ASSESSEE HAS EITHER CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME WHEREAS THE ASSESSEE HAD NOT ONLY FAILED TO PRODUCE THE BOO KS OF ACCOUNTS DURING THE SURVEY PROCEEDINGS BUT ALSO FAILED TO PRODUCE THEM BEFORE THE ASSESSING OFFICER WHICH ARE NECESSARY FOR MAKING THE ASSESSMENT FOR THIS YEAR. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LD.CIT(A) HAS ERRED IN DELETING THE PENALTY BY PLACING RELIANCE ON THE CASE OF HARI GOPAL SINGH VS. CIT(258 ITR 85) AS THE FACTS OF THE INSTANT CASE ARE STRIKINGLY DIFFERENT SO MUCH SO THAT IN THE INSTANT CASE ASSESSEE HAD SUBMITTED AUDIT REPORT WHEREAS IN THE CASE OF HARIGOPAL SINGH, ASSESSEE WAS HALWAI AND RETURN WAS FILED ON ESTIMATED BASIS WITH OUT MAINTENANCE OF BOOKS OF ACCOUNT. 5. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SE T ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. BOTH THE APPEALS RELATING TO ASSOCIATES ON SIMIL AR ISSUE OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WERE HEARD TOGETHE R AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. 4. THE ONLY ISSUE RAISED IN THE PRESENT APPEALS IS AGAINST DELETION OF PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THE FACTS OF BOTH THE APPEALS ARE IDENTICAL, HOWEVER, REFERENCE IS MADE TO ITA NO .781/CHD/2013 TO ADJUDICATE THE ISSUE. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS ENGAGED IN ROAD CONSTRUCTION BUSINESS DURING THE YEAR UNDER CO NSIDERATION. SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OUT AT TH E BUSINESS PREMISES OF THE ASSESSEE ON 12.3.2009. THE ASSESSEE SURREND ERED A SUM OF RS.1.30 CRORES. THE ASSESSEE HAD FURNISHED RETURN OF INCOM E DECLARING TOTAL 3 INCOME OF RS.2,07,80,580/-. THE SAID NET PROFIT WA S INCLUSIVE OF THE UNDISCLOSED INCOME OF RS.1.30 CRORES SURRENDERED DU RING THE COURSE OF SURVEY. THE ASSESSING OFFICER NOTED THAT THE NET P ROFIT INCLUSIVE OF THE SURRENDERED AMOUNT WAS RS.7.70% AND IF THE AMOUNT O F SURRENDERED INCOME IS EXCLUDED, THEN THE NET PROFIT WORKS OUT T O 2.90% ONLY. THE ASSESSEE HAD DECLARED THE GROSS RECEIPTS ON THE BAS IS OF TDS CERTIFICATES BUT HAD FAILED TO SUBMIT COPY OF LEDGER ACCOUNTS AN D BILLS/VOUCHERS IN RESPECT OF THE EXPENDITURE. THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT DESPITE REPEATED OPPORTUNITIES. THE ASSESS EE HAD CLAIMED HUGE EXPENDITURE IN THE PROFIT & LOSS ACCOUNT I.E. WAGES OF RS.6.84 CRORES, PURCHASE OF MATERIAL OF RS.10.47 CRORES, DIESEL AND LUBRICANTS OF RS.2.30 CRORES BUT THE ASSESSEE FAILED TO PRODUCE ANY BILL/ VOUCHER IN RESPECT OF THE SAME. NO PROOF OF PAYMENT OF THE EXPENDITURE W AS ALSO PRODUCED BY THE ASSESSEE. IN THE ABSENCE OF THE BOOKS OF ACCOU NT AND BILLS/VOUCHERS THE ASSESSING OFFICER NOTED THAT IT WAS DIFFICULT T O VERIFY WHETHER THE ASSESSEE HAD COMPLIED WITH THE PROVISIONS OF SECTIO N 40(A)(IA) AND 40A(3) OF THE ACT. ANOTHER FACTOR NOTED BY THE ASS ESSEE WAS THAT THE ASSESSEE HAD DEVELOPED A PATTERN OF NOT PRODUCING B OOKS OF ACCOUNT YEAR AFTER YEAR EVEN THOUGH THE ASSESSEE CLAIMED THAT TH E BOOKS OF ACCOUNT WERE AUDITED. EVEN AT THE TIME OF SURVEY CARRIED O UT AT THE PREMISES OF THE ASSESSEE ON 12.3.2009 THE ASSESSEE FAILED TO PR ODUCE BOOKS OF ACCOUNT, BILLS AND VOUCHERS. DURING THE COURSE OF SURVEY IT WAS STATED THAT NO BOOKS HAD BEEN PREPARED W.E.F. 1.4.2008 ONW ARDS. IN OTHER WORDS, THE OPENING BALANCE AS ON 1.4.2008 OR THE CL OSING BALANCE AS ON 12.3.2009 COULD NOT BE VERIFIED. ANOTHER PLEA OF T HE ASSESSEE NOTED BY THE ASSESSING OFFICER WAS THAT DURING THE COURSE OF SURVEY, THE ASSESSEE HAD STATED THAT HE HAD PLANNED TO FILE RETURN FOR A SSESSMENT YEAR 2009- 10 ON A FIXED NET PROFIT RATE . IN THE STATEMENT RECORDED DURING THE COURSE OF SURVEY, ADMITTEDLY THE ASSESSEE SUBMITTED THAT HE WAS NOT IN A 4 POSITION TO SHOW THE BOOKS OF ACCOUNT. EVEN THE AC COUNTANT DURING THE COURSE OF SURVEY OPERATION STATED THAT THE BOOKS OF ACCOUNT WERE NOT WRITTEN W.E.F. 1.4.2008 AS THE BILLS AND VOUCHERS F ROM VARIOUS SITES HAD NOT BEEN RECEIVED. VARIOUS INCRIMINATING DOCUMEN TS WERE FOUND AT THE TIME OF SURVEY SHOWING RS.1.30 CRORES OF UNEXPLAINE D SUNDRY DEBTORS AND ADVANCES TO SUPPLIERS AND AS THE ASSESSEE WAS UNABL E TO EXPLAIN THE SOURCE OF THE SAME, IT WAS OFFERED AS ADDITIONAL IN COME FOR THE ASSESSMENT YEAR 2009-10 AND THE SAME WAS DECLARED I N THE PROFIT & LOSS ACCOUNT IN ADDITION TO THE WORK DONE. THE ASSESSIN G OFFICER WAS OF THE VIEW THAT THE ABOVE CONDUCT OF THE ASSESSEE ESTABLI SHES TWO THINGS THAT THE ASSESSEE WAS NOT MAINTAINING ITS BOOKS OF ACCOU NT AND THE RETURNED BOOK RESULTS OF THE ASSESSEE WERE NOT RELIABLE. TH E ASSESSING OFFICER FURTHER NOTED THAT THERE WAS FALL IN NP RATE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD DECLARED NP RATE O F 2.90% ON TOTAL TURNOVER OF RS.27.09 CRORES IN THE YEAR UNDER CONSI DERATION AS AGAINST NP RATE OF 3.56% ON TOTAL TURNOVER OF RS.34.80 CROR ES DECLARED IN ASSESSMENT YEAR 2008-09. THE CLAIM OF THE ASSESSE E ON THE OTHER HAND, WAS THAT IN CASE THE SURRENDERED AMOUNT IS INCLUDED THEN THE GP RATE DECLARED BY THE ASSESSEE WAS 7.70%, WHICH WAS HIGHE R THEN THE PRECEDING YEAR AND ALSO IN LINE WITH THE NP RATE APPLIED BY T HE TRIBUNAL IN EARLIER YEAR. THE ASSESSING OFFICER, HOWEVER, WAS OF THE V IEW THAT AS THE ASSESSEE HAD FAILED TO PRODUCE THE BOOKS OF ACCOUNT , WHICH IN TURN WERE NOT BEING MAINTAINED BY THE ASSESSEE, THE BOOK RESU LTS ARE TO BE REJECTED UNDER SECTION 145(3) OF THE ACT AND BEST JUDGMENT H AD TO BE MADE IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER FURTHE R NOTED THAT IN ASSESSMENT YEAR 2006-07 THE TRIBUNAL IN ASSESSEES OWN CASE HAD APPLIED NP RATE OF 7% TO THE GROSS RECEIPTS, WHICH IN TURN HAD BEEN UPHELD BY THE HON'BLE PUNJAB & HARYANA HIGH COURT, WHICH WAS LATE R FOLLOWED IN ASSESSMENT YEARS 2007-08 AND 2008-09. ANOTHER PLEA RAISED BY THE 5 ASSESSEE WAS THAT IT HAD SUB-CONTRACTED THE WORK AM OUNTING TO RS.3.89 CRORES AND THE SAME SHOULD BE REDUCED WHILE APPLYIN G THE NET PROFIT. THE ASSESSING OFFICER IN VIEW OF THE RATIO LAID DOW N BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEES OWN CASE COMPUTED THE INCOME OF THE ASSESSEE BY APPLYING THE NET PROFIT R ATE OF 7% ON TOTAL RECEIPTS LESS THE COST OF MATERIAL SUPPLIED BY THE GOVERNMENT SALES-TAX AND CESS. HOWEVER, NO DEDUCTION WAS ALLOWED ON ACC OUNT OF DEPRECIATION, INTEREST AND SUB-CONTRACT AS HELD BY THE TRIBUNAL IN ASSESSMENT YEAR 2006-07, WHICH IN TURN WAS CONFIRME D BY THE PUNJAB & HARYANA HIGH COURT IN ASSESSEES OWN CASE. FURTHER THE INCOME DECLARED BY THE ASSESSEE WAS ENHANCED BY THE SURRENDERED AMO UNT AND THE ASSESSING OFFICER COMPUTED THE BUSINESS PROFIT @ 3. 82% OF RS.27.11 CRORES AT RS.1,03,57,050/- AND AFTER ADDING THE SUR RENDERED AMOUNT OF RS.1.30 CRORES, ASSESSED INCOME FOR THE YEAR UNDER CONSIDERATION AT RS.2,33,57,050/- ON GROSS RECEIPTS OF RS.27.11 CROR ES RESULTING IN NP RATE OF 8.61%. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE ATTRACTED. AFTER CONSIDERING THE REPLY OF THE ASSE SSEE THAT THE PROFIT RATE WAS ESTIMATED ON ESTIMATE BASIS AND WHERE ADDITIONS WERE MADE ON ESTIMATE BASIS, NO PENALTY WAS IMPOSABLE U/S 271(1) (C) OF THE ACT, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE FURNISH ED INACCURATE PARTICULARS OF INCOME AS IT WAS NOT A MERE ESTIMATI ON MADE BY THE ASSESSING OFFICER BUT AFTER REJECTION OF BOOK RESUL TS THE NET PROFIT RATE HAD TO BE APPLIED AS THE ASSESSEE HAD FAILED TO PRO DUCE AND MAINTAIN BOOKS OF ACCOUNT. ACCORDINGLY, PENALTY OF RS.8,75, 742/- WAS IMPOSED U/S 271(1)(C) OF THE ACT. 6. THE CIT (APPEALS) APPLYING THE RATIO LAID DOWN B Y THE HON'BLE PUNJAB & HARYANA HIGH COURT IN HARIGOPAL SINGH VS. CIT [258 ITR 85 (P&H)] HELD THAT THE ASSESSING OFFICER WAS NOT RIGH T IN LEVYING PENALTY 6 U/S 271(1)(C) OF THE ACT ON ESTIMATION OF INCOME AN D THE SAME WAS CANCELLED. 7. THE REVENUE IS IN APPEAL AGAINST THE SAID ORDER OF THE CIT (APPEALS). THE LEARNED D.R. FOR THE REVENUE POINTE D OUT THAT THE ASSESSEE HAD HUGE TURNOVER OF RS.27.09 CRORES AND H AD ALSO SURRENDERED INCOME OF RS.1.20 CRORES DURING THE COURSE OF SURVE Y CONDUCTED AT THE PREMISES OF THE ASSESSEE DURING THE YEAR UNDER CONS IDERATION AND IN SUCH CIRCUMSTANCES WHERE THE ASSESSEE HAD FAILED TO MAIN TAIN AND PRODUCE BOOKS OF ACCOUNT, NO OTHER ALTERNATIVE WAS LEFT WIT H THE ASSESSING OFFICER BUT TO ESTIMATE THE INCOME OF THE ASSESSEE BUT IT COULD NOT BE SAID THAT IT WAS A MERE ESTIMATE JUSTIFYING NO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN MAK DATA P. LTD. VS. CIT [358 ITR 593 (SC)] AND ALSO ON THE DECISION OF HON'BLE SUPREME COURT IN B.A. BA LASUBRAMANIAM & BROS. CO. VS. CIT [236 ITR 977 (SC)]. 8. THE LEARNED A.R. FOR THE ASSESSEE, ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF THE TRIBUNAL IN ACIT VS. S HRI GURMUKH SINGH IN ITA NO.722/CHD/2012, ORDER DATED 28.6.2013 AND POIN TED OUT THAT THERE WAS NO MERIT IN LEVY OF PENALTY WHERE THE INCOME HA D BEEN ESTIMATED IN THE HANDS OF THE ASSESSEE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE SAID PENALTY U/S 271(1)( C) OF THE ACT IS LEVIABLE WHERE THE ASSESSEE HAD CONCEALED ITS INCOM E OR FURNISHED INACCURATE PARTICULARS OF INCOME. EITHER OF THE TW O CONDITIONS IS TO BE FULFILLED BEFORE THE ASSESSEE IS HELD TO BE EXIGIBL E TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE 7 FACTS AND CONDUCT OF THE ASSESSEE HAS TO BE SEEN TO ADJUDICATE WHETHER THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF ROADS AT VARIOUS SITES IN THE STATE OF PUNJAB, HARYANA, HIMACHAL PRA DESH AND UTTRANCHAL. DURING THE YEAR UNDER CONSIDERATION SURVEY UNDER SE CTION 133A OF THE ACT WAS CONDUCTED AT VARIOUS BUSINESS PREMISES OF T HE ASSESSEE ON 12.3.2009. DURING SURVEY OPERATION IT WAS FOUND TH AT NO BOOKS OF ACCOUNT FOR ANY OF THE YEARS WERE AVAILABLE WITH TH E ASSESSEE AT ITS ANY OF THE BUSINESS PREMISES. WHEN REQUISITIONED TO PR ODUCE BOOKS OF ACCOUNT, THE ASSESSEE EXPRESSED ITS INABILITY TO PR ODUCE THE SAME. THE ASSESSEE IN THE STATEMENT RECORDED DURING THE COURS E OF SURVEY STATED THAT HE WAS NOT IN A POSITION TO SHOW THE BOOKS OF ACCOUNT OF ANY YEAR. HE MADE FURTHER STATEMENT IN RESPECT OF NON-MAINTEN ANCE OF BOOKS OF ACCOUNT WHICH IS REPRODUCED BY THE ASSESSING OFFICE R AT PAGE 4 OF THE ASSESSMENT ORDER AND THE SAME READS AS UNDER: Q PAGE 4: PLEASE GIVE DETAILS OF BOOKS OF ACCOUNTS MAINTAINED BY YOU, UPTO WHICH DATE THE BOOKS ARE WRITTEN, WHERE THE BOOKS FOR EARLIER YEARS ARE KEPT? ANS. : WE MAKE PROPER ACCOUNTS OF EXPENSES & RECEIP TS IN COMPUTER AND AS FAR AS THIS YEAR IS CONCERNED WE PLAN TO FILE THE RETURN BY EST IMATION OF THE PROFITS WHILE WE MAINTAINED OUR ROUGH EXPENDITURE AS PER DAILY EXPEN SES & VOUCHERS ARE ALSO COLLECTED. THE BOOKS SHOULD BE IN THE COMPUTER OR M IGHT HAVE BEEN DESTROYED. Q. PAGE 4: DO YOU WANT TO SAY THAT YOU ARE NOT IN A POSITION TO SHOW BOOKS FOR ANY YEAR AT PRESENT? ANS. YES, I AM NOT IN A POSITION TO SHOW THE BOOKS FOR A NY YEAR. IN OUR SCRUTINY ASSESSMENT NORMALLY WE GET ASSESSED AT NET RATE. WE COLLECT OUR VOUCHERS FROM ALL SITES AND GIVE THEM TO OUR CA, SH. SURESH GOYA/ WHO AFTER COMPILING ALL THE EXPENSES BROUGHT BY THE STAFF SITES, MAKE OUR BALANCE SHEET WHICH WE FORWARD TO THE DEPARTMENT FOR ASSESSMENT. 10. FURTHER STATEMENT OF SHRI SURINDER MISHRA WAS R ECORDED DURING THE SURVEY OPERATION AND IN HIS STATEMENT THE ACCOUNTAN T STATED THAT BOOKS OF ACCOUNT W,E,F, 1.4.2008 HAVE NOT BEEN WRITTEN BECAU SE BILLS & VOUCHERS FROM VARIOUS SITES HAVE NOT BEEN RECEIVED. FOR THE EARLIER YEARS BOOKS, HE STATED THAT THE BOOKS WERE LYING WITH SHRI NARIN DER SINGH, ADVOCATE. 8 STATEMENT OF SHRI NARINDER SINGH, ADVOCATE WAS RECO RDED. WHEN HE WAS CONFRONTED WITH THE STATEMENT OF SHRI SURINDER MISR A, ACCOUNTANT, HE STATED THAT HE HAS NEVER TAKEN ANY BOOKS OF ACCOUNT S NOR SHOWN THEM TO THE DEPARTMENT DURING ALL THE I.T. PROCEEDINGS/ASSE SSMENT. DURING THE COURSE OF SURVEY SEVERAL INCRIMINATING DOCUMENTS AN D CASH WERE FOUND FROM THE PREMISES OF THE ASSESSEE AND IT WAS CONFRO NTED TO THE ASSESSEE. WHILE RECORDING THE STATEMENT OF THE ASSESSEE AT TH E TIME OF SURVEY, IT WAS NOTED THAT THE CASH OF RS.20 LACS WAS FOUND FRO M HIS PREMISES FROM TWO ROOMS AND THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH. THE ASSESSEE STATED THAT THE CASH BELONGS TO TWO FIRMS BUT IN THE ABSENCE OF BOOKS HE DISCLOSED SUM OF RS.10 LACS IN M/S RAJINDE R & COMPANY AND RS.9.90 LACS AND M/S GRAFCON INFRASTRUCTURE AS ADDI TIONAL INCOME FOR THE ASSESSMENT YEAR 2009-10 AND THE SAID INCOME WAS DIS CLOSED OVER AND ABOVE THE NORMAL INCOME OF BOTH THE CONCERNS. FURT HER DURING THE COURSE OF SURVEY A COMPUTER PRINTOUT FOUND FROM THE PREMISES OF THE ASSESSEE WAS CONFRONTED TO THE ASSESSEE AND HE WAS ASKED TO EXPLAIN THE ENTRIES IN THE SAID DOCUMENT. THE ASSESSEE IN REPL Y STATED AS UNDER: ANS:- AS I AM UNABLE TO SHOW BOOKS I AM NOT IN A POSITION TO EXPLAIN THESE ENTRIES. THESE ARE BASICALLY ADVANCES PAID FOR PURCHASE OF MATERIAL ETC. AFTER CAREFULLY EXAMINING THESE DOCUMENTS, I OFFER SUM OF RS.130 LACS (1,30,00,000/-) AS UNEXPLAINED INVESTMENT IN M/S. RAJINDER AND COMPANY ON A/C OF SUNDRY DEBTORS AND ADVANCES TO SUPPLIERS FOR A.Y. 2009-10. SIMILARLY AN AMOUNTS OF RS.70,10,000 /- IS BEING DISCLOSED IN M/S GRAFCON INFRASTRUCTURE ON A/C OF SUNDRY DEBTORS & ADVANCES TO SUPPLIERS OF MATERIAL. I'M GIVING 2 SEPARATE DISCLOSURE LETTERS IN BOTH FIRMS. I FURTHER CLARIFY THAT DUE TO NON MAINTENANCE OF PROPER BOOKS. I AM DISCLOSING TOTAL AMOUNT OF RS.2 CRORE 10 LACS IN TWO FIRMS FOR THE A.Y.2009-10. THIS DISCLOSURE IS OVER AND ABOVE MY NORMAL INCOMES TO BE DECLARED SEPARATELY. THE DISCLOSURE IS WITHOUT ANY PRESSURE & TO AVOID LITIGATION, PENALTY & PROSECUTION. WHICH EVER IS STATED HAS CORRECTLY BEEN RECORDED. ENTIRE TAX SHAL L BE PAID BEFORE FILING OF INCOME TAX RETURNS.' 9 11. THE ASSESSEE THUS FOR THE YEAR UNDER CONSIDERA TION, DURING THE COURSE OF SURVEY ADMITTED THAT ENTRIES IN THE SEIZE D DOCUMENTS WERE ADVANCES PAID FOR THE PURCHASE OF MATERIAL AND AS H E WAS UNABLE TO PRODUCE THE BOOKS OF ACCOUNT HE SURRENDERED SUM OF RS.1.30 CRORES AS UNEXPLAINED INVESTMENT IN M/S RAJINDER & COMPANY ON ACCOUNT OF SUNDRY DEBTORS AND ADVANCES TO SUPPLIERS FOR ASSESS MENT YEAR 2009-10. FURTHER SUM OF RS.70.10 LACS WAS DISCLOSED IN THE H ANDS OF M/S GRAFCON INFRASTRUCTURE ON ACCOUNT OF SUNDRY DEBTORS AND ADV ANCES TO SUPPLIERS OF MATERIAL. IT WAS CATEGORICALLY CLARIFIED BY THE AS SESSEE WHILE RECORDING THE STATEMENT DURING THE COURSE OF SURVEY THAT DUE TO NON-MAINTENANCE OF BOOKS OF ACCOUNT DISCLOSURE OF RS.2.10 CRORES WAS B EING MADE IN THE TWO FIRMS FOR ASSESSMENT YEAR 2009-10. THE SAID DISCLO SURE WAS OVER AND ABOVE THE NORMAL INCOME OF THE ASSESSEE TO BE DECLA RED SEPARATELY. 12. AFTER MAKING THE AFORESAID SURRENDER THE ASSESS EE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,07,80,580/- O N 30.9.2009. THE ASSESSING OFFICER FROM THE PERUSAL OF THE RETURN OF INCOME NOTED THAT THE TOTAL TURNOVER FOR THE YEAR UNDER CONSIDERATION WAS RS.27.09 CRORES AND THE NET PROFIT SHOWN BY THE ASSESSEE INCLUDING SURR ENDERED AMOUNT WAS RS.2,08,80,583/- DECLARING NP RATE OF 7.70%. IN CA SE SURRENDERED AMOUNT IS EXCLUDED THEN THE NET PROFIT DECLARED B Y THE ASSESSEE WAS RS.78,80,583/- DECLARING NP RATE OF 2.90%. DURING THE PRECEDING YEAR THE ASSESSEE HAD DECLARED NP RATE OF 3.56% ON TOTAL TURNOVER OF RS.34.68 CRORES. THE ASSESSEE HAD FAILED TO FURNISH ANY OPE NING OR CLOSING STOCK OF MATERIAL AND WORK-IN-PROGRESS DURING THE ASSESSM ENT YEARS 2007-08 AND 2008-09. HOWEVER, FOR THE YEAR UNDER CONSIDERA TION WHILE OPENING STOCK OF MATERIAL/WORK-IN-PROGRESS HAD BEEN SHOWN A T NIL, CLOSING STOCK AND WORK-IN-PROGRESS HAD BEEN SHOWN AT RS.8,30,861/ -. THE ASSESSING OFFICER NOTED THAT THE TOTAL WORK DONE BY THE ASSES SEE DURING THE YEAR 10 WAS RS.27.09 CRORES AND CLOSING STOCK SHOWN BY THE ASSESSEE WAS ONLY 0.30% OF THE GROSS WORK WHICH AS PER THE ASSESSING OFFICER WAS UNDER VALUATION OF THE CLOSING STOCK, WHICH IN TURN HAD D IRECT BEARING ON THE PROFITS OF THE ASSESSEE. IT MAY BE BROUGHT ON RECO RD THAT THE ASSESSEE FROM YEAR TO YEAR WAS FILING RETURN OF INCOME BASED ON AUDITED BALANCE SHEET AND PROFIT & LOSS ACCOUNT. HOWEVER, WHEN CO NFRONTED DURING THE COURSE OF SURVEY WHILE RECORDING THE STATEMENT, THE ASSESSEE HAD CATEGORICALLY ADMITTED THAT HE WAS NOT IN A POSITIO N TO PRODUCE BOOKS OF ACCOUNT FOR ANY OF THE YEARS. NO BOOKS OF ACCOUNT WERE FOUND FROM THE PREMISES OF THE ASSESSEE WHEN SURVEY WAS CONDUCTED AT HIS VARIOUS BUSINESS PREMISES. FURTHER STATEMENT OF THE ACCOUN TANT AND COUNSEL WERE ALSO RECORDED AS PART OF THE SURVEY PROCEEDINGS, WH O CATEGORICALLY ADMITTED THAT THEY HAD NO BOOKS OF ACCOUNT. THE LE ARNED COUNSEL FOR THE ASSESSEE ALSO ADMITTED THAT FROM YEAR TO YEAR THE A SSESSMENT IN THE HANDS OF THE ASSESSEE WAS BEING COMPLETED ON ESTIMATE BAS IS AND NO BOOKS OF ACCOUNT HAD BEEN PRODUCED. THE ASSESSEE ON THE ONE HAND FURNISHED AUDITED PROFIT & LOSS ACCOUNT PURPORTEDLY ON THE BA SIS OF BOOKS OF ACCOUNT AS THAT WAS THE REQUIREMENT OF THE LAW, SIN CE THE TOTAL TURNOVER OF THE ASSESSEE EXCEEDS THE PRESCRIBED LIMIT FOR MA INTENANCE OF BOOKS OF ACCOUNT, PROVIDED UNDER THE INCOME TAX ACT. HOWEVE R, THE ASSESSEE FAILED TO MAINTAIN AND PRODUCE THE BOOKS OF ACCOUNT AND THE INCOME IN THE HANDS OF THE ASSESSEE WAS ESTIMATED FROM YEAR T O YEAR AS IN THE ABSENCE OF THE BOOKS OF ACCOUNT, IT WAS NOT POSSIBL E TO COMPUTE THE INCOME IN THE HANDS OF THE ASSESSEE FROM YEAR TO YE AR. THE TRIBUNAL FROM ASSESSMENT YEAR 2006-07 ONWARDS HAD APPLIED NP RATE OF 7% TO DETERMINE THE INCOME OF THE ASSESSEE. THE ASSESSEE WAS WORKING FROM VARIOUS SITES AND SHOWING HIGH TURNOVER FROM CONTRA CT BUSINESS AND REFLECTING HUGE EXPENDITURE IN THE PROFIT & LOSS AC COUNT, BUT AS A PRACTICE WAS NOT PRODUCING ANY BOOKS OF ACCOUNT. I N SUCH 11 CIRCUMSTANCES, IT WAS DIFFICULT TO VERIFY WHETHER T HE ASSESSEE HAD COMPLIED WITH VARIOUS PROVISIONS OF THE ACT I.E. SE CTION 40(A)(IA) AND/OR SECTION 40A(3) OF THE ACT, VARIATION OF WHICH WOULD DISENTITLE THE ASSESSEE TO THE CLAIM OF ITS COMPLETE EXPENDITURE W HICH ARE COVERED BY THE SAID SECTIONS. FURTHER IT WAS NOT POSSIBLE TO VERIFY WHETHER THE ASSESSEE HAS RAISED ANY LOANS AND THE STOCK DETAILS WERE ALSO NOT VERIFIABLE IN THE HANDS OF THE ASSESSEE. THE ASSES SEE HAD DEVELOPED A PATTERN OF NOT MAINTAINING/PRODUCING THE BOOKS OF A CCOUNT FROM YEAR TO YEAR THOUGH HE HAD CLAIMED THAT BOOKS OF ACCOUNT HA D BEEN AUDITED AND RETURN OF INCOME WAS BASED ON THE SAID AUDITED ACCO UNTS. THE ASSESSEE HAVING FAILED TO DISCHARGE HIS ONUS OF MAINTAINING THE BOOKS OF ACCOUNT AND ALSO FAILED TO PRODUCE THE BOOKS OF ACCOUNT AND ALSO FAILED TO PRODUCE VOUCHERS/BILLS IN RESPECT OF CLAIM OF VARIO US EXPENDITURE, THE INCOME IN THE HANDS OF THE ASSESSEE WAS NOT BEING D ECLARED CORRECTLY. IN THESE CIRCUMSTANCES, THERE WAS NO ALTERNATIVE BUT T O ESTIMATE THE INCOME IN THE HANDS OF THE ASSESSEE. DURING THE YEAR UND ER CONSIDERATION, THE ASSESSEE HAD CLAIMED HUGE EXPENDITURE IN THE PROFIT & LOSS ACCOUNT I.E. WAGES OF RS.6.85 CRORES, PURCHASE OF MATERIAL OF RS .10.47 CRORES AND DIESEL AND LUBRICANT OF RS.2.30 CRORES AND THE ASSE SSEE BLATANTLY CLAIMED THAT HE DID NOT HAVE THE RELEVANT BILLS//VOUCHERS A VAILABLE WITH HIM. THE SAID PRACTICE OF NON-MAINTENANCE OF BOOKS OF ACCOUN T AND BILLS AND VOUCHERS WAS BEING CARRIED ON BY THE ASSESSEE ATLEA ST FROM ASSESSMENT YEAR 2006-07 I.E. THE YEAR IN WHICH THE TRIBUNAL VI DE ITA NO.865/CHD/2009 HAD ESTIMATED THE PROFITS IN THE HA NDS OF THE ASSESSEE. THE SAID ESTIMATION OF INCOME IN THE HANDS OF THE A SSESSEE FOR ASSESSMENT YEAR 2006-07 AT NP RATE OF 7% AS AGAINST 4.33 % DECLARED BY THE ASSESSEE IN ITS ACCOUNTS HAD BEEN AFFIRMED BY T HE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEE OWN CASE AND THE SAM E HAD BEEN ACCEPTED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDE RATION AND NO APPEAL 12 HAS BEEN FILED AGAINST THE ORDER OF THE ASSESSING O FFICER. IN VIEW OF THE ABOVE SAID FACTS AND CIRCUMSTANCES AND THE ATTITUDE OF THE ASSESSEE IN NOT PRODUCING OR NON-MAINTAINING BOOKS OF ACCOUNT, THE ASSESSING OFFICER IS LEFT WITH NO OPTION BUT TO ESTIMATE THE INCOME IN T HE HANDS OF THE ASSESSEE AND SUCH ESTIMATION HAS BEEN ACCEPTED BY T HE ASSESSEE. 13. FURTHER IN THE FACTS OF THE PRESENT CASE, WE FI ND THAT THOUGH DURING THE COURSE OF SURVEY IT WAS DECLARED BY THE ASSESSE E THAT SURRENDER OF RS.1.30 CRORES IS BEING MADE OVER AND ABOVE THE DEC LARED INCOME OF THE ASSESSEE. HOWEVER, THE ASSESSEE FAILED TO DECLARE THE INCOME AT THE RATES AT WHICH HE WAS BEING ASSESSED IN THE EARLIER YEARS . IN ASSESSMENT YEAR 2006-07 THE NET PROFIT RATE OF 7% TO THE TOTAL CONT RACT RECEIPTS WAS APPLIED IN ORDER TO COMPUTE THE INCOME OF THE ASSES SEE. HOWEVER, FOR THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE DECL ARED ONLY NET PROFIT RATE OF 2.90% EXCLUDING THE AMOUNT OF SURRENDER WHI CH WAS LOWER THAN NET PROFIT RATE DECLARED BY THE ASSESSEE IN THE EAR LIER YEARS I.E. 4.33% IN ASSESSMENT YEAR 2006-07, 4.49% IN ASSESSMENT YEAR 2 007-08 AND 3.57% IN ASSESSMENT YEAR 2008-09. THE DECLARATION OF INC OME BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS NOT ACCEPTED B Y THE ASSESSING OFFICER AND THE NET PROFITS WERE DETERMINED BY APPL YING NET PROFIT RATE OF 7% ON THE NET CONTRACT RECEIPTS OF RS.18.5 CRORES T O WHICH SURRENDERED AMOUNT WAS ADDED AND THE TOTAL INCOME ASSESSED IN T HE HANDS OF THE ASSESSEE WAS RS.2.33 CRORES AND ON THE DIFFERENTIAL INCOME, PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED. 14. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT A S THE INCOME HAD BEEN ESTIMATED IN THE HANDS OF THE ASSESSEE, THERE WAS NO MERIT IN LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON SUCH ESTIMAT ED INCOME. RELIANCE IN THIS REGARD WAS PLACED IN ACIT VS. SHRI GURMUKH SINGH (SUPRA). WE FIND NO MERIT IN THE SAID PLEA OF THE ASSESSEE. TH E CASE OF THE ASSESSEE 13 IS NOT CASE OF ESTIMATE ONLY, BUT A CASE OF COMPLET E DISREGARD OF THE PROVISIONS OF THE ACT, WHERE THE ASSESSING OFFICER IS LEFT WITH NO ALTERNATIVE BUT TO ESTIMATE THE INCOME BECAUSE OF T HE ATTITUDE OF THE ASSESSEE IN NOT MAINTAINING/PRODUCING ANY BOOKS OF ACCOUNT. ALTHOUGH THE RETURN OF INCOME IS ACCOMPANIED WITH AUDITED BA LANCE SHEET AND PROFIT & LOSS ACCOUNT BUT THE ASSESSEE HAS NOT MAIN TAINED OR PRODUCED ANY BOOKS OF ACCOUNT TO JUSTIFY THE DECLARED RESULT S IN PROFIT & LOSS ACCOUNT. IT IS NOT THAT IN EVERY CASE OF ESTIMATI ON OF INCOME, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT CAN BE L EVIED. VARIOUS COURTS HAVE CONSIDERED THE ISSUE AND HAVE UPHELD THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT EVEN IN CASES WHERE ES TIMATE OF INCOME HAD BEEN MADE, CONSIDERING THE FACTS ON WHICH THE ESTIM ATION OF INCOME WAS MADE IN THE RESPECTIVE HANDS. THE HON'BLE MADRAS H IGH COURT IN CIT VS. KRISHNASAWAMY & SONS (1996) 219 ITR 157 (MAD) H AD ELABORATELY CONSIDERED THE ISSUE AND HAD HELD THAT THE PENALTY PROCEEDINGS CAN BE APPLIED EVEN IN CASES WHERE THE ASSESSMENT IS MADE ON THE BASIS OF ESTIMATE BASIS . THE HON'BLE HIGH COURT HAD OBSERVED AS UNDER : AT ANY RATE, EVEN ASSUMING THAT THE REVISED ASSESS MENT WAS BASED ON AN ESTIMATE MADE BY THE ASSESSING AUTHORITY, IT CANNOT BE SAID THAT IN SUCH A CASE, THERE COULD BE NO SCOPE FOR SA YING THAT THE ASSESSEE HAS CONCEALED HIS INCOME, WARRANTING PENAL TY UNDER SECTION 271(1)(C). IN OUR OPINION, IN THIS REGARD, THE TRIBUNAL HAS ERRED IN LAW IN ASSUMING THAT THERE ARE TWO VIEWS I N THE MATTER. ONE, AS HELD IN THE ABOVEREFERRED TO CIT V. E.V. RA JAN [1985] 151 ITR 189 (MAD) ; CEMENT DISTRIBUTORS PVT. LTD. V. CIT [1966 ] 60 ITR 586 (MAD) ; A.K. BASHU SAHIB V. CIT [1977] 108 ITR 736 (MAD) ; CIT (ADDL.) V. BHOOPATHY (E.) [1978] 113 ITR 188 (MAD) ; RATHNAM AND CO. V. IAC [1980] 124 ITR 376 (MAD) AND CIT V. MIR MOHAMED ALI [1981] 128 ITR 215 (MAD) AND ANOTHER, AS HELD IN BOMBAY HARDWARE. SYNDICATE V. CIT [1978] 114 ITR 586 (MAD) ; (14 ITR 133 (MAD) (SIC.)) AND ADDL. CIT V. T.K. PER UMALSWAMY [1984] 150 ITR 600 (MAD). AS POINTED OUT IN CIT V. E.V. RAJAN [1985] 151 ITR 189 (MAD) AT PAGE 195 ITSELF, THE 'UNIFORM VIEW' TAKEN BY THIS COURT IS THAT THE 'PENALTY PROVISION HAS BEEN APPLIED EVEN IN CASES WHERE ASSESSMENT IS MADE ON THE BASIS OF AN ESTIMATE'. IN THAT DECISION, ALL THE ABOVEREFERRED TO DECISIONS OF THIS COURT, WHICH TOOK A SIMILAR VIEW EARLIER HAVE ALSO BEEN REFERRED TO. EVEN IN A LATER DECISION IN CIT V. BAL AKRISHNA TEXTILES [1992] 193 ITR 561 (MAD) RELIED ON BY LEARNED COUNSEL FOR THE 14 REVENUE, THE SAME VIEW HAS BEEN REITERATED. THE REL EVANT OBSERVATION THEREIN IS AS FOLLOWS (PAGE 367) : 'EVEN IF THE REVENUE HAD ASSESSED THE INCOME AT A H IGHER ESTIMATE THAN THAT FURNISHED BY THE ASSESSEES, IT C ANNOT BE STATED AS AN INFLEXIBLE RULE THAT, IN ALL CASES, ES TIMATED INCOME IS NOT LIABLE TO PENALTY, AS IT IS ALWAYS OPEN TO D RAW AN INFERENCE OF DELIBERATE UNDERESTIMATE ON THE FACTS AND CIRCUMSTANCES AND IF THERE WAS SUCH AN UNDERESTIMAT E, AN INFERENCE OF CONCEALMENT CAN ALSO BE DRAWN. WE, THE REFORE, ARE UNABLE TO APPRECIATE THE REASONING OF THE TRIBUNAL THAT THE ESTIMATE OF THE REVENUE BEING HIGHER THAN THAT OF T HE ASSESSEES, THERE CAN BE NO CONCEALMENT.' THUS, WE ALSO FIND THAT IN CIT (ADDL.) V. T.K. PER UMALSWAMY [1984] 150 ITR 600 (MAD), IN ONE CASE (ASSESSMENT YEAR 1963-64) PENAL TY WAS UPHELD, AND IN ANOTHER CASE (ASSESSMENT YEAR 19 64-65) PENALTY WAS HELD TO BE NOT LEVIABLE. THE DIFFERENCE BETWEEN THE TWO CASES WAS BECAUSE IN THE FORMER CASE, THE ASSESSEE ADMITTED T HAT THE ORIGINAL RETURN DID NOT DISCLOSE THE TRUE STATE OF AFFAIRS, WHILE IN THE LATTER CASE, THE ASSESSEE HIMSELF MADE ONLY AN ESTIMATE OF HIS INCOME REFERABLE TO THE SALE OF LICENCE OF SILK YARN AND A DIFFERENT ESTIMATE WAS ARRIVED AT BY THE INCOME-TAX OFFICER, BUT, NEVE RTHELESS THE ASSESSEE HAD DISCLOSED THE TRUE NATURE OF THE INCOM E AS WELL AS THE TRUE NATURE OF THE TRANSACTIONS FROM OUT OF WHICH T HE INCOME WAS DERIVED. ONLY BECAUSE OF THIS LATTER FEATURE OF DIS CLOSURE BY THE ASSESSEE HIMSELF, THE COURT HELD THAT THE SAID FACT WOULD NEGATIVE CONCEALMENT. SO, IT CANNOT BE HELD, BASED ON THAT D ECISION, THAT WHENEVER THERE IS AN ESTIMATE OF INCOME, THERE IS N O SCOPE FOR HOLDING THAT THE ASSESSEE HAS CONCEALED THE INCOME. THEREFO RE, IF ON THE ASSESSEE'S OWN SHOWING THE FILING OF THE ORIGINAL R ETURN WAS AN ACT OF CONCEALMENT OF INCOME, IT DOES CALL FOR A PENALTY. IN FACT IN CIT V. KRISHNA AND CO. [1979] 120 ITR 144 (MAD) ALSO, THIS COURT HELD AS FOLLOWS (PAGE 146) : 'IN THE FACE OF THE ASSESSEE'S OWN ADMISSION THAT T HE AMOUNT REPRESENTED ITS INCOME, THERE IS ABSOLUTELY NO OTHE R EVIDENCE REQUIRED TO SHOW THAT THE AMOUNT REPRESENTED ITS INCOME AND THAT IT HAD BEEN CONCEALED FROM THE RETURN.' 15. IT IS FURTHER OBSERVED BY THE HON'BLE HIGH COUR T AS UNDER : WE ALSO FIND SOME SIMILAR FEATURES ON FACTS IN CIT V. BALAKRISHNA TEXTILES [1992] 193 ITR 361 (MAD)SIMILAR TO THE FACTS IN THE PRESENT CASE. NO DOUBT IN SOME OTHER RESPECTS THE F ACTS ARE ALSO DISTINGUISHABLE. BUT, WE ARE ONLY FOLLOWING THE LEG AL POSITION ENUNCIATED THERE, ONLY REITERATING THE VIEWS EARLIE R HELD IN OTHER JUDICIAL PRONOUNCEMENTS. THEN, COMING BACK TO BOMBAY HARDWARE SYNDICATE V. C IT [1978] 114 ITR 586 (MAD), WHICH WAS RELIED ON BY THE TRIBUNAL TO HOLD THAT IT (BOMBAY HARDWARE SYNDICATE V. CIT [1978] 114 ITR 586 ) HELD A DIFFERENT VIEW ON THE ABOVE ASPECT, WE MUST POINT OUT THAT IT IS NOT SO. EVEN THE QUOTATION FROM BOMBAY HARDWARE SYNDICATE V. CIT [1978] 114 ITR 586 (MAD), EXTRACTED BY THE TRIBUNAL ONLY SAYS THUS (PAGE 589) : 15 'THE MERE ESTIMATE MADE, HOWEVER WELL-FOUNDED IT MA Y BE, BY ITSELF WOULD NOT NORMALLY CONSTITUTE MATERIAL FOR H OLDING THAT THE INCOME THAT HAS BEEN ADDED ON THE BASIS OF THE ESTIMATE WAS THE INCOME THAT HAS BEEN CONCEALED.' (EMPHASIS* SUPPLIED). THE USE OF THE EXPRESSION 'NORMALLY' IN THE ABOVE P ASSAGE ALSO SHOWS THAT EVEN IN A CASE OF ESTIMATE, THERE IS POS SIBILITY FOR HOLDING THAT THE ASSESSEE HAS CONCEALED THE INCOME. SO, BOMBAY HARDWARE. SYNDICATE V. CIT [1978] 114 ITR 586 (MAD) DOES NOT SHOW ANY VIEW CONFLICTING WITH THAT EXPRESSED IN CI T V. E.V. RAJAN [1985] 151 ITR 189 (MAD) AND OTHER DECISIONS REFERRED TO EARLIER. 16. THE HON'BLE MADHYA PRADESH HIGH COURT IN CIT VS . CHANDRAKANTA (1994) 205 ITR 607 (MP) HAD ALSO HELD THAT WHERE TH E ASSESSEE HAD ORIGINALLY FURNISHED RETURN SHOWING LOAN OF RS.50,0 00/- AND REVISED IT AND DECLARED THE PROFIT OF RS.7500/-, HE HAD NECESS ARILY SUPPRESSED THE PARTICULARS OF INCOME. THE ASSESSEE IN THE FACTS O F THAT CASE WAS NOT MAINTAINING BOOKS OF ACCOUNT. THE HON'BLE HIGH COU RT THUS OBSERVED THAT THE INCOME HAD, THEREFORE, TO BE ASSESSED ON E STIMATE BASIS. THAT BEING SO, IT IS THEN DIFFICULT TO SWALLOW THAT SINC E ASSESSEES INCOME WAS ASSESSED ON ESTIMATE BASIS, THE ASSESSEE WAS NOT LI ABLE TO ANY PENALTY. THE HON'BLE HIGH COURT THUS UPHELD THE LEVY OF PENA LTY UNDER EXPLANATION TO SECTION 271(1)(C) OF THE ACT. 17. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT CA N BE INITIATED WHERE ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INC OME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, THEN SUCH PE RSON MAY BE DIRECTED BY THE ASSESSING OFFICER OR THE CIT (APPEALS) TO PA Y BY WAY OF PENALTY, THE SAME IS MENTIONED IN SUB-CLAUSE (III) OF CLAUSE (C) OF SECTION 271(1)(C) OF THE ACT. THE EXPRESSION USED IN SECTI ON 271(1)(C) OF THE ACT IS HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THEREFORE, WHERE THERE IS CONCEALMENT OF INCOME OR INACCURACY, THE PHRASE USE D IS PARTICULARS OF INCOME. IN VIEW OF THE PROVISIONS OF THE ACT, IT I S OBVIOUS THAT THE SAID 16 PROVISIONS WOULD OPERATE WHEN THERE IS FAILURE TO D ISCLOSE FULLY AND TRULY PARTICULARS OF INCOME. IN THE FACTS OF THE PRESENT CASE BEFORE US FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS.1.30 CRORES PURSUANT TO SEARCH OPERATION AT HIS PREMISES AND THE BASIS OF THE SAID SURRENDER OF ADDITIONAL INCOME WAS THE DOCUMENTS FOUND FROM THE PREMISES OF THE ASSESSEE DURING THE COURSE OF S EARCH PROCEEDINGS. THE ASSESSEE HAD MADE DECLARATION THAT THE SAID SUR RENDER WAS OVER AND ABOVE ITS INCOME FOR THE YEAR UNDER CONSIDERATION. HOWEVER, THE ASSESSEE DID NOT RESPECT THE SURRENDER AND DECLARED ITS NORMAL INCOME LOWER THAN IN EARLIER YEARS ON THE BASIS OF ALLEGED AUDITED PROFIT & LOSS ACCOUNT AND BALANCE SHEET BUT IT WAS FOUND IN THE C ASE OF THE ASSESSEE THAT NO BOOKS OF ACCOUNT WERE MAINTAINED OR PRODUCE D BY THE ASSESSEE. IN THE SAID CIRCUMSTANCES, THE ASSESSING OFFICER HA D NO ALTERNATIVE BUT TO ESTIMATE THE INCOME IN THE HANDS OF THE ASSESSEE BY APPLYING THE NP RATE OF 7% AS IT HAS BEEN APPLIED TO DETERMINE THE INCOME OF THE ASSESSEE FOR THE PAST SEVERAL YEARS. THE SAID NP RATE OF 7% WAS APPLIED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2006-07 WHICH WAS UPHELD BY THE HON'BLE PUNJAB & HARYANA HIGH COURT I N ASSESSEES OWN CASE. IN THESE FACTS WHERE THE ASSESSING OFFICER H AD TO RESORT TO ESTIMATION OF INCOME, IN CANNOT BE SAID THAT THE AS SESSEE HAD NOT FURNISHED INACCURATE PARTICULARS OF INCOME. THE AS SESSEE HAVING FAILED TO DISCHARGE THE INITIAL BURDEN OF ESTABLISHING THE CORRECTNESS OF THE RETURN FILED, THE EXPLANATION-1 TO SECTION 271 (1) OF THE ACT IS CLEARLY ATTRACTED AND THE ASSESSEE IS EXIGIBLE TO LEVY OF P ENALTY U/S 271(1)(C) OF THE ACT. 18. WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN MAK DATA P. LTD. VS. CIT (SUPRA) WHEREIN I T HAS BEEN HELD AS UNDER : 17 EXPLANATION I TO SECTION 271(1)(C) OF THE INCOME T AX ACT, 1961, RAISES A PRESUMPTION OF CONCEALMENT, WHEN A D IFFERENCE IS NOTICED BY THE ASSESSING OFFICER, BETWEEN THE RE PORTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSE E TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WHEN T HE INITIAL ONUS PLACED BY THE EXPLANATION HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS TO THE DEPARTMENT TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED INCOME AND NOT OTHERWISE. 19. WE FURTHER FIND SUPPORT FROM THE RATIO LAID DOW N BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN RAJESH CHAWLA VS. CI T [203 CTR (P&H) 209/154 TAXMAN 364 (P&H)] WHEREIN IT HAS BEEN HELD THAT INCASES WHERE THERE WAS NO BONAFIDE VOLUNTARY DISCLOSURE OF INCOME BUT ONLY TO AVOID CONSEQUENCES OF LAW, THE MERE SURRENDER OF IN COME WOULD NOT FORECLOSE ANY ACTION FOR CONCEALMENT OF INCOME. 20. IN THE FACTS OF THE CASE BEFORE THE HON'BLE PUN JAB & HARYANA HIGH COURT IN SHVETA NANDA VS. CIT, CHANDIGARH IN INCOME TAX APPEAL NO.810 OF 2008, DATE OF DECISION 18.4.2011, THERE W AS SURVEY AT THE PREMISES OF THE ASSESSEE AND SOME DISCREPANCIES WER E NOTED. THE HUSBAND OF THE ASSESSEE GAVE AN UNDERTAKING FOR DEC LARATION OF ADDITIONAL INCOME INCLUDING THE INCOME IN THE HANDS OF THE ASS ESSEE. HOWEVER, THE SAID ADDITIONAL INCOME WAS NOT DECLARED IN THE RETU RN OF INCOME FILED FOR THE RELEVANT ASSESSMENT YEAR. THEREAFTER THE ASSES SEE AGREED TO PAY INCOME TAX ON THE AMOUNT OF ADDITIONAL INCOME ALONG WITH INTEREST UNDER SECTION 234B OF THE ACT SUBJECT TO NO PENAL ACTION AGAINST HER. THE ASSESSING OFFICER DISAGREEING WITH THE ASSESSEE INI TIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. T HE PLEA OF THE ASSESSEE BEFORE THE HON'BLE HIGH COURT WAS THAT THE ONUS WAS UPON THE REVENUE TO ESTABLISH CONCEALMENT AND IN THE ABSENCE OF THE SAME, THE ASSESSEE WAS NOT EXIGIBLE TO LEVY OF PENALTY. THE HON'BLE HIGH COURT HELD THAT INDIVIDUAL FACT SITUATION HAS TO BE CONSI DERED TO RECORD A FINDING THAT THERE WAS NO CONCEALMENT OR FURNISHING OF INACCURATE 18 PARTICULARS ON THE PART OF THE ASSESSEE THEREIN. I N THE ABSENCE OF THE ASSESSEE HAVING DISCLOSED SURRENDERED INCOME IN THE RETURN OF INCOME, THE ASSESSEE WAS HELD TO BE LIABLE TO LEVY OF PENAL TY UNDER SECTION 271(1)(C) OF THE ACT. 21. IN VIEW OF THE ABOVE SAID RATIO LAID DOWN BY TH E HON'BLE APEX COURT AND OTHER HIGH COURTS AND THE FACTS OF THE PR ESENT CASE, WE HOLD THAT THE EXPLANATION-I TO SECTION 271 (1) OF THE AC T IS ATTRACTED AND THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT ON THE CONCEALED INCOME. THE GROUNDS OF APPEAL RAI SED BY THE REVENUE ARE THUS ALLOWED. 22. THE FACTS IN ITA NO.782/CHD/2013 ARE IDENTICAL TO THE FACTS IN ITA NO.781/CHD/2013 AND OUR DECISION IN ITA NO.781/CHD/ 2013 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.782/CHD/2013. 23. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE IN ITA NOS.781 & 782/CHD/2013 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF FEBRUARY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH FEBRUARY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 19