M/S. SANDEEP ENTERPRISES, Neemuch V. THE DCIT, Ratlam

ITA 799/IND/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6251 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Bogus purchase; Rejection of books of accounts; Document seized; Question of law; Documents seized
• Section: 147; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 799/IND/2014 A.Y. : 2007-08 M/S.SANDEEP ENTERPRISES, DY. CIT, RATLAM NEEMUCH VS APPELLANT RESPONDENT PAN NO. ABGFS7140G APPELLANTS BY : SHRI S.S.DESHPANDE, CA RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A), UJJAIN, DATED 08.09.2014 FOR THE ASSESS MENT YEAR 2007-08. DATE OF HEARING : 05 . 0 4 .2016 DATE OF PRONOUNCEMENT : 05 . 0 4 .2016 M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 2 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PARTNERSHIP FIRM DOING THE BUSINESS OF TRANSPORTATI ON, LOADING UNLOADING, HANDLING AND SHIFTING OF MATERIAL. THE A SSESSEE HAS FILED THE RETURN OF INCOME DECLARING TOTAL INCOME O F RS. 40,30,950/- AND THE SAME HAS BEEN ASSESSED AT RS. 3,77,22,570/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE AO POINTED OUT SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNTS. AFTER TAKING INTO ACCOUNT THE DEFECTS IN THE BOOKS OF ACCOUNTS THE CIT(A) WHILE DECIDING THE QUANTUM APPEAL ADOPTED THE NET PROFIT @ 4%. THEREFORE, THE CIT(A) SUSTAINED THE AD DITION TO THE EXTENT OF RS. 56,045/- WHILE DECIDING THE QUANTUM AP PEAL. THEREFORE, THE AO IMPOSED THE PENALTY OF RS. 20,00, 000/- U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS DISMISSED THE APPEAL. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE AO HAS DISALLOWED A SUM OF RS. . 15,00,153/- OUT OF TOTAL PAYMENT OF RS. 1,57,01,538 /- UNDER THE HEAD LABOUR AND WAGES ON ESTIMATED BASIS. SIMILA RLY, HE HAS MADE ADDITION ON ESTIMATES OF RS. 83,55,153/- ON M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 3 3 ACCOUNT OF TRANSPORTATION, LOADING AND UNLOADING CH ARGES WHICH ARE TO THE TUNE OF RS. 16,71,03,072/-. THE CIT (A) HAS UPHELD THE REJECTION OF BOOKS AND APPLIED NET PROFI T @4 % ON TOTAL RECEIPT OF TRANSPORTATION CHARGES OF RS. 24 C RORES, THEREBY HE HAS CONFIRMED THE ADDITION ON THE BASIS OF APPLI CATION OF NET PROFIT RATE. THE REJECTION OF BOOKS OF ACCOUNT S AND ESTIMATING THE NET PROFIT ON A PARTICULAR PERCENTAG E DOES NOT AMOUNT TO ANY CONCEALMENT. ON A MERE ESTIMATE BASIS , NO PENALTY CAN BE LEVIED. HE RELIED UPON THE FOLLOWING DECISIONS :- 1. J.K. JAJOO VS. CIT,181 ITR 410. 2. CIT VS. GAURISHANKAR SURESHPRASAD (PAT.), 224 ITR 26. 3. ACIT VS. RELIANCE PETROCHEMICALS LTD., 322 ITR 158. 4. CIT VS. CHIRAG INGOTS, 275 ITR 310. 5. NARESH CHANDRA VS. CIT, 357 ITR 514. 6. CIT VS. SANGUR VANASPATI MILLS LIMITED,303 ITR 53. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE DECISION OF HON'BLE M.P. HIGH COURT IN THE CASE OF CIT VS. SHIV NARAYAN JAMNALAL, 232 ITR M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 4 4 311 AND SUBMITTED THAT PENALTY CAN BE LEVIED, IF TH E ADDITION IS BASED ON ESTIMATED INCOME. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT IF THE PENAL TY IS IMPOSED ON ESTIMATED INCOME, THE PENALTY CAN BE IMP OSED. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDER OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAL INDI RAIL NIRMAN ENGG. LIMITED, (2014) 365 ITR 304 (DEL), WHER EIN THE HON'BLE HIGH COURT HAS HELD THAT IN THE CASE OF ONE CONTRACTOR, WHO WAS UNDERTAKING THE PROJECT FOR INDIAN RAILWAYS ON TURN- KEY BASIS AND SEARCH WAS CARRIED OUT IN ASSESSEES P REMISES AS WELL AS THE PREMISES OF DIRECTORS AND TRUSTEE PERSON S, THE MATTER REFERRED TO SPECIAL AUDITORS IN TERMS OF SEC TION 142(2A) OF INCOME-TAX ACT, 1961, AND THE AUDITORS REPORTED THAT NUMBER OF TRANSACTIONS WITH NO SUPPORTING VOUCHERS W ERE AVAILABLE. THE ASSESSEE WAS GIVEN OPPORTUNITY TO GIV E PROPER EXPLANATION. THE ASSESSEE WAS GIVEN THE BOOKS OF ACC OUNTS. THE AO ESTIMATED NET PROFIT OF 11% ON GROSS RECEIPT S. THE TRIBUNAL REDUCED THE ESTIMATE OF GROSS PROFIT FROM 11 % TO 8%. PENALTY WAS DELETED BY CIT(A) AND IT WAS CONFIRMED BY THE TRIBUNAL AND HIGH COURT HAS HELD THAT THE ASSESSEE WAS GIVEN M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 5 5 NUMBER OF OPPORTUNITIES TO INSPECT THE SEIZED MATER IAL AND GIVEN THE PHOTOCOPIES OF DESIRED DOCUMENTS. THE MER E FACT THAT ESTIMATE WAS REDUCED TO 8% WOULD NOT TAKE AWAY AN Y GUILT OF THE ASSESSEE AND OR EXPLAIN TO FAILURE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR GROS S OR WILLFUL NEGLECT ON HIS PART. THE PENALTY WAS JUSTIFIED. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO SUBMIT THE DECISI ON OF HON'BLE M.P. HIGH COURT IN THE CASE OF CIT (ADDITIO NAL ) VS. SMT. CHANDRAKANTA AND OTHERS, 205 ITR 607, WHEREIN T HE HON'BLE HIGH COURT HAS HELD THAT THE ASSESSEE SUBMI TTED HIS RETURN AND SHOWED A LOSS OF REST. 50,000/- AND THE N REVISED IT AND SHOWED A PROFIT OF RS. 7,500/-, HE HAD UNNEC ESSARILY SUPPRESSED THE PARTICULARS OF INCOME AND GIVEN AN I NCORRECT ACCOUNT OF HIS INCOME. THE ASSESSEE DID NOT MAINTAI N BOOKS OF ACCOUNT. HIS INCOME HAD ,THEREFORE, TO BE ASSESSED ON ESTIMATE BASIS. THE TRIBUNAL COMMITTED AN ERROR IN HOLDING T HAT SINCE THE ASSESSEES INCOME WAS ASSESSED ON ESTIMATE BASIS , THE ASSESSEE WAS NOT LIABLE TO ANY PENALTY, THOUGH THE I NCOME WAS ASSESSED ON ESTIMATED BASIS. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE DECISION OF HON'BLE GUJARAT M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 6 6 HIGH COURT IN THE CASE OF CIT VS. CHANDRA VILAS HOT EL, (2007) 291 ITR 202 ( GUJ ), WHEREIN IT WAS HELD THAT THE AO FOUND FROM THE MANNER IN WHICH THE ACCOUNTS WERE MAINTAINE D THE INCOME COULD NOT BE PROPERLY ESTIMATED AND WHILE DOI NG SO HE ALSO OBSERVED THAT THE AUDITORS OF THE ASSESSEE HAD CLEARLY OBSERVED THAT FOR THE CHECK INCOME OR FOR THE TEST INCOME OF THE PARTICULAR DAY THE REQUIRED SLIPS WERE NOT PROD UCED BEFORE THE AUDITORS. THE AO HELD THAT THE INCOME WAS NOT PR OPERLY RETURNED, AND HE ACCORDINGLY APPLIED SECTION 141 AN D HE ASSESSED THE INCOME AT 20 % MORE TO THE RETURNED IN COME. THE PENALTY WAS CONFIRMED BY THE HON'BLE GUJARAT HIGH C OURT. 6. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT IN THE INSTANT CASE, THE SEARCH WAS C ONDUCTED IN THE PREMISES OF BHARAT KOTHARI GROUP AND DURING THE COURSE OF STATEMENT, SHRI MAYUR KOTHARI STATED THAT THEY ARE ISSUING THE BILLS WITHOUT MAKING DELIVERY OF IRON AN D STEELS AND THEY HAVE RECEIVED THE CONSIDERATION OF SUCH SALE B Y ACCOUNT PAYEE CHEQUES AND AFTER KEEPING THE COMMISSION AMOU NT, THE AMOUNTS WERE RETURNED. ON THE BASIS OF THE STATEMEN T, ASSESSEES CASES WERE REOPENED U/S 147 AND THE AO HAS MADE M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 7 7 THE ADDITION ON PROFIT OF BOGUS PURCHASE @6% OF THE ABOVE PURCHASE AND PENALTY IS IMPOSED. THEREFORE, THE AO AND LD. CIT(A) IS JUSTIFIED IN IMPOSING THE PENALTY. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IN THIS CASE, THE AO HAS IMPOSED THE PEN ALTY ON THE GROUND THAT THE ASSESSEE IS A PARTNERSHIP FIRM DOIN G THE BUSINESS OF TRANSPORTATION, LOADING AND UNLOADING A ND HANDLING AND SHIFTING THE MATERIAL. THE GROSS RECEI PT WAS SHOWN AT RS. 24,32,24,929/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAS OBSERVED THE DIS CREPANCY IN LABOUR PAYMENT ACCOUNT AS SOME OF THE VOUCHERS O F PAYMENTS WERE NOT SIGNED BY LABOURS AND SOME OF THE LABOURS SIGNATURES WERE NOT SIMILAR TO THE NAMES WERE NOT T HE SAME IN DIFFERENT MONTHS. THE ASSESSEE HAS CLAIMED PAYMENT OF RS. 16,26,48,836/- DURING THE YEAR AS TRANSPORTATION, L OADING AND UNLOADING CHARGES. THE AO ASKED TO PRODUCE ALL THE PERSONS WITH THEIR PROOF OF IDENTITY AND BANK ACCOUNT. THE A SSESSEE WAS ALSO ASKED TO PRODUCE THE LABOURS WHICH THE ASSES SEE DID NOT PRODUCE. THEREFORE, THE BOOKS OF ACCOUNTS WERE REJECTED M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 8 8 AND INCOME OF THE ASSESSEE WAS ESTIMATED AND CIT(A) HAS CONFIRMED THE ADDITION OF NET PROFIT @ 4% AND ADDIT ION TO THE EXTENT OF RS. 56,98,045/- WERE SUSTAINED BY THE LD. CIT(A) AND IT WAS CONFIRMED IN THE TRIBUNAL. WE FIND THAT THE S IMILAR ISSUE HAD COME UP BEFORE THE JURISDICITONAL HIGH COURT IN THE CASE OF CIT VS. SHIVNARAYAN JAMNALAL, 312 ITR 311, WHERE IN THE HON'BLE HIGH COURT HAS HELD THAT THE BOOKS OF ACCOU NTS MAINTAINED BY THE ASSESSEE WERE NOT PROPERLY MAINTA INED AND IF ASSESSEE HAS NOT CONCEALED ANY MATERIAL AND NOT TRIED TO DEFRAUD THE AUTHORITIES, THE PENALTY CANNOT BE LEVI ED, BECAUSE THE INCOME WAS ASSESSED ON ESTIMATE BASIS. IN THAT C ASE, THE ASSESSEE HAD NINE LIQUOR SHOPS LOCATED IN SEVERAL P LACES MAINTAINED A SINGLE CASH BOOK AND LEDGER. THE AO HE LD THAT IT WAS NOT POSSIBLE TO ACQUIRE DAILY ACCOUNT FROM ALL T HE SHOPS REGULARLY AT A PARTICULAR PLACE AND THAT THE SALES OF ALL THESE SHOPS WERE RECORDED AT A STRETCH. HE, THEREFORE, ES TIMATED THE SALES AND NET PROFIT, IN WHICH THE TRIBUNAL HAS CANC ELLED THE PENALTY AND HON'BLE HIGH COURT HAS CONFIRMED THE OR DER OF THE TRIBUNAL. WE FIND THAT IN THE INSTANT CASE ON HAND IN THE YEAR UNDER CONSIDERATION THE BOOKS OF ACCOUNTS WERE REJ ECTED AND M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 9 9 NET PROFIT WAS APPLIED. THEREFORE, WE ARE OF THE VIEW THAT FACTS OF THIS CASE IS SIMILAR TO THE FACTS OF THE JURISDI CTIONAL HIGH COURT. THEREFORE, THE PENALTY CANNOT BE IMPOSED. WE ALSO GET SUPPORT FROM THE DECISION OF CIT VS. WHITELENE CHEM ICALS, (2014) 360 ITR 385 (GUJ), WHEREIN IT IS HELD AS UNDE R :- FOR THE ASSESSMENT YEAR 2001-02, PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961, WAS IMPOSED AGAINST THE ASSESSEE ON TWO COUNTS (I)THAT ADDITION S WERE MADE IN THE INCOME OF THE ASSESSEE AFTER REJECTION OF BOOK RESULTS ON THE BASIS OF FAIR GROS S PROFIT RATE, AND (II) THAT THE ASSESSEE HAD ESTIMAT ED 3 PER CENT, OF THE SALES TAX WITH IT. THIS WAS CONFIR MED BY THE COMMISSIONER (APEALS). WITH RESPECT TO THE FIRST ASPECT OF THE PENALTY, THE TRIBUNAL OBSERVED THAT NO PENALTY COULD BE IMPOSED MERELY BECAUSE THE ACCOUNT BOOKS OF THE ASSESSEE WERE REJECTED AND THA T THE PROFIT WAS ESTIMATED ON THE BASIS OF THE FAIR G ROSS PROFIT RATIO. WITH RESPECT TO THE RETENTION OF THE PORTION OF THE SALES TAX, THE TRIBUNAL STATED THAT NO EVIDE NCE WAS BROUGHT BY THE REVENUE TO SUGGEST THAT THE M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 10 10 ASSESSEE HAD RETAINED A PORTION OF SALES TAX WITH I T. THE ASSESSEE FILED ITS EXPLANATION WHICH COULD NOT BE TERMED NOT BONA FIDE. IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO PROVE THE CHARGE THAT A PORTION OF THE SALES TAX WAS RETAINED BY THE ASSESSEE, PENALTY COULD NOT BE IMPOSED. THEREFORE, THE TRIBUNAL CANCELLED THE PENALTY. ON APPEAL : HELD, DISMISSING THE APPEAL, THAT THE OPINION OF THE TRIBUNAL WITH RESPECT TO THE DELETION OF PENALT Y WAS BASED ON APPRECIATION OF EVIDENCE ON RECORD. WITH RESPECT OF THE ADDITIONS MADE AFTER REJECT OF THE BOOK RESULTS AND ON THE BASIS OF THE FAIR GROSS PRO FIT RATIO, THE TRIBUNAL FOUND NO ADDITIONAL MATERIAL TO SUSTAIN THE PENALTY. WITH RESPECT TO THE SO-CALLED RETENTION OF THE SALES IN THE TRIBUNAL FOUND THAT T HE REVENUE COULD NOT ESTABLISH SUCH CHARGE. THE EXPLANATION OFFERED BY THE ASSESSEE COULD NOT BE TERMED AS NOT BONA FIDE. THEREFORE, THE TRIBUNAL RIGHTLY CANCELLED THE PENALTY. M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 11 11 8. WE ALSO GET SUPPORT FROM THE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS . SANGRUR VANASPATI MILLS LIMITED, (2008) 303 ITR 53 ( P & H ), WHEREIN IT IS HELD AS UNDER :- IN ORDER TO ATTRACT CLAUSE 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 O F HIS INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE NOT ATTRACTED TO CASES WHERE THE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND ADDITIONS ARE MADE THEREIN. WHEN THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF ESTIMATE AND NOT ON ACCOUNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, THEN THE PENALTY IS NOT LEVIABLE. 9. WE ALSO GET SUPPORT FROM THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MAHENDR A SINGH KHELDA, (2012) 252 CTR (RAJ) 453, WHEREIN IT IS HELD AS UNDER :- M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 12 12 THE FINDING OF THE TRIBUNAL MAKES IT CLEAR THAT ADDITIONS MADE BY THE AO WERE BASED ON ESTIMATION ONLY. A FACT OR ALLEGATION BASED ON ESTIMATION CANN OT BE SAID TO BE CORRECT ONLY, IT CAN BE INCORRECT ALS O. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, PENALTY WAS WRONGLY LEVIED BY THE AO. THE BASIS FOR LEVYING PENALTY IN THE PRESENT CASE IS ONLY ESTIMATION, WHICH IS PURELY A QUESTION OF FACT AND THERE IS A CONCURRENT FINDING OF FACT RECORDED BY F IRST APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL BOTH. THE INCOME-TAX APPEAL CAN BE ADMITTED ONLY ON SUBSTANTIAL QUESTION OF LAW, BUT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN PRESENT APPEAL SO AS TO ENTERTAIN IT. THE APPELLATE AUTHORITY AS WELL AS TH E TRIBUNAL BOTH HAVE RECORDED A CONCURRENT FINDING OF FACT THAT ADDITIONS IN THE PRESENT CASE ARE BASED O N ESTIMATION ONLY. IN THESE CIRCUMSTANCES, NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APP EAL AND THE SAME IS, ACCORDINGLY, DISMISSED IN LIMINE. M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 13 13 10. WE ALSO GET SUPPORT FROM THE DECISION OF HON'BLE DE LHI HIGH COURT IN THE CASE OF CIT VS. AERO TRADERS P.LT D., (2010) 322 ITR 316 (DEL), WHEREIN IT IS HELD AS UNDER :- THE ASSESSEE-COMPANY FILED ITS RETURN OF INCOME FO R THE YEAR 1997-98 ON A NOTICE U/S 148 OF THE INCOME- TAX ACT, 1961, DECLARING A LOSS OF RS. 83,64,468/-. THE ASSESSEE HAD, IN THE INCOME-TAX RETURN FILED BY IT, ATTACHED A NOTE STATING THAT IT WAS IMPOSSIBLE FOR IT TO SUBSTANTIATE ITS CLAIM OF LOSS BY WAY OF ANY EVIDENCE AS THE RELEVANT RECORDS WERE SEIZED AND WERE WITH THE POLICE AUTHORITIES. THE AO AFTER BEIN G UNABLE TO OBTAIN COPIES OF THE SEIZED DOCUMENTS, BASED HIS ASSESSMENT ORDER ON THE LIMITED DOCUMENTS PROVIDED AND REJECTED THE BOOK RESULTS DECLARED BY THE ASSESSEE. HE ESTIMATED THE INCOME OF THE ASSESSEE AT RS. 61,00,000/-. HE ALSO INITIAT ED PENALTY PROCEEDINGS SEPARATE. THE COMMISSIONER (APPEALS) ESTIMATED THE TOTAL INCOME OF THE ASSESSE E AT RS. 1,02,980/-. THE TRIBUNAL CONFIRMED THIS ORDE R. THE AO OBSERVED THAT THE PROFIT WAS ESTIMATED AFTER M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 14 14 REJECTION OF BOOKS OF ACCOUNTS DUE TO CERTAIN DISCREPANCIES AND IMPOSED A PENALTY ON THE ASSESSEE OF RS. 36,41,003/-, ON THE GROUND THAT IT WAS A CLEAR CASE OF FURNISHING INACCURATE PARTICULA RS OF INCOME. THE COMMISSIONER (APPEALS) DELETED THE PENALTY HOLDING THAT THE ADDITION MADE BY THE AO ON THE BASIS OF ESTIMATED PROFIT COULD NOT BE A SUBJEC T- MATTER OF PENALTY FOR CONCEALMENT OF INCOME. THE TRIBUNAL CONFIRMED THIS ORDER. ON APPEAL : HELD, DISMISSING THE APPEAL, THAT THE FINDING ARRIV ED AT BY THE TRIBUNAL DID NOT WARRANT INTERFERENCE AS IT WAS PURELY A FINDING OF FACT. 11. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT IF THE PENALTY IS IMPOSED ON ESTIMAT ED INCOME, THE PENALTY CAN BE IMPOSED. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF HON'BLE DE LHI HIGH COURT IN THE CASE OF CIT VS. KALINDI RAIL NIRMAN EN GG. LIMITED, (2014) 365 ITR 304 (DEL), WHEREIN THE HON'BLE HIGH C OURT HAS HELD THAT IN THE CASE OF ONE CONTRACTOR, WHO WAS UNDE RTAKING THE PROJECT FOR INDIAN RAILWAYS ON TURN-KEY BASIS AN D SEARCH M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 15 15 WAS CARRIED OUT IN ASSESSEES PREMISES AS WELL AS TH E PREMISES OF DIRECTORS AND TRUSTEE PERSONS, THE MATTER REFERR ED TO SPECIAL AUDITORS IN TERMS OF SECTION 142(2A) OF INCOME-TAX ACT, 1961, AND THE AUDITORS REPORTED THAT NUMBER OF TRANSACTIO NS WITH NO SUPPORTING VOUCHERS WERE AVAILABLE. THE ASSESSEE WAS GIVEN OPPORTUNITY TO GIVE PROPER EXPLANATION. THE ASSESSE E WAS GIVEN THE BOOKS OF ACCOUNTS. THE AO ESTIMATED NET PROFIT OF 11% ON GROSS RECEIPTS. THE TRIBUNAL REDUCED THE ESTIMATE O F GROSS PROFIT FROM 11 % TO 8%. PENALTY WAS DELETED BY CIT(A ) AND IT WAS CONFIRMED BY THE TRIBUNAL AND HIGH COURT HAS HE LD THAT THE ASSESSEE WAS GIVEN NUMBER OF OPPORTUNITIES TO IN SPECT THE SEIZED MATERIAL AND GIVEN THE PHOTOCOPIES OF DESIRE D DOCUMENTS. THE MERE FACT THAT ESTIMATE WAS REDUCED T O 8% WOULD NOT TAKE AWAY ANY GUILT OF THE ASSESSEE AND OR EXPLAIN TO FAILURE TO RETURN THE CORRECT INCOME DID NOT ARI SE FROM ANY FRAUD OR GROSS OR WILLFUL NEGLECT ON HIS PART. THE P ENALTY WAS JUSTIFIED. THE LD. DEPARTMENTAL REPRESENTATIVE ALS O SUBMITTED THE DECISION OF HON'BLE M.P. HIGH COURT IN THE CASE OF CIT (ADDITIONAL ) VS. SMT. CHANDRAKANTA AND OTHERS, 205 ITR 607, WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT THE ASS ESSEE M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 16 16 SUBMITTED HIS RETURN AND SHOWED A LOSS OF REST. 50 ,000/- AND THEN REVISED IT AND SHOWED A PROFIT OF RS. 7,500/-, HE HAD UNNECESSARILY SUPPRESSED THE PARTICULARS OF INCOME AND GIVEN AN INCORRECT ACCOUNT OF HIS INCOME. THE ASSESSEE DI D NOT MAINTAIN BOOKS OF ACCOUNT. HIS INCOME HAD ,THEREFOR E, TO BE ASSESSED ON ESTIMATE BASIS. THE TRIBUNAL COMMITTED AN ERROR IN HOLDING THAT SINCE THE ASSESSEES INCOME WAS ASSE SSED ON ESTIMATE BASIS, THE ASSESSEE WAS NOT LIABLE TO ANY P ENALTY, THOUGH THE INCOME WAS ASSESSED ON ESTIMATED BASIS. T HE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE DECISIO N OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. C HANDRA VILAS HOTEL, (2007) 291 ITR 202 ( GUJ ), WHEREIN IT WAS HELD THAT THE AO FOUND FROM THE MANNER IN WHICH THE ACCOU NTS WERE MAINTAINED THE INCOME COULD NOT BE PROPERLY EST IMATED AND WHILE DOING SO HE ALSO OBSERVED THAT THE AUDITOR S OF THE ASSESSEE HAD CLEARLY OBSERVED THAT FOR THE CHECK IN COME OR FOR THE TEST INCOME OF THE PARTICULAR DAY THE REQUIRED SLIPS WERE NOT PRODUCED BEFORE THE AUDITORS. THE AO HELD THAT THE INCOME WAS NOT PROPERLY RETURNED, AND HE ACCORDINGLY APPLIE D SECTION 141 AND HE ASSESSED THE INCOME AT 20 % MORE TO THE RETURNED M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 17 17 INCOME. THE PENALTY WAS CONFIRMED BY THE HON'BLE GU JARAT HIGH COURT. 12. DURING THE COURSE OF HEARING THE LD. DEPARTMENTAL REPRESENTATIVE HAS RELIED UPON THE DECISION OF HON 'BLE M.P. HIGH COURT, WHICH IS A JURISDICTIONAL HIGH COURT, WHE REIN THE PENALTY HAS BEEN LEVIED, WHERE THE INCOME WAS ASSESS ED ON ESTIMATED INCOME, BUT WE FIND THAT IN THAT CASE, TH E ASSESSEE HAS FILED THE RETURN SHOWING LOSS, THEN HE REVISED T HE RETURN AND SHOWED THE PROFIT AND THEREAFTER THE ITO ESTIMA TED AN DETERMINED THE INCOME AND ASSESSEE DID NOT MAINTAIN THE BOOKS OF ACCOUNTS. THEREFORE, THE INCOME WAS ASSESS ED ON ESTIMATE BASIS, BUT IN THE CASE ON HAND, THE FACTS OF THIS CASE ARE ENTIRELY DIFFERENT. IN THIS CASE, THE BOOKS OF ACCOUNTS ARE MAINTAINED, BUT IT WAS REJECTED U/S 145 OF THE INCOM E-TAX ACT, 1961, AND THE INCOME WAS ESTIMATED @ 4% NET PROFIT. THEREFORE, THE FACTS ARE DIFFERENT. THEREFORE, IT WI LL NOT BE HELPFUL TO THE DEPARTMENT. SIMILARLY, IN THE CASE O F CIT VS. CHANDRA VILAS HOTEL, (2007) 291 ITR 202 ( GUJ ), WHE REIN THE ASSESSEE WAS NOT MAINTAINING SLIPS FOR HIS HOTEL IN COME, WHICH WAS NOT PRODUCED BEFORE THE AUDITOR. THEREFORE, THE INCOME M/S.SANDEEP ENTERPRISES, NEEMUCH VS. DY. CIT, RATLA M I.T.A.NO. 799/IND/2014 A.Y. 20007-08 18 18 WAS ESTIMATED. THEREFORE, PENALTY WAS LEVIED, BUT IN THIS CASE, THE FACTS ARE ENTIRELY DIFFERENT AS DISCUSSED ABOVE . THEREFORE, IT WILL NOT BE HELPFUL TO THE REVENUE. 13. WE, RESPECTFULLY FOLLOWING THE DECISIONS OF VARIOUS HON'BLE HIGH COURTS, DELETE THE PENALTY. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 5 TH APRIL, 2016. (B.C.MEENA) ACCOUNTANT MEMBER ( D.T.GARASIA) JUDICIAL MEMBER DATED : 5 TH APRIL, 2016. CPU*