M/s Zaveri Diamonds, Ludhiana V. ACIT, Ludhiana

ITA 842/CHANDI/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73557 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-01-2014
• Assessment Year: 1998-1999
• Appeal Filed On: 05-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Question of law; Retraction; Revised return
• Section: 234B; 139(5); 147

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.842/CHD/2011 ASSESSMENT YEAR : 2006-07 M/S ZAVERI DIAMONDS, VS. THE A.C.I.T., NALKE WALI GALI, CIRCLE-III, PANSARI BAZAR, LUDHIANA. PAN: AAAFZ0550E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI AKHILESH GUPTA, DR DATE OF HEARING : 22.01.2014 DATE OF PRONOUNCEMENT : 25.03.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, LUDHIANA DA TED 04.07.2011 AGAINST THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A)-I, LUDHIANA HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) AMOUNTING TO RS.20 LAC AS LEVIED BY THE ASSESSING OFFICER. 2. THE PENALTY U/S 271(1)(C) HAS BEEN CONFIRMED BY THE LD.CIT(A)-I, LUDHIANA AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE DETAILED SUBMISSIONS FILED DURING THE COURSE OF HEARING MENTIONING VARIOUS CASE LAWS HAS NOT BEE N CONSIDERED BY THE LD.CIT(A) PROPERLY WHILE DISMISSI NG THE APPEAL. 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AT RS.20 LACS. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM CONSTITUTED OF TWO PARTNERS SHRI MANOJ KUMAR S/O SH RI KRISHAN KUMAR AND SHRI VINEET KUMAR S/O SHRI KRISHAN KUMAR, BOTH REPRESENTING THEIR HUF. THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,11,500/- ON 30.10.19 98. THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 OF THE ACT ON THE BASIS OF INVESTIGATION MADE AND INFORMATION AVAILABLE. T HE ASSESSEE CLAIMED TO BE ENGAGED IN THE BUSINESS OF PURCHASE A ND SALE OF DIAMOND, GOLD JEWELLERY, SILVER AND SILVER UTENSILS , ETC. THE ENQUIRIES MADE BY THE ASSESSING OFFICER REVEALED TH AT THE ASSESSEE OPENED BANK ACCOUNT IN PUNJAB NATIONAL BANK IN CHAU RA BAZAR, LUDHIANA IN THE NAME OF M/S ZAVERI DIAMONDS AND CAS H OF RS.16.28 CRORES WAS DEPOSITED WITHIN A SPAN OF ONE MONTH AND SEVEN DAYS. FURTHER CHEQUES/DDS HAVE BEEN ISSUED FROM THIS ACCO UNT TO VARIOUS PARTIES. THE STATEMENT OF SHRI MANOJ KUMAR, PARTNE R IN HIS HUF CAPACITY WAS RECORDED AND IT WAS NOTED BY THE ASSES SING OFFICER THAT THE PARTNER HAD NO PRIOR SUFFICIENT EXPERIENCE OF DOING BUSINESS OF DIAMOND AS THE EARLIER CONCERN IN WHICH HE WAS PARTNER WAS ONLY DEALING IN GOLD AND SILVER JEWELLERY AND B ULLION. FURTHER IT WAS FOUND BY THE ASSESSING OFFICER THAT THE WHO LE BUSINESS WAS CARRIED OUT BY THE ASSESSEE FROM A SMALL SHOP WITH THE HELP OF ONLY TWO PERSONS WHOSE STATEMENTS WERE RECORDED. FURTHE R STATEMENTS OF THE PERSONS FROM WHOM THE ITEMS OF FURNITURE WERE A LLEGED TO HAD BEEN PURCHASED, WERE RECORDED AND THEY STATED THAT NO PURCHASE OF FURNITURE WAS MADE FROM THEM AND ONLY BILLS WERE OB TAINED TO REFLECT THE SAME IN THE BOOKS OF ACCOUNT OF THE ASS ESSEE FIRM. 3 FURTHER LOCAL ENQUIRIES WERE MADE BY THE INSPECTOR ON BEHALF OF THE ASSESSING OFFICER AND IT WAS FOUND FROM THE PERSONS IN ADJOINING SHOPS THAT NO PROPER BUSINESS WAS CARRIED OUT FROM THE SAID SHOP. FURTHER THE ASSESSEE HAD NOT PAID ANY SALES TAX ON THE ALLEGED SALES MADE BY THE ASSESSEE. FURTHER THE ASSESSEE FAILED TO PRODUCE ANY OF THE PERSONS TO WHOM CASH SALES WERE MADE. DURING T HE COURSE OF INVESTIGATION FOUR PERSONS ADMITTED THAT THEY HAD N OT SOLD ANY JEWELLERY TO THE FIRM INSTEAD THEY HAD RECEIVED THE CHEQUES AND DEPOSITED THE SAME IN THE BANK ACCOUNT AND INTRODUC ED THE SAID AMOUNT IN THE BOOKS FOR WHICH THEY WERE MADE COMPEN SATORY CASH PAYMENT ALONGWITH CASH COMMISSION @ 2% TO 3%. THE ASSESSING OFFICER HELD THAT THE ASSESSEE FIRM DID NOT ACTUALL Y INDULGE IN PURCHASE AND SALE TRANSACTIONS BUT IN FACT MANIPULA TED AFFAIRS TO GIVE A COLOUR OF BUSINESS ACTIVITY OF SUCH LARGE M AGNITUDE. THE ASSESSING OFFICER THUS HELD THAT NO BUSINESS WHATSO EVER WAS EVER DONE IN THE NAME OF M/S ZAVERI DIAMONDS AND ONLY CA SH WAS DEPOSITED IN THE BANK IN LIEU OF WHICH CHEQUE/DDS W ERE ISSUED TO DIFFERENT PERSONS FOR WHICH COMMISSION @ 2% TO 3% W AS CHARGED ON THE AMOUNT OF ALLEGED PURCHASES. THE ASSESSING OFFICER THUS REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE COM MISSION INCOME AT RS.32,55,735/- APPLYING RATE OF 2% ON THE AMOUNT OF PURCHASES DECLARED BY THE ASSESSEE AT RS.16.27 CRORES. 5. THE CIT (APPEALS) PARTLY ALLOWED THE APPEAL OF T HE ASSESSEE. THE TRIBUNAL IN THE APPEAL PREFERRED BY THE DEPARTM ENT IN ITA NO.503/CHANDI/2004 VIDE ORDER DATED 31.10.2008 AFTE R CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE RESTORED THE O RDER OF THE ASSESSING OFFICER. THE TRIBUNAL HELD THAT IN THE A BSENCE OF ENOUGH EVIDENCE AND THE MATERIAL ON RECORD TO SATISFACTORI LY EXPLAIN THE 4 SOURCE OF MONEY DEPOSITED IN THE BANK ACCOUNT, WHIC H THE ASSESSEE CLAIMED TO BE THE SALE PROCEEDS OF THE JEWELLERY SO LD, THE ASSESSING OFFICER WAS JUSTIFIED TO HOLD THAT NO BUSINESS OF P URCHASE OR SALE OF JEWELLERY WAS CARRIED OUT BY THE ASSESSEE FIRM. CO NSEQUENT TO THE ORDER OF THE TRIBUNAL, SHOW CAUSE NOTICE WAS ISSUED TO EXPLAIN WHY PENALTY U/S 271(1)(C) OF THE ACT SHOULD NOT BE LEVI ED. IN VIEW OF THE FINDINGS OF THE TRIBUNAL THAT THE ASSESSEE WAS NOT IN THE BUSINESS OF PURCHASE AND SALE OF JEWELLERY, THE ASS ESSING OFFICER OBSERVED THAT BY NOT PROVIDING THE IDENTITY OF THE PERSONS TO WHOM THE JEWELLERY WAS SOLD, THE ASSESSEE HAD FAILED TO PROVIDE CORRECT PICTURE OF THE RECEIPTS AND SOURCE OF THE MONEY DEP OSITED IN THE BANK WHICH COULD NOT BE VERIFIED. IT WAS FURTHER N OTED BY THE ASSESSING OFFICER THAT IN CASE THE DEPARTMENT HAD N OT RECEIVED INFORMATION, THE FALSE PARTICULARS OF BUSINESS AND INCOME OF THE ASSESSEE WOULD NOT HAVE COME TO THE KNOWLEDGE OF TH E TAX AUTHORITIES, WHICH LED TO REOPENING OF THE ASSESSME NT AND ADDITION OF RS.32,55,735/-. THE ASSESSING OFFICER HELD THE ASSESSEE TO BE LIABLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND PENALTY OF RS.20 LACS WAS LEVIED ON THE ASSESSEE. 6. THE CIT (APPEALS) AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, WHICH HAVE BEEN INCORPORATED AS PART OF T HE APPELLATE ORDER AND ARE NOT BEING REPRODUCED FOR THE SAKE OF BREVITY, VIDE PARA 4 UPHELD THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. VARIOUS EVIDENCES PRODUCED BY THE ASSESSEE TO ESTABLISH THA T THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF JEWELLERY WAS CONSIDERED BY THE CIT (APPEALS) ON THE ONE HAND AND ON THE OTHER HAND THE EVIDENCES COLLECTED BY THE ASSESSING OFFIC ER DURING THE ASSESSMENT PROCEEDINGS IN THE FORM OF STATEMENTS GI VEN BY FOUR 5 PERSONS, WHO HAD LATER RETRACTED FROM THEIR STATEME NTS DURING THE COURSE OF CROSS EXAMINATION, WERE ALSO CONSIDERED. FURTHER IT WAS NOTED BY THE CIT (APPEALS) THAT THE SELLER OF FURNI TURE HAD ALSO RETRACTED FROM HIS STATEMENT AND HE CONFIRMED THAT THE SAME WAS NOT GENUINE FURNITURE SALE. THE CIT (APPEALS) REJE CTED THE CONTENTION OF THE ASSESSEE IN THIS REGARD AND OBSER VED THAT THERE WAS ENOUGH CIRCUMSTANTIAL EVIDENCE TO CONCLUDE THAT NO BUSINESS HAD ACTUALLY BEEN TRANSACTED OTHER THAN PROVIDING A CCOMMODATION ENTRIES. THE RETRACTION MADE AFTER INITIAL ADMISSI ON BY THE PURCHASERS COULD NOT TAKE AWAY THE EVIDENTIARY VALU E OF THE ADMISSION ITSELF, WAS HELD BY THE CIT (APPEALS). F URTHER IT WAS OBSERVED BY THE CIT (APPEALS) THAT THE TRIBUNAL IN THE FACTS OF THE CASE HAD COME TO THE CONCLUSION THAT NO GENUINE BUS INESS WAS CARRIED OUT BY THE ASSESSEE AND THE CONCLUSION ARRI VED AT BY THE ASSESSING OFFICER WAS CONFIRMED. AS THE ASSESSEE WAS FOUND TO BE ENGAGED IN THE ACT OF MONEY LAUNDERING, THE CIT (AP PEALS) HELD THAT NO LENIENCY IN THE MATTER OF ASSESSMENT/PENALT Y PROCEEDINGS COULD BE ENTERTAINED. THE JUDICIAL PRONOUNCEMENT R ELIED UPON BY THE LEARNED A.R. FOR THE ASSESSEE BEFORE THE CIT (A PPEALS) WERE HELD TO BE DISTINGUISHABLE ON THE FACTS. FURTHER RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE APEX C OURT IN DHARMENDRA TEXTILE REPORTED IN 306 ITR 277 (SC) AND IN M/S RELIANCE PETROPRODUCTS REPORTED IN 322 ITR 158 (SC) , WHEREIN IT WAS HELD THAT THE PENALTY U/S 271(1)(C) OF THE ACT WAS IN THE NATURE OF CIVIL LIABILITY. FURTHER RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN CIT VS. ZOO M COMMUNICATIONS PVT. LTD. [327 ITR 510 (DEL)] AND PE NALTY LEVIED U/S 271(1)(C) OF THE ACT WAS UPHELD BY THE CIT (APP EALS). 6 7. THE LEARNED A.R. FOR THE ASSESSEE HAS FILED BRIE F SYNOPSIS IN WHICH AN ATTEMPT HAS BEEN MADE TO MEET WITH ALL THE OBJECTIONS RAISED BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER WHILE MAKING THE ADDITION IN THE QUANTUM PROCEEDINGS. F URTHER PLEA OF THE ASSESSEE BEFORE US WAS THAT THE EVIDENCE OF THE ASSESSEE CONDUCTING ITS BUSINESS WAS PRODUCED BEFORE THE AUT HORITIES BELOW, WHICH HAS NOT BEEN PROVED TO BE FALSE AND WHILE UPH OLDING THE ADDITION THE DOUBT HAS BEEN MADE OF THE CASH SALE A ND PARTICULAR MANNER IN WHICH THE BUSINESS WAS CARRIED OUT. ON THE OTHER HAND, THE SALES TAX DEPARTMENT HAS ACCEPTED THE SALES WHE RE THE ASSESSEE WAS REGISTERED WITH THE SALES TAX DEPARTMENT. IN T HE FACTS OF THE CASE, THE DIFFERENT ASPECTS OF THE BUSINESS BEING C ARRIED OUT IN A PARTICULAR MANNER, IT WAS POINTED OUT BY THE LEARNE D A.R. FOR THE ASSESSEE THAT THE SAME WERE ONLY DOUBTS OR SUSPICIO NS IN THE MIND OF THE ASSESSING OFFICER AND THE SAME COULD NOT PAR TAKE THE NATURE OF EVIDENCE. FURTHER PLEA OF THE ASSESSEE WAS THAT NO RELIANCE COULD BE PLACED UPON VARIOUS STATEMENTS RECORDED BY THE ASSESSING OFFICER AS IN THE CROSS OBJECTION, THE SAID PARTIES HAD STATED THAT THEY HAD MADE SALE OF JEWELLERY AND AS SUCH NO ADVE RSE VIEW COULD BE TAKEN OF THE SAID STATEMENTS. THE ASSESSEE SUB MITTED THAT IT HAD FURNISHED COMPLETE DETAILS IN RESPECT OF ITS PURCHA SES AND SALES. THE SALES WERE STATED TO BE MADE IN CASH AND AS PER LAW THERE WAS NO PROVISION FOR GETTING THE NAMES AND ADDRESSES OF THE PERSONS. OUR ATTENTION WAS DRAWN TO THE SALE BILLS PREPARED BY THE ASSESSEE, COPIES OF WHICH WERE FILED AT PAGES 17 AND 18 OF TH E PAPER BOOK. IT WAS FAIRLY ADMITTED BY THE LEARNED A.R. FOR THE ASSESSEE THAT THE JEWELLERY SOLD BY THE ASSESSEE FIRM WAS IN THE SAME FORM AND IN THE SAME SIZE AS IT WAS PURCHASED. THE LEARNED A.R. FO R THE ASSESSEE FURTHER CONTENDED THAT LEVY OF PENALTY U/S 271(1)(C ) OF THE ACT WAS 7 NOT AUTOMATIC AND WHERE ADDITION WAS MADE ON SUCH B ASIS NO CASE OF CONCEALMENT COULD BE PROVED. RELIANCE WAS PLACE D ON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SANGRUR VANASPATI MILLS LTD. [303 ITR 53(P&H)]. IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT IN CA SE OF THE ASSESSEE ALSO ADDITIONS WERE MADE ON ACCOUNT OF ESTIMATE BAS IS AND AS PER THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SANGRUR VANASPATI MILLS LTD. (SUPRA), THERE WAS NO MERIT ON ANY LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. I T WAS FINALLY CONTENDED BY THE LEARNED A.R. FOR THE ASSESSEE THAT THE EXPLANATION OF THE ASSESSEE AT BEST WAS DOUBTFUL, THE SAME COUL D NOT BE PROVED TO BE WRONG BY THE AUTHORITIES BELOW AND HENCE NO M ERIT IN THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 8. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THA T 95% OF THE ARGUMENTS MADE BY THE LEARNED A.R. FOR THE ASSESSEE WERE CONFINED TO THE FACTS AND AT THIS STAGE OF APPELLATE PROCEED INGS WHERE THE QUESTION WAS LEVY OF PENALTY U/S 271(1)(C) OF THE A CT, THE FACTS AS LAID DOWN IN THE QUANTUM PROCEEDINGS WERE TO BE APP LIED. OUR ATTENTION WAS DRAWN TO THE ORDER PASSED BY THE HON' BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEES OWN CASE WHEREIN I T HAS BEEN CATEGORICALLY HELD THAT THE SALES MADE BY THE ASSES SEE WERE UNVERIFIABLE AND FURTHER IN PARA 29 IT HAS BEEN LAI D DOWN THAT THE ASSESSEE HAD NO DHARAMKANTA I.E. NO WEIGHING SCALE AND IT WAS IMPOSSIBLE TO IMAGINE THAT THE BUSINESS OF THE JEWE LLERY WAS BEING CARRIED OUT WITHOUT THE DHARAMKANTA. THE NEXT CONT ENTION OF THE LEARNED D.R. FOR THE REVENUE WAS THAT THE PARENT CO MPANY M/S VISHAL JEWELLERS HAD DECLARED SALE OF RS.9 CRORES F OR THE FINANCIAL YEAR, WHEREAS THE ASSESSEE OPERATING FROM A SHOP OF 10X10 8 SITUATED IN CROWDED LANE WITHIN THE PERIOD OF 30 TO 40 DAYS HAD CONDUCTED THE SALE OF RS.16 CRORES. FURTHER THE P URCHASES OR THE SALES MADE BY THE ASSESSEE WERE NOT IDENTIFIABLE AS ADMITTEDLY THE SALES WERE CASH SALES. THE CONTENTION OF THE ASSES SEE THAT IT HAD SALES TAX NUMBER WAS FACTUALLY INCORRECT AS THE SAL ES TAX REGISTRATION WAS GRANTED TO THE ASSESSEE FROM 18.3. 1998 VIDE SALES TAX ORDER DATED 20.3.1998. THE LEARNED D.R. FOR TH E REVENUE CONTENDED THAT THE ONUS WAS UPON THE ASSESSEE TO ES TABLISH ITS FACTS AND DESPITE SEVERAL OPPORTUNITIES THE ASSESSEE WAS UNABLE TO ESTABLISH THE SAME AND EVEN THE HON'BLE HIGH COURT IN THE CASE OF THE ASSESSEE HAD HELD THAT THE SO CALLED BUSINESS O F THE ASSESSEE WAS BOGUS AND WHEN THERE WAS NO BUSINESS CONDUCTED BY THE ASSESSEE, THE INCOME ASSESSED IN THE HANDS OF THE A SSESSEE WAS LEVIABLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE AC T. 9. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THE ASSESSEE HAD DISCHARGED ITS ONUS AND THE EXPLANATIO N OF THE ASSESSEE WAS PLAUSIBLE ONE AND THERE WAS NO MERIT I N THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. 11. SECTION 271(1) OF THE ACT READS AS UNDER : 271. (1) IF THE ASSESSING] OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) [* * *] (B) HAS FAILED TO COMPLY WITH A NOTICE UNDER SUB- SECTION (2) OF SECTION 115WD OR UNDER SUB-SECTION (2) OF SECTION 115WE OR UNDER SUB-SECTION (1) OF SECTION 142 OR SUB-SECTION (2) OF SECTION 143 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2A) OF SECTION 142 ], OR (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR [* * *] FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR [(D) HAS CONCEALED THE PARTICULARS OF THE FRINGE BE NEFITS OR FURNISHED INACCURATE PARTICULARS 90 OF SUCH FRINGE BENEFITS,] 9 HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, (I) [* * *] (II) IN TE CASES REFERRED TO IN CLAUSE (B), IN ADD ITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM OF TEN THOUSAND RUPEES] FOR EACH SUCH FA ILURE ; (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D) IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, A SUM WHICH SHALL NOT BE LESS THAN , BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFITS OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME 1 OR FRINGE BENEFITS.. 12. THE EXPLANATION I UNDER SECTION 271(1) READS AS UNDER : EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. 13. PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS L EVIABLE WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. 14. THE HON'BLE SUPREME COURT IN CIT VS RELIANCE PE TROPRODUCTS P.LTD. (2010) 322 ITR 158 (SC) WHILE INTERPRETING T HE WORD INACCURATE PARTICULARS OF INCOME HAD OBSERVED AS UNDER: READING THE WORDS 'INACCURATE' AND 'PARTICULARS' I N CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. 15. THE SECOND ASPECT IN RELATION TO THE LEVY OF PE NALTY IS TO BE CONSIDERED IN VIEW OF THE EXPLANATION I CLAUSE (A) UNDER SECTION 271(1) OF THE ACT. THE SAID EXPLANATION UNDER SECTION 271( 1) OF THE ACT LAYS OUT THAT IN CASES WHERE ANY PERSON UNDER THIS ACT FAILS TO OFFER AN 10 EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME TAX (APPEALS) OR THE COMMISSIONER TO BE FALSE, THEN THE AMOUNT ADDED OR DISALLOWED FOR COMPUTING THE TOTAL INCOME OF SUCH PERSON IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED. 16. FURTHER CLAUSE (B) TO EXPLANATION 1 UNDER SECTI ON 271(1) OF THE ACT PROVIDES THAT WHILE COMPUTING THE TOTAL INCOME OF A NY PERSON, WHERE SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT A BLE TO SUBSTANTIATE AND FAILS TO PROVES THAT SUCH EXPLANATION IS BONAFI DE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF HIS INCOME HAVE BEEN DISCLOSED BY HIM, THEN SUCH AMOUNT ADDED TO HIS INCOME IS TO BE TREATED AS INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. THE CLAUSE (B) TO EXPLANATION 1 UNDER S ECTION 271(1) OF THE ACT, THUS SET OUT THAT IN CASE WHERE THE ASSESSEE O FFERS AN EXPLANATION WHICH, (A) HE IS NOT ABLE TO SUBSTANTIATE AND; (B) HE IS UNABLE TO PROVE THAT THE EXPLANATION OFFERED BY HIM WAS BONAFIDE AN D ALL THE FACTS RELATING TO THE SAME HAD BEEN DISCLOSED BY HIM, THE N HE IS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOW EVER, WHERE THE EXPLANATION FURNISHED BY SUCH PERSON IS BONAFIDE AN D ALL THE FACTS AND MATERIAL RELATING TO THE COMPUTATION OF INCOME HAD BEEN FURNISHED ON RECORD, THEN THE SAID PERSON HAVING DISCHARGED, HIS ONUS CANNOT BE SAID TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME. 17. THE HON'BLE DELHI HIGH COURT IN CIT VS. ZOOM COMMUNICATIONS PVT. LTD. (SUPRA) HAD LAID DOWN THE FOLLOWING PROPOSITION: SO LONG AS THE ASSESSEE HAS NOT CONCEALED ANY MATE RIAL FACT OR THE FACTUAL INFORMATION GIVEN BY HIM HAS NOT BEEN FOUND TO BE INCORRECT, HE WILL NOT BE LIABLE TO IMPOSITION OF PENALTY UNDER S ECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, EVEN IF THE CLAIM MADE BY HIM IS UNSUSTAINABLE IN LAW, PROVIDED THAT HE EITHER SUBSTANTIATES THE EXPL ANATION OFFERED BY 11 HIM OR THE EXPLANATION, EVEN IF NOT SUBSTANTIATED, IS FOUND TO BE BONA FIDE. IF THE EXPLANATION IS NEITHER SUBSTANTIATED N OR SHOWN TO BE BONA FIDE, EXPLANATION 1 TO SECTION 271(1)(C) WOULD COME INTO PLAY AND THE ASSESSEE WILL BE LIABLE FOR THE PRESCRIBED PENALTY. SECTION 271(1)(C) OF THE ACT, TO THE EXTENT IT IS RELEVANT, PROVIDES FOR IMPOSITION OF PENALTY IN CASE THE ASSESSING OFFICE, IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, IS SATISFIED THAT ANY PE RSON HAD CONCEALED PARTICULARS OF HIS INCOME OR HAD FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME. EXPLANATION 1 TO CLAUSE (C) SUB-SECTION (1 ) OF SECTION 271 PROVIDES THAT WHERE IN RESPECT OF ANY FACTS MATERIA L TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON, SUCH PERSON FAIL S TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE OR HE OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBST ANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE AND THAT AL L THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TO TAL INCOME, HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DISALLOW ED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON, AS A RESULT THEREOF, S HALL FOR THE PURPOSE OF CLAUSE (C) BE DEEMED TO REPRESENT THE INCOME IN RES PECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 18. THE HON'BLE HIGH COURT IN ZOOM COMMUNICATIONS P VT. LTD. (SUPRA) RELYING UPON THE DECISION OF THE HON'BLE SU PREME COURT IN CIT VS RELIANCE PETROPRODUCTS P.LTD. (SUPRA) OBSERV ED AS UNDER: IN PROPOSITION OF LAW WHICH EMERGES FROM THIS CASE , WHEN CONSIDERED IN THE BACKDROP OF THE FACTS OF THE CASE BEFORE THE COURT, IS THAT SO LONG AS THE ASSESSEE HAS NOT CONC EALED ANY MATERIAL FACT OR THE FACTUAL INFORMATION GIVEN BY H IM HAS NOT BEEN FOUND TO BE INCORRECT, HE WILL NOT BE LIABLE TO IMP OSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, EVEN IF THE CLA IM MADE BY HIM IS UNSUSTAINABLE IN LAW, PROVIDED THAT HE EITHER SUBST ANTIATES THE EXPLANATION OFFERED BY HIM OR THE EXPLANATION, EVEN IF NOT SUBSTANTIATED, IS FOUND TO BE BONA FIDE. IF THE EX PLANATION IS NEITHER SUBSTANTIATED NOR SHOWN TO BE BONA FIDE, EX PLANATION 1 TO SECTION 271(1)(C) WOULD COME IN TO PLAY AND THE ASS ESSEE WILL BE LIABLE TO FOR THE PRESCRIBED PENALTY. 19. THE HON'BLE HIGH COURT FURTHER HELD AS UNDER: IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS I NCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS OF THE INCO ME OF THE ASSESSEE, BUT IT CANNOT BE DISPUTED THAT THE CLAIM MADE BY THE AS SESSEE NEEDS TO BE BONA FIDE. IF THE CLAIM BESIDES BEING INCORRECT IN LAW I S MALA FIDE, EXPLANATION 1 TO SECTION 271(1) (C) WOULD COME INTO PLAY AND WORK TO THE DIS-ADVANTAGE OF THE ASSESSEE. THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMAL L PERCENT OF THE INCOME- TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSE SSEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WIT HOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAI M IS NOT FOUND TO BE BONA FIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOU LD STILL NOT BE LIABLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IF WE TAKE THE VIEW THAT A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT BE L IABLE TO IMPOSITION OF PENALTY, EVEN IF HE WAS NOT ACTING BONA FIDE WHILE MAKING A CLAIM OF THIS 12 NATURE, THAT WOULD GIVE A LICENCE TO UNSCRUPULOUS A SSESSEES TO MAKE WHOLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITHOUT THERE BE ING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR RETURN WOULD NO T BE PICKED UP FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF -ASSESSMENT UNDER SECTION 143(1) OF THE ACT AND EVEN IF THEIR CASE IS SELECTED FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYING THE TAX, WHICH I N ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE, ACTUATED BY A MALA FIDE INTENTION TO EVADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOUT PAYING THE T AX LEGALLY PAYABLE BY THEM, IF THEIR CASES ARE NOT PICKED UP FOR SCRUTINY . THIS WOULD TAKE AWAY THE DETERRENT EFFECT, WHICH THESE PENALTY PROVISION S IN THE ACT HAVE. 20. THE HON'BLE SUPREME COURT IN MAK DATA P. LTD. V S. CIT [358 ITR 593 (SC)] HELD AS UNDER : EXPLANATION I TO SECTION 271(1)(C) OF THE INCOME T AX ACT, 1961, RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERE NCE IS NOTICED BY THE ASSESSING OFFICER, BETWEEN THE REPORTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONU S PLACED BY THE EXPLANATION HAS BEEN DISCHARGED BY HIM, THE ONUS SH IFTS TO THE DEPARTMENT TO SHOW THAT THE AMOUNT IN QUESTION CONS TITUTED INCOME AND NOT OTHERWISE. 21. THUS AFTER THE INSERTION OF THE EXPLANATION-1 T O SECTION 271 OF THE ACT, THE BURDEN IS SHIFTED UPON THE ASSESSEE TO ESTABLISH WITH THE EVIDENCE THE SOURCE OF PARTICULAR ITEMS OF INCO ME AND WHERE NO BONAFIDE EXPLANATION IS AVAILABLE, THEN THE PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE. IN THE FACTS OF THE PRESENT CASE BEFORE US THE ASSESSEE HAD DECLARED IN COME FROM BUSINESS OF RUNNING JEWELLERY SHOWROOM AND WITHIN S HORT SPAN OF CONDUCTING BUSINESS FOR 30-40 DAYS HAD DECLARED SAL ES OF ABOUT RS.16 CRORES. THE PURCHASES MADE BY THE ASSESSEE W ERE THROUGH CHEQUES, BUT COMPLETE SALES WERE IN CASH. THE HON' BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEES OWN CASE HAD IN TH E QUANTUM APPEAL CONSIDERED THE FACTS IN ENTIRETY VIDE PARAS 5 AND 6 WHICH READS AS UNDER: 5. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD OPENED BANK ACCOUNT NO. 16475 IN PUNJAB NATIONAL BA NK, CHAURA BAZAR, LUDHIANA IN THE NAME OF ZAVERI DIAMONDS WHIC H HAD LOT OF CASH DEPOSITS IN THE SHORT PERIOD OF TIME AND CHEQU ES/DEMAND DRAFTS 13 HAD BEEN ISSUED TO VARIOUS PARTIES FROM THIS ACCOUN T. THE ACCOUNT WAS OPENED ON 13.2.1998 AND UPTIL 20.3.1998, IT HAD CASH DEPOSIT OF RS. 16.28 CRORES AND CHEQUES/DEMAND DRAFTS FOR THE CORRESPONDING AMOUNT HAD BEEN ISSUED TO VARIOUS PARTIES. THE ST ATEMENT OF SH. MANOJ KUMAR PARTNER WAS RECORDED WHICH ONLY REVEALE D THAT SUCH A HUGE VOLUME OF BUSINESS COULD NOT BE DONE FROM SHOP MEASURING 8' X 10' LOCATED IN NALKEWALI GALI, PAUSARI BAZAR, LUDHI ANA. THERE WAS ONLY ONE MORE EMPLOYEE, NAMED, GURU PARSHAD AGED 30 YEARS WHO WAS KNOWN TO HIM FOR ABOUT LAST 1 % YEARS ONLY. THE SHOP WAS HIRED IN FEBRUARY, 1998 AND NO FITTINGS WERE MADE. THE F URNITURE USED IN THE SHOP WAS NOT COMMENSURATE WITH THE QUANTUM OF B USINESS ALLEGED TO HAVE TAKEN PLACE AT THE SHOP. ON CERTAIN DATES C ASH DEPOSITS IN THE BANK HAD EXCEEDED RS.20 LACS. LIKE ON 23.2.1998 CAS H DEPOSITED IN THE BANK WAS RS.20 LACS WHEREAS ON 24.2.1998 THERE WAS A CASH DEPOSIT OF RS.47 LACS. CASH DEPOSIT ENTRIES OF RS.53 LACS ON 26.2.1998 AND RS.57 LACS ON 27.2.1998 WERE ALSO FOU ND IN THE BANK ACCOUNT. BESIDES, SEVERAL OTHER ALARMING FACTORS WERE OBSERVED IN THE ASSESSMENT ORDER DV ME ASSESSING AUTHORITY TO CONCLUDE MAT THE AMOUNT OF PURCHASES A S DECLARED BY THE ASSESSEE AMOUNTING TO RS. 16,27,86,7457- WAS NOT ON ACCOUNT OF ANY BUSINESS CARRIED ON IN THE NAME OF ZAVERI DIAMOND BUT WAS A DEVICE ADOPTED BY THE ASSESSEE WHEREBY IT WAS RECEIVING 2 TO 3% COMMISSION ON THE ALLEGED PURCHAS ES. TAKING 2% AS THE COMMISSION, THE TOTAL COMMISSION INCOME WAS CALCULATED TO BE RS .32,55,735/-. 6. IN ADDITION TO THE ABOVE FACTORS AND THOSE REF ERRED TO IN THE ASSESSMENT ORDER, THE ASSESSING AUTHORITY NOTICED THAT DURING INVESTI GATIONS FOUR PERSONS, NAMELY, (I) SANJAY JAIN S/O SH. SHAM LAI R/O 297, MAJOR SHAM SINGH ROA D, LUDHIANA; (II) SANJEEV GOEL S/O SH. BRIJ MOHAN R/O OHRI CHOWK, BATALA, DISTRICT GUR DASPUR (STATEMENT RECORDED ON 9.11.2000); (III) SHRI SHAM LAI S/O SHRI HEM RAJ R/ O GRAIN MARKET, MANDI NIHAL SINGH WALA, DISTRICT MOGA (STATEMENT RECORDED ON 6.11.200 0); AND (IV) SHRI PREM CHAND S/O SHRI MIRI RAM R/O DASHMESH COLONY, NEAR SHISHU BHAR AT SCHOOL, SUNAM, DISTRICT SANGRUR HAD ADMITTED THAT THEY HAVE NOT SOLD ANY JE WELLERY TO THE FIRM M/S ZAVERI DIAMONDS AND THEY HAD RECEIVED CHEQUES AND DEPOSITE D IN THE BANK ACCOUNT AND HAD PAID 2 TO 3% COMMISSION. HOWEVER, IN RESPONSE TO LETTER DATED 28.1.2003 SUMMONS WERE ISSUED AND S/SHRI PREM CHAND, SHAM LAI AND SANJEEV GOEL APPEARED AND IN THEIR STATEMENTS AGAIN RECORDED HAD RESILED FROM THEIR EA RLIER STATEMENTS MADE IN THE YEAR 2000. EVEN SHRI AMARJEET SINGH S/O SHRI HARBOL SING H RESILED FROM HIS EARLIER STATEMENT. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING AUTHORITY HAD NOTICED SEVERAL FACTORS FOR CONCLUDING THAT JEWELLE RY BUSINESS AS CLAIMED BY THE ASSESSEE WAS NOT BEING CARRIED ON BY IT AND THE FINDINGS WER E NOT BASED ON THESE STATEMENTS ALONE. 22. ON CONSIDERATION OF THE FACTS, IT WAS OBSERVED BY THE HON'BLE HIGH COURT AS UNDER: 8. UNDER THE CIRCUMSTANCES, THE BENEFIT OF VDIS SC HEME WHERE VARIOUS PERSONS HAD DECLARED THE JEWELLERY TH EREUNDER WAS NOT AVAILABLE WHICH COULD HAVE BEEN TAKEN BY THE APPELL ANT. A PERUSAL OF THE ORDER OF THE ASSESSING AUTHORITY AND ALSO ITAT SHOWS THAT THEY HAD NOT RECORDED FINDINGS ONLY ON THE BASIS OF STAT EMENTS MADE BY VARIOUS PERSONS WHICH WERE LATER ON SOUGHT TO BE RE TRACTED BY THEM. THERE WAS HUGE CASH DEPOSIT OF RS. 16.28 CRORES IN A PERIOD OF 1 MONTH AND 7 DAYS FROM 13.2.1998 TO 20.3.1998 IN THE BANK ACCOUNT OF THE ASSESSEE FOR WHICH HEAVY ONUS LAY UPON IT TO SA TISFACTORILY TENDER EXPLANATION ALONG WITH SUPPORTIVE MATERIAL TO SUBST ANTIATE ITS PLEA WHICH THE ASSESSEE HAD FAILED TO DO. EVEN WITH REGA RD TO THE RETRACTION 14 OF STATEMENT, IT MAY BE NOTICED THAT THE EARLIER ST ATEMENTS OF THESE PERSONS WERE RECORDED IN THE YEAR 2000 WHEREAS THEY HAD SOUGHT TO RESILE THEREFROM IN THE YEAR 2003. THE RETRACTI ON FROM EARLIER STATEMENT HAS TO BE AT THE EARLIEST OPPORTUNITY, IN THE ABSENCE OF WHICH RETRACTION MAY NOT BE TAKEN TO BE OF ANY VALUE. THE TOTALITY OF FACTORS AS RECORDED BY THE ASSESSING AUTHORITY AND THE ITAT CLEARLY POINTS OUT RELATING TO THE MODUS OPERANDI OF THE ASSESSEE. IT WOULD BE APPOSITE TO REFER TO THE FINDINGS RECORDED BY THE ITAT, WHIC H READ THUS:- '24. TO VERIFY THE ABOVE CLAIM OF THE ASSESSEE OF C ONDUCT OF BUSINESS OF PURCHASE AND SALE OF DIAMOND JEWELLERY/LOOSE DIAMON D/BULLION, ENQUIRIES WERE CONDUCTED FROM THE PARTNER OF THE AS SESSEE FIRM SHRI MANOJ KUMAR, BOTH BY THE INVESTIGATION WING AS WELL AS BY THE ASSESSING OFFICER. IN THE STATEMENTS RECORDED BY THE INVESTIGATION WING OF SH RI MANOJ KUMAR ON 6.5.1999 AND 23.11.2000, HE EXPLAINED THAT, THE MAIN BUSINES S IS TRADING IN DIAMOND JEWELLERY, GOLD AND SILVER UTENSILS ETC. HE FURTHER STATED THAT THIS BUSINESS WAS CARRIED OUT AT THE SHOP LOCATED AT NALKE WALI GALI IN PANSARI BAZAR, LUDHIANA. HE ALSO STATED THAT, THE BUSINESS WAS CARRIED OUT B Y HIM ALONGWITH ONE EMPLOYEE WHOSE NAME WAS GURU PRASAD, NO PARTICULARS OF SUCH EMPLOYEE OTHER THAN THE FACT THAT HE WAS AGED ABOUT 30 YEARS WERE STATED BY SHRI MANOJ KUMAR. HE HAS STATED THAT THE EMPLOYEE NAMELY SHRI GURU PR ASAD USED TO GO WITH HIM TO HELP HIM IN SALES. IT HAS ALSO BEEN STATED THAT THE SAID EMPLOYEE NEVER WENT TO THE BANK ALONE BUT USED TO ACCOMPANY HIM SO METIMES FOR HELPING IN CARRYING AND COUNTING CURRENCY NOTES. IT WAS STATED THAT THE HELP IN WHICH THE BUSINESS WAS CARRIED OUT, WAS TAKEN ON RENT IN FEBR UARY, 1998. IT WAS ALSO STATED THAT NO FITTINGS WERE INSTALLED IN THE SHOP BUT ONL Y WHITEWASH WAS GOT DONE. FURTHER, THE FURNITURE PURCHASED FOR CARRYING ON TH E BUSINESS INCLUDED ONE TABLE, ONE HALF SIZE ALMIRAH AND TWO CHAIRS. IT HAS BEEN STATED THAT NO COUNTER OR SAFE WAS PURCHASED IN THE SHOP. ALSO, NO GLASS WORK WAS DONE. SO FAR AS THE MODUS OPERANDI TO CARRY ON THE BUSINESS IT WAS STAT ED THAT PURCHASES WERE MADE DIRECTLY FROM THE CUSTOMERS AND NO AGENT OR BROKER WAS INVOLVED IN THE PURCHASES. IT WAS STATED THAT THE PAYMENTS TO THE S ELLERS OF JEWELLERY HAVE BEEN MADE THROUGH CHEQUES AND MOST OF THE TIMES, THE CHE QUES WERE ISSUED IMMEDIATELY AND IN SOME CASES, THE CHEQUES WERE PAYABLE AFTER T WO-THREE DAYS. IT WAS FURTHER STATED THAT THE ENTIRE JEWELLERY PURCHASED BY THE A SSESSEE WAS SOLD ON THE SAME SHAPE AS IT WAS PURCHASED WITHOUT ANY ALTERATION TO DIFFERENT PARTIES. IT WAS ALSO STATED THAT EVEN THE BUYERS WHO PURCHASED THE JEWELLERY FROM THE ASSESSEE, HAD APPROACHED DIRECTLY AND NOT THROUGH ANY AGENT O R BROKER. INFACT, WHEN ASKED TO NAME OR IDENTIFY A SINGLE PERSON TO WHOM SALES WERE MADE, IT WAS STATED AS UNDER:- 'I DO NOT KNOW ANY SUCH PERSON.' 25. IT WAS FURTHER STATED IN REGARD TO THE ABOVE SALES AS UNDER: Q: HAVE YOU MADE ANY SALES THROUGH CHEQUE OR DRAFT? ANS. ALL SALES ARE MADE IN CASH. 15 Q: HAVE YOU MADE ANY SALE TO ANY LOCAL JEWELLER OF ANY ITEM I.E. GOLD, SILVER, DIAMOND ETC.? ANS. NO JEWELLER FROM THE LOCAL MARKET EVER PURCHAS ED ANY ITEM FROM ME. Q: WHERE HAVE YOU KEPT YOUR CASH WHEN THE CASH IN H AND WAS MORE THAN CRORES? ANS. MOST OF THE TIMES, THE CASH WAS KEPT IN BUSINE SS PREMISES AND SOMETIMES, I USED TO CARRY IT HOME. Q: DID YOU EMPLOY ANY SECURITY GUARD FOR SECURITY P URPOSES TO GUARD SUCH HUGE AMOUNT OF CASH AND JEWELLERY AMOUNTING TO FEW CRORES? ANS. NO, I NEVER EMPLOYED ANY SUCH GUARD. 26. THEREAFTER, ANOTHER STATEMENT OF SHRI MANOJ KUM AR WAS RECORDED ON 23 RD OF NOVEMBER 2000 WHEREIN IT WAS FURTHER STATED THAT THERE WAS NO FIXED TIME TO DEPO SIT THE CASH IN BANK AND TIME TAKEN TO DEPOSIT THE CASH DEP ENDED ON THE QUANTITY OF CASH. IT WAS ALSO STATED THAT AT TIME, IT USED TO TAKE THIRTY MINUTES AND, OTHER TIME, THE BA NK AUTHORITIES USED TO KEEP THE CASH AND NOTE DOWN THE BANK ACCOUNT NUMBER AND GIVE THE PAY IN SLIP RECEIPT LAT ER. IT WAS FURTHER STATED THAT THE ASSESSEE USED TO LOCK T HE SAFE AND, THE BOY MR. GURU PRASAD WHO WAS EMPLOYED USED TO SIT IN THE SHOP DURING HIS ABSENCE, WHICH IS APPARE NTLY CONTRADICTORY TO HIS EARLIER STATEMENT , WHEN HE HAD STATED SUCH PURPORTED EMPLOYEE USED TO ACCOMPANY HIM TO TH E BANK. AT THIS JUNCTURE TOO, SHRI MANOJ KUMAR FAILED TO PROVIDE THE PARTICU LARS OF THE EMPLOYEE SHRI GURU PRASAD. SO FAR AS THE SAFE IS CONCERNED, U THE SAME WAS A HALF FLOOR. IT WAS FURTHER STATED THAT THIS BUSINESS WAS CARRIED OUT UPTO MARC H 1999 AND THEREAFTER CLOSED. AS REGARDS THE PACKAGING AT THE TIME OF MAKING OF SALE S, IT WAS STATED THAT SINCE THE VOLUME OF JEWELLERY WAS LESS, THEY WERE PUT IN LIFA FA AND WERE DELIVERED AT SHOP ONLY AND THEREFORE, THERE WAS NO REQUIREMENT OF ANY JEWE LLERY BOX. IT WAS ALSO STATED THAT SINCE THE JEWELLERY WAS OLD JEWELLERY, THERE WAS NO REQUIREMENT OF ANY DISPLAY ALSO. 27. THEREAFTER ANOTHER STATEMENT WAS RECORDED BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS ON 27 TH MARCH 2003 WHEREIN SHRI MANOJ KUMAR STATED THAT DIAMOND JEWELLERY WAS PURCHASED ON THE BASIS OF WEIGHT WHICH WAS ENGRAVED IN THE JEWELLERY AND IS VALUED ON THE BASI S OF QUALITY OF DIAMONDS STUDDED THEREIN. IT WAS ALSO STATED THAT THE QUALITY IS CHE CKED THROUGH AN INSTRUMENT CALLED I-GLASS. THE CHECKED ITS COLOUR, CUTS A ND SPOTS AND CRACKS, IF ANY. IT WAS STATED THAT ON THE BASIS OF EXPERIENCE AND LOOK ING TO THE SIZE OF DIAMOND, THE ASSESSEE WAS ABLE TO JUDGE THE VALUE. REGARDING THE VALUE AND WEIGHT OF THE MATERIAL IN WHICH DIAMOND IS STUDDED IT WAS STATED THAT THER E WERE TWO TYPES OF STUDDED MATERIAL; I.E. DIAMOND SETS IN GOLD AND OTHER IS ST UDDED IN WHITE METAL. SO FAR AS THE WHITE METAL, IT WAS STATED THAT THE SAME IS VALUELE SS BECAUSE THIS IS MADE OF INFERIOR METAL QUALITY. AS REGARDS DIAMOND STUDDED IN GOLD J EWELLERY, THE WEIGHT OF THE PRODUCT IS TAKEN ON THE WEIGHMENT SCALE (DHARAMKANA TA). OUT OF TOTAL WEIGHT, THE DIAMOND WEIGHT ENGRAVED ON THE GOLD OR THE WHITE ME TAL IS REDUCED AND BALANCE WAS TAKEN AS THE WEIGHT OF GOLD. IT WAS FURTHER STATED THAT BIGGER SIZE DIAMOND IS COSTLY I.E. CALLED SOLITAIRE WHICH IS NORMALLY WEIGHED IN LOTS AND SMALL DIAMONDS ARE CHEAPER. IT WAS STATED THAT NEW ASSESSEE FIRM M/S ZAVERI DIAMOND, HAD BEEN OPENED WITH INTENTION TO EXPAND THE FAMILY BUSINESS , HOWEVER ON ACCOUNT OF SUBSEQUENT UNFORTUNATE EVENTS, THE FIRM HAD TO BE C LOSED IN MARCH 1999. SO FAR AS THE SALES, IT WAS STATED THAT HE KNEW THE CUSTOM ERS TO WHOM, SALES HAD BEEN MADE BUT HE COULD NOT DISCLOSE THE NAME DUE TO PROF ESSIONAL/TRADE SECRET AND 16 OTHERWISE ALSO, CONSIDERABLE TIME WAS LAPSED. IT WA S FURTHER STATED THAT THE CUSTOMERS USED TO COME TO SELL THE JEWELLERY AND, T HE BUSINESS OF JEWELLERY IS DONE ON REPUTATION AND FAMILY BACKGROUND. 28. FROM THE AFORESAID, IT IS SEEN THAT SHRI MAN OJ KUMAR IN HIS STATEMENT HAS STATED THAT THE SALES HAVE BEEN MADE IN CASH AND TH E PERSON TO WHOM, SALES ARE MADE ARE UNVERIFIABLE. INFACT, HE SAYS HE KNOWS THE NAMES OF THE CUSTOMERS THROUGH WHOM SALES HAVE BEEN MADE PERSONALLY BUT HE DID NOT DISCLOSE THE NAMES DUE TO PROFESSIONAL/TRADE SECRET. THIS IS IN CLEAR CONTRADICTION TO HIS FIRST STATEMENT RECORDED ON 6.5.1999 WHEN HE STATED THAT HE DID NOT KNOW ANY SUCH PERSON AND THE BUYERS APPROACHED HIM DIRECTLY. IT I S THUS A CASE WHERE THE ASSESSEE HAS BEEN CHANGING HIS STAND AS REGARDS THE PARTICULARS OF SALES. NO EVIDENCE WORTH ANY CREDENCE HAS BEEN LED EITHER IN THE COURSE OF ASSESSMENT PROCEEDINGS OR APPELLATE PROCEEDINGS TO ESTABLISH T HAT THE SALES HAVE BEEN MADE AND THE CASH DEPOSITED IN THE BANK ACCOUNT WAS IN L IEU OF THE SALES MADE OF JEWELLERY. INFACT, WE FIND THAT UNVERIFIABILITY OF THE SALES HAD BEEN ACCEPTED BY THE CIT(A) IN HIS ORDER WHEN HE HAD ENHANCED THE INCOME RETURNED TO RS.3 LACS AND THE ASSESSEE IN THE IMPUGNED PROCEEDINGS, HAS NEITH ER CHALLENGED THIS FINDING EITHER BY FILING A SEPARATE APPEAL OR CROSS OBJECTI ON OR FOR THAT MATTER LEADING ANY EVIDENCE. MERE FURNISHING OF CASH MEMOS CANNOT, BY ANY STRETCH OF IMAGINATION, BE MADE A SOLE BASIS TO CONCLUDE THAT ANY SALES HAVE BEEN MADE BY THE ASSESSEE. IT IS, THEREFORE, A CASE WHERE ON TH E BASIS OF THE EVIDENCE ON RECORD AND ON THE BASIS OF THE FINDINGS RECORDED BY BOTH ASSESSING OFFICER AS WELL AS THE CTT (A), IT HAS TO BE HELD THAT THE SAL ES MADE BY THE ASSESSEE ARE UNVERIFIABLE AND UNACCEPTABLE AND IN VIEW THEREOF, IT IS HELD THAT THE SALES SO DECLARED BY THE ASSESSEE OF RS. 16.28 CRORES, SINCE ARE NOT SUPPORTED BY ANY EVIDENCE, THE SAME ARE ACCEPTABLE. 29. MOREOVER WE FIND THAT THE ENTIRE TRANSACTION S OF PURCHASE AND SALE OF JEWELLERY, AS CLAIMED BY THE ASSESASEE HAVE BEEN CA RRIED OUT IN A PECULIAR MANNER AND ABNORMAL CIRCUMSTANCES, WHICH TO OUR MIN D, IRREFUTABLY LEADS TO A CONCLUSION THAT THERE IS NO BUSINESS PER SE OF THE ASSESASEE OF PURCHASE AND SALE OF JEWELLERY. IT IS FIRSTLY SEEN IN THIS REGAR D THAT ASSESSEE FIRM DID NOT EVEN HAVE THE NECESSARY INFRASTRUCTURE TO CARRY ON THE B USINESS OF PURCHASE AND SALE OF DIAMOND JEWELLERY. ONE OF THE MOST ESSENTIAL INFRAS TRUCTURE, AS HAS ALSO BEEN ADMITTED BY THE ASSESSEE, IN THE COURSE OF BUSINESS OF PURCHASE AND SALES OF JEWELLERY, IS DHARMKANTA, ON THE BASIS OF WHICH, TH E JEWELLERY IS PURCHASED AND SOLD. IT MAY BE STATED HERE THAT TOTAL WEIGHT OF TH E JEWELLERY PURCHASED AND SOLD BY THE ASSESASEE IS SUBSTANTIAL AS REFLECTED IN QUA NTITATIVE DETAILS ON PAGE 7 OF THE PAPER BOOK AND THE TOTAL VALUE OF BUSINESS CARRIED OUT IS IN EXCESS OF RS. 16 CRORES. IT IS NOWHERE STATED THAT ASSESSEE HAS ANY DHARAMKANTA WHICH COULD HAVE ENABLED IT TO CARRY ON SUCH BUSINESS AND THAT TOO O F SUCH HUGE VOLUMES. THE FACT IS THAT THE ASSESSEE WAS NOT IN OWNERSHIP OF ANY WE IGHING SCALE TO WEIGH THE JEWELLERY ALLEGEDLY PURCHASED OR SOLD AND EVEN OTHE RWISE NO PARTICULARS HAVE BEEN PLACED ON RECORD TO SHOW THAT SUCH JEWELLERY W AS ALLEGEDLY PURCHASED AND SOLD BY THE ASSESSEE WITH A WEIGHING SCALE OF THIRD PARTY. IN FACT, THE EVIDENCE FURNISHED BY THE ASSESSEE IN THE SHAPE OF PURCHASE BILLS AND SALES BILLS DO NOT INCLUDE THE WEIGHMENT SLIPS, WHICH AS PER THE A DMISSION OF THE ASSESSEE IS THE FUNDAMENTAL REQUIREMENT FOR ANY TRANSACTION OF PURCHASE/SALE OF JEWELLERY. INFACT DURING THE COURSE OF THE INSTANT PROCEEDINGS A SPECIFIC QUESTION WAS PUT TO THE ASSESSEE BY THE BENCH, TO WHICH IT WAS STATED T HAT SO FAR AS THE TRANSACTION OF PURCHASE IS CONCERNED, THE WEIGHMENT SLIPS HAVE BEEN HANDED OVER TO THE SELLER OF THE JEWELLERY AND AS REGARD THE TRANSACTI ONS OF SALES, THEY HAD BEEN HANDED OVER TO THE BUYERS OF JEWELLERY AND NO RECOR DS HAVE BEEN MAINTAINED BY THE ASSESSEE IN THIS REGARD. WE ARE UNABLE TO ACCEP T SUCH A FALLACIOUS STATEMENT MADE PARTICULARLY IN LIGHT OF THE FACT THAT EVEN TH E BASIC PARTICULARS OF THE PERSON, FROM WHOM SUCH WEIGHMENT HAS BEEN GOT DONE IS NOT BROUGHT TO RECORD. 17 ALSO, NO EXPENSES WITH REGARD TO THE WEIGHMENT HAVE BEEN DEBITED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. THIS CONCLUSION I S ALSO SUPPORTED FROM THE STATEMENT RECORDED OF ONE OF THE SELLERS OF THE JEW ELLERY TO THE ASSESSEE. INFACT, EVEN IN THE COURSE OF HEARING BEFORE US IN THE CASE S OF THE SELLERS OF JEWELLERY, WEIGHMENT SLIPS HAVE BEEN BROUGHT ON RECORD EITHER BEFORE THE LOWER AUTHORITIES OR EVEN BEFORE US. INFACT, THE ASSESSEE 'S STAND IS MANIFESTED BY THE CONTRADICTION IN THE ASSESSEE'S APPROACH VIS A VIS THAT OF THE SELLERS OF THE JEWELLERY TO ASSESSEE. ONE OF THE SELLER STATED THA T THE WEIGHING SCALE WAS AVAILABLE IN THE SHOP OF THE ASSESSEE WHEREAS ADMIT TEDLY THE ASSESSEE DOES NOT OWN ANY WEIGHING SCALE AND INSTEAD THE ASSESSEE STA TED THAT WEIGHMENT WAS DONE ON A DHARMKANTA OF ANOTHER PARTY, WHO HAS NOT EVEN BEEN IDENTIFIED.' 23. THE HON'BLE HIGH COURT THUS HELD THAT NO SUBSTA NTIAL QUESTION OF LAW AROSE IN THE APPEAL AND THE SAID APPEAL OF T HE ASSESSEE WAS DISMISSED. 24. THE CONTENTION OF THE ASSESSEE WAS THAT THE INC OME HAVING BEEN ESTIMATED IN THE HANDS OF THE ASSESSEE DOES N OT JUSTIFY LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND R ELIANCE WAS PLACED ON HON'BLE PUNJAB & HARYANA HIGH COURT IN CI T VS. SANGRUR VANASPATI MILLS LTD. [303 ITR 53(P&H)]. WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE WHERE THE ASSESSEE HAD FAILED TO PRODUCE ANY EVIDENCE WORTH CREDENCE EITHER IN THE ASSESSMENT OR APPELLATE PROCEEDINGS TO ESTABLISH THAT THE SALES HAD BEEN MA DE AND THE CASH DEPOSITED IN THE BANK ACCOUNT WAS IN LIEU OF THE SA LES MADE IN JEWELLERY. FURTHER THE ASSESSEE HAD ACCEPTED THE O RDER OF THE ASSESSING OFFICER UNDER WHICH HE HAD ENHANCED THE I NCOME RETURNED TO RS.3 LACS AND THE ASSESSEE HAD NOT CHALLENGED TH E SAID ADDITION BEFORE THE HIGHER AUTHORITIES. THE FINDING OF THE TRIBUNAL IN THIS REGARD WAS AS UNDER: IT IS, THEREFORE, A CASE WHERE ON THE BASIS OF THE EVIDENCE ON RECORD AND ON THE BASIS OF THE FINDINGS RECORDED BY BOTH ASSESSING OFFICER AS WELL AS THE CIT(A), IT HAS TO BE HELD THAT THE SALES MADE BY THE ASSESSEE ARE UNVERIFIABLE AND UNACCEPTABLE AND IN VIEW THEREOF, IT IS HELD THAT T HE SALES SO DECLARED BY THE ASSESSEE OF RS.16.28 CRORES, SINCE ARE NOT SUPPORTED BY ANY EVIDENCE, THE SAME ARE ACCEPTABLE. 18 25. THE ASSESSING OFFICER HAD APPLIED THE RATE OF 2 % COMMISSUION ON PURCHASE OF RS.16.27 CRORES AND MADE ADDITION OF RS.32,55,735/- ON ESTIMATE BASIS. THE ESTIMATE OF INCOME IN THE H ANDS OF THE ASSESSEE IN SUCH FACTS AND CIRCUMSTANCES HAD TO BE RESORTED TO AS THE ASSESSEE HAD FAILED TO JUSTIFY ITS CASE. THE P LEA OF THE LEARNED A.R. FOR THE ASSESSEE BEFORE US WAS THAT AGAINST TH E SAID ESTIMATION OF INCOME, NO PENALTY UNDER SECTION 271(1)(C) OF TH E ACT IS LEVIABLE. 26. THE LEARNED A.R. FOR THE ASSESSEE IN THIS REGAR D HAS PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE PUNJ AB & HARYANA HIGH COURT IN CIT VS. SANGRUR VANASPATI MILLS LTD. (SUPRA) WHEREIN THE ASSESSING OFFICER FOUND THAT THE ASSESS EE HAD MADE UNACCOUNTED SALES AND IN ORDER TO ARRIVE AT QUANTUM OF SUCH UNACCOUNTED SALES, EXTRAPOLATED AVERAGE SALE PRICE IN 4 INVOICES TO 53 INVOICES, AS SOME OF THE INVOICES WERE FOUND TOR N, BUT DUPLICATE AND TRIPLICATE COPIES WERE AVAILABLE, ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. THE PENALTY LEVIED UNDER SE CTION 271(1)(C) OF THE ACT DELETED BY THE TRIBUNAL ON THE GROUND TH AT THERE WAS NO CONCLUSIVE EVIDENCE THAT THE SALES ESTIMATED BY THE ASSESSING OFFICER WERE MADE OUTSIDE THE BOOKS OF ACCOUNT, WHI CH WAS CONFIRMED BY THE HON'BLE PUNJAB & HARYANA HIGH COUR T. 27. WE DO NOT AGREE WITH THE PROPOSITION MADE BY TH E LEARNED A.R. FOR THE ASSESSEE THAT IN EACH CASE WHERE ESTIM ATE OF INCOME IS MADE IN THE HANDS OF THE ASSESSEE, NO PENALTY FOR C ONCEALMENT IS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. THE F ACTS OF EACH CASES HAVE TO BE CONSIDERED BEFORE COMING TO THE CO NCLUSION AS TO THE CIRCUMSTANCES WHICH RESULTED IN ESTIMATION OF I NCOME IN THE 19 HANDS OF THE ASSESSEE. IN CASES OF CONTRACTORS WHE RE THE BOOKS OF ACCOUNT HAVE NOT BEEN PROPERLY KEPT AND PROFIT IS E STIMATED IN THE HANDS OF THE ASSESSEE, PENALTY UNDER SECTION 271(1) (C) OF THE ACT ON SUCH ESTIMATED INCOME WAS HELD NO LEVIABLE IN SEVER AL CASES BUT THERE ARE VARIOUS OTHER DECISIONS WHERE THE PENALTY HAS BEEN HELD TO BE LEVIABLE IN THE CASE OF THE ESTIMATED INCOME. 28. THE HON'BLE MADHYA PRADESH HIGH COURT IN CIT VS . CHANDRAKANTA (1994) 205 ITR 607 (MP) HAD HELD THAT WHERE THE ASS ESSEE HAD ORIGINALLY FURNISHED RETURN SHOWING LOAN OF RS.50,000/- AND RE VISED IT AND DECLARED THE PROFIT OF RS.7500/-, HE HAD NECESSARILY SUPPRES SED THE PARTICULARS OF INCOME. THE ASSESSEE IN THE FACTS OF THAT CASE WAS NOT MAINTAINING BOOKS OF ACCOUNT. THE HON'BLE HIGH COURT THUS OBSERVED T HAT THE INCOME HAD, THEREFORE, TO BE ASSESSED ON ESTIMATE BASIS. THAT BEING SO, IT IS THEN DIFFICULT TO SWALLOW THAT SINCE ASSESSEES INCOME W AS ASSESSED ON ESTIMATE BASIS, THE ASSESSEE WAS NOT LIABLE TO ANY PENALTY. THE HON'BLE HIGH COURT THUS UPHELD THE LEVY OF PENALTY UNDER EX PLANATION TO SECTION 271(1)(C) OF THE ACT. 29. THE HON'BLE MADRAS HIGH COURT IN CIT VS. KRISHN ASAWAMY & SONS (1996) 219 ITR 157 (MAD) HAD ELABORATELY CONSIDERED THE ISSUE AND HAD HELD THAT THE PENALTY PROCEEDINGS CAN BE APPLIED EV EN 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 AUTHORIT Y, IT CANNOT BE SAID THAT IN SUCH A CASE, THERE COULD BE NO SCOP E FOR SAYING THAT THE ASSESSEE HAS CONCEALED HIS INCOME, WARRANT ING PENALTY UNDER SECTION 271(1)(C). IN OUR OPINION, IN THIS RE GARD, THE TRIBUNAL HAS ERRED IN LAW IN ASSUMING THAT THERE AR E TWO VIEWS IN THE MATTER. ONE, AS HELD IN THE ABOVEREFERRED TO CIT V. E.V. RAJAN [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 20 ITR 376 (MAD) AND CIT V. MIR MOHAMED ALI [1981] 128 ITR 215 (MAD) AND ANOTHER, AS HELD IN BOMBAY HARDWARE. SYND ICATE V. CIT [1978] 114 ITR 586 (MAD) ; (14 ITR 133 (MAD) (SIC.)) AND ADDL. CIT V. T.K. PERUMALSWAMY [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 C OURT IS THAT THE 'PENALTY PROVISION HAS BEEN APPLIED EVEN IN CAS ES WHERE ASSESSMENT IS MADE ON THE BASIS OF AN ESTIMATE'. IN THAT DECISION, ALL THE ABOVEREFERRED TO DECISIONS OF THI S COURT, WHICH TOOK A SIMILAR VIEW EARLIER HAVE ALSO BEEN REFERRED TO. EVEN IN A LATER DECISION IN CIT V. BALAKRISHNA TEXTILES [1992 ] 193 ITR 561 (MAD) RELIED ON BY LEARNED COUNSEL FOR THE REVENUE , THE SAME VIEW HAS BEEN REITERATED. THE RELEVANT OBSERVA TION 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 CANNOT BE STATED AS AN INFLEXIBLE RULE THAT, IN ALL CASES, ESTIMATED INCOM E IS NOT LIABLE TO PENALTY, AS IT IS ALWAYS OPEN TO DRAW AN INFERENCE OF DELIBERATE UNDERESTIMATE ON THE FACTS AND CIRCUMSTANCES AND IF THERE WAS SUCH AN UNDERESTIMATE, AN INFERENCE OF CONCEALMENT CAN A LSO BE DRAWN. WE, THEREFORE, ARE UNABLE TO APPRECIATE THE REASONI NG OF THE TRIBUNAL THAT THE ESTIMATE OF THE REVENUE BEING HIG HER THAN THAT OF THE 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) PENALTY WAS UPHELD, AND IN ANOTHER CASE (ASSESSMENT YEAR 1964-65) PENALTY WAS HELD TO BE NOT LEVIABLE. THE DIFFERENCE BETWEEN THE TWO CASES WAS BECAUSE IN THE FORMER CASE, THE ASSESSEE ADMITTED THAT 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, NEVERTHELESS THE ASSESSEE HAD DISCLOSED THE TRUE NA TURE OF THE INCOME AS WELL AS THE TRUE NATURE OF THE TRANSACTIO NS FROM OUT OF WHICH THE INCOME WAS DERIVED. ONLY BECAUSE OF THIS LATTER FEATURE OF DISCLOSURE BY THE ASSESSEE HIMSELF, THE COURT HE LD THAT THE SAID FACT WOULD NEGATIVE CONCEALMENT. SO, IT CANNOT BE H ELD, BASED ON THAT DECISION, THAT WHENEVER THERE IS AN ESTIMATE O F INCOME, THERE IS NO SCOPE FOR HOLDING THAT THE ASSESSEE HAS CONCE ALED THE INCOME. THEREFORE, IF ON THE ASSESSEE'S OWN SHOWING THE FIL ING OF THE ORIGINAL RETURN WAS AN ACT OF CONCEALMENT OF INCOME , IT DOES CALL FOR A PENALTY. IN FACT IN CIT V. KRISHNA AND CO. [1 979] 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 IN COME AND THAT IT HAD BEEN CONCEALED FROM THE RETURN.' 30. 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 OTH ER RESPECTS THE FACTS ARE ALSO DISTINGUISHABLE. BUT, WE ARE ONL Y FOLLOWING 21 THE LEGAL POSITION ENUNCIATED THERE, ONLY REITERATI NG THE VIEWS EARLIER 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) : '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. 31. THE HON'BLE PATNA HIGH COURT IN CIT VS. WARASAT HUSSAIN [171 ITR 405 (PAT) HELD AS UNDER: ASSESSMENT BY ESTIMATE IS ONE OF THE KNOWN PROCESS ES IN THE TAXATION WORLD. WHERE THE ASSESSEE CONCEALS RELEVANT MATERIAL/EVIDENCE, THE R EVENUE HAS NO OPTION BUT TO MAKE A BEST JUDGMENT ASSESSMENT BY ESTIMATE. AN ASSESSMENT BY ESTIMATE IS AS MUCH LEGAL AS ANY OTHER ASSESSMENT. ONCE AN ASSESSMENT HAS BEEN D ONE, WHETHER IT IS A BEST JUDGMENT ASSESSMENT OR OTHERWISE, THE FIGURE ASSESSED MUST B E HELD TO BE THE INCOME OF THE ASSESSEE. SUCH AN ASSESSMENT WOULD NOT EFFECT THE L EVY OF PENALTY. 32. SIMILAR PROPOSITIONS HAVE BEEN LAID DOWN IN OT HER CASES INCLUDING HON'BLE GAUHATI HIGH COURT IN G.C.AGGARWA L VS. CIT [102 ITR 408 (GAUHATI), WHICH HAS LATER BEEN CONFIR MED BY THE HON'BLE SUPREME COURT. IT HAS BEEN HELD BY THE HON 'BLE HIGH COURT IN THE SAID CASE THAT THE PENALTY FOR CONCEALMENT W AS LEVIABLE EVEN WHERE THE INCOME WAS ESTIMATED. THE HON'BLE HIGH C OURT HELD THAT WHERE THE OMISSION OR WRONG STATEMENT IN THE ORIGIN AL RETURNS AS ADMITTED BY THE ASSESSEE, COULD NOT BE STATED TO BE , BY ANY STANDARD OF EVALUATION OF EVIDENCE OR MATERIAL ON RECORD, TO BE INADVERTENT OR BONAFIDE OMISSION OR MISTAKE. THAT BEING SO TH E REVISED RETURNS 22 WERE NOT REALLY WITHIN THE CORRECT AMBIT AND SCOPE OF SECTION 139(5) OF THE ACT SO AS TO ALLOW IMMUNITY TO THE AS SESSEE FROM THE MISCHIEF OF SECTION 271(1)(C) OF THE ACT. THE SAID DECISION WAS CONFIRMED BY THE HON'BLE SUPREME COURT IN G.C.AGGAR WAL VS. CIT [186 ITR 571 (SC). HENCE THE HON'BLE APEX COURT HA S HELD THAT THE PENALTY FOR CONCEALMENT CAN BE LEVIED IN CASES WHERE THE INCOME HAS BEEN ASSESSED ON ESTIMATE BASIS. 33. THE HON'BLE SUPREME COURT IN B.A.BALASUBRAMANIA M & BROTHERS CO. VS. CIT [236 ITR 977 (SC)] CONFIRMED T HE DECISION OF THE HON'BLE MADRAS HIGH COURT IN CIT VS. B.A.BALASU BRAMANIAM & BROTHERS CO.[752 ITR 529 (MAD)]. THE INCOME IN THE HANDS OF THE ASSESSEE THEREIN WAS ESTIMATED AS THE ASSESSEE THOU GH HAD RECEIVED CERTAIN IMPORT LICENCE BASED ON THE VALUE OF GOODS EXPORTED WHICH WERE SOLD BY THE ASSESSEE AS SUCH, BUT THE ASSESSEE FAILED TO FURNISH THE DETAILS OF COMMODITIES EXPORTED AGAINST WHICH S UCH LICENCES WERE ISSUED AND THE PROFITS EARNED ON SUCH SALE OF IMPORT OF LICENCES NOT BEING AVAILABLE, THE ASSESSING OFFICER ESTIMATED THE INCOME IN THE HANDS OF THE ASSESSEE. IN THE PENALT Y PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, WHICH WERE LEVI ED BY THE I.A.C. BUT WERE DELETED BY THE TRIBUNAL, IN VIEW, THAT MER ELY BECAUSE THE INCOMES FROM SALE OF LICENCES WERE FIXED AT HIGHER FIGURE THAN THE AMOUNTS DISCLOSED BY THE ASSESSEE, DOES NOT IMPLY T HAT THE DIFFERENCE REPRESENTED THE CONCEALED INCOME OF THE ASSESSEE JUSTIFYING THE IMPOSITION OF PENALTY FOR CONCEALMEN T, WHERE THE INCOME FROM SALE OF LICENCES HAD BEEN ADOPTED ON ES TIMATE BASIS, NO PENALTY FOR CONCEALMENT COULD BE LEVIED. THE HO N'BLE HIGH COURT IN THE SAID CASE HELD AS UNDER: 23 IN CASES OF ASSESSMENT ON THE BASIS OF AN ESTIMATE APPLICABILITY OF SECTION 27I(1)( C ) CANNOT BE RULED OUT. IT WAS NOT IN DISPUTE THAT THE FACTS OF THE PRESENT CASE WOULD FALL WITHIN THE ABOVE EXPLANATION TO SECTION 271(1)(C) , AND, THEREFORE, THE ONUS WOULD STAND SHIFTED TO THE ASSESSEE TO SHOW THAT THERE WAS NO C ONCEALMENT OF INCOME. THE ASSESSEE HAD NOT ESTABLISHED THAT THE GAP BETWEEN THE INCOME RETURNED AND THE INCOME ASSESSED WAS NOT DUE TO ANY FRAUD OR WILFUL NEGLECT ON ITS P ART, FOR IT DID NOT PRODUCE THE REQUISITE MATERIAL EVEN WHEN CALLED FOR, FOR PROVING THE CORR ECTNESS OF THE INCOME RETURNED. THE ONLY EXPLANATION GIVEN BY THE ASSESSEE WAS THAT IT WAS NOT ABLE TO PRODUCE THE RECORDS BECAUSE OF LAPSE OF TIME. TO FIND OUT WHETHER THE A SSESSEE HAD RETURNED THE INCOME BY SALE OF LICENCES TRULY AND CORRECTLY, THE NATURE OF THE GOODS SOLD, THE TIME AT WHICH IT WAS SOLD AND THE PARTIES TO WHOM THEY WERE SOLD WER E ALL MATERIAL, AND SO LONG AS THE ASSESSEE HAD NOT FURNISHED THE REQUISITE PARTICULAR S, THE ASSESSEE SHOULD BE TAKEN TO HAVE CONCEALED THE PARTICULARS OF ITS INCOME. THERE FORE, THE TRIBUNAL WAS NOT JUSTIFIED IN CANCELLING THE PENALTIES FOR THE RELEVANT ASSESS MENT YEARS. 34. THE HON'BLE SUPREME COURT IN THE APPEAL FILED B Y THE ASSESSEE HELD AS UNDER: HELD, AFFIRMING THE DECISION OF THE HIGH COURT, TH AT THE HIGH COURT WAS CORRECT IN HOLDING THAT AS THE INCOME RETURNED WAS LESS THAN 8 0 PERCENT OF INCOME ASSESSED, THE EXPLANATION TO SECTION 271(1)(C) BECAME APPLICABLE AND THE INCOME-TAX OFFICER WAS JUSTIFIED IN IMPOSING PENALTY BECAUSE THE ASSESSEE HAD NOT BEEN ABLE TO DISCHARGE THE ONUS WHICH WAS ON IT UNDER THE EXPLANATION TO SECTI ON 271(1)(C). 35. ON THE ANALYSIS OF THE ABOVE SAID PRECEDENTS LA ID DOWN BY VARIOUS HON'BLE HIGH COURTS AND HON'BLE SUPREME COU RT, WHETHER PENALTY FOR CONCEALMENT CAN BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON ESTIMATED INCOME DEPENDS UPON THE CIRCUM STANCES HOW THE INCOME IS ESTIMATED. EACH CASE OF ESTIMATE OF INCOME DOES NOT ATTRACT THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 36. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE TRI BUNAL IN ACIT VS. GURINDER PAL SINGH IN ITA NO.781/CHD/2013, VIDE ORDER DATED 26.2.2014 WHEREIN ON MERIT OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON ESTIMATED INCOME, IT WAS HE LD AS UNDER: 17. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT CA N BE INITIATED WHERE ANY PERSON HAS CONCEALED THE PARTICULARS OF H IS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME , THEN SUCH PERSON MAY BE DIRECTED BY THE ASSESSING OFFICER OR THE CIT (APPEALS) TO PAY BY WAY OF PENALTY, THE SAME IS MEN TIONED IN SUB- CLAUSE (III) OF CLAUSE (C) OF SECTION 271(1)(C) OF THE ACT. THE EXPRESSION USED IN SECTION 271(1)(C) OF THE ACT IS HAS CONCEALED 24 THE PARTICULARS OF HIS INCOME OR HAS FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME. THEREFORE, WHERE THER E IS CONCEALMENT OF INCOME OR INACCURACY, THE PHRASE USE D IS PARTICULARS OF INCOME. IN VIEW OF THE PROVISIONS O F THE ACT, IT IS OBVIOUS THAT THE SAID PROVISIONS WOULD OPERATE WHEN THERE IS FAILURE TO DISCLOSE FULLY AND TRULY PARTICULARS OF INCOME. IN THE FACTS OF THE PRESENT CASE BEFORE US FOR THE YEAR UN DER 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 INCOM E WAS THE DOCUMENTS FOUND FROM THE PREMISES OF THE ASSESSEE D URING THE COURSE OF SEARCH PROCEEDINGS. THE ASSESSEE HAD MAD E DECLARATION THAT THE SAID SURRENDER WAS OVER AND ABOVE ITS INCO ME 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 CASE OF THE A SSESSEE THAT NO BOOKS OF ACCOUNT WERE MAINTAINED OR PRODUCED BY THE ASSESSEE. IN THE SAID CIRCUMSTANCES, THE ASSESSING OFFICER HAD N O ALTERNATIVE BUT TO ESTIMATE THE INCOME IN THE HANDS OF THE ASSE SSEE BY APPLYING THE NP RATE OF 7% AS IT HAS BEEN APPLIED TO DETERMI NE THE INCOME OF THE ASSESSEE FOR THE PAST SEVERAL YEARS. THE SA ID 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 IN ASSESSEES OWN CASE. IN THESE FACTS WHERE THE ASSESSING OFFICER HAD TO RESORT TO ESTIMATION OF IN COME, IN CANNOT BE SAID THAT THE ASSESSEE HAD NOT FURNISHED INACCUR ATE PARTICULARS OF INCOME. THE ASSESSEE HAVING FAILED TO DISCHARGE THE INITIAL BURDEN OF ESTABLISHING THE CORRECTNESS OF THE RETUR N FILED, THE EXPLANATION-1 TO SECTION 271 (1) OF THE ACT IS CLEA RLY ATTRACTED AND THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY 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) W HEREIN IT HAS BEEN HELD AS UNDER : EXPLANATION I TO SECTION 271(1)(C) OF THE INCOME T AX ACT, 1961, RAISES A PRESUMPTION OF CONCEALMENT, WHE N A DIFFERENCE IS NOTICED BY THE ASSESSING OFFICER, BET WEEN THE REPORTED AND ASSESSED INCOME. THE BURDEN IS TH EN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE 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 CHAWL A VS. CIT [203 CTR (P&H) 209/154 TAXMAN 364 (P&H)] WHEREIN IT HAS BEEN HELD THAT INCASES WHERE THERE WAS NO BONAFIDE VOLUN TARY DISCLOSURE OF INCOME BUT ONLY TO AVOID CONSEQUENCES OF LAW, TH E MERE SURRENDER OF INCOME 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 I NCOME TAX APPEAL NO.810 OF 2008, DATE OF DECISION 18.4.2011, THERE WAS 25 SURVEY AT THE PREMISES OF THE ASSESSEE AND SOME DIS CREPANCIES WERE NOTED. THE HUSBAND OF THE ASSESSEE GAVE AN UNDERTA KING FOR DECLARATION OF ADDITIONAL INCOME INCLUDING THE INCO ME IN THE HANDS OF THE ASSESSEE. HOWEVER, THE SAID ADDITIONAL INCO ME WAS NOT DECLARED IN THE RETURN OF INCOME FILED FOR THE RELE VANT ASSESSMENT YEAR. THEREAFTER THE ASSESSEE AGREED TO PAY INCOME TAX ON THE AMOUNT OF ADDITIONAL INCOME ALONGWITH INTEREST UNDE R SECTION 234B OF THE ACT SUBJECT TO NO PENAL ACTION AGAINST HER. THE ASSESSING OFFICER DISAGREEING WITH THE ASSESSEE INITIATED PEN ALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE PLEA OF T HE 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 CONSIDERED TO RECORD A FINDING THAT THERE WAS NO CONCEALMENT OR F URNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE THEREIN. IN THE ABSENCE OF THE ASSESSEE HAVING DISCLOSED SURRENDERE D INCOME IN THE RETURN OF INCOME, THE ASSESSEE WAS HELD TO BE LIABL E TO LEVY OF PENALTY 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 T HE ACT IS ATTRACTED AND THE ASSESSEE IS EXIGIBLE TO LEVY OF P ENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE CONCEALED INCOM E. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS ALLOWED. 37. THUS FROM THE ABOVE IT BECOMES CLEAR THAT AFTER THE INSERTION OF EXPLANATION-1 TO SECTION 271(1) OF THE ACT, THE BUR DEN IS UPON THE ASSESSEE TO BONAFIDELY EXPLAIN THE PARTICULAR ITEMS OF INCOME AND WHERE THE ASSESSEE HAS FAILED TO GIVE ANY BONAFIDE EXPLAN ATION, THEN PENALTY FOR CONCEALMENT IS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. IN THE FACTS OF THE PRESENT CASE BEFORE US, NO BONAFIDE EXPLANAT ION HAS BEEN GIVEN BY THE ASSESSEE AND ON THE OTHER HAND, THE ASSESSEE HA D TRIED TO BUILT UP THE CASE IT WAS ENGAGED IN THE BUSINESS OF SALE AND PUR CHASE OF JEWELLERY AND IT HAS BEEN ESTABLISHED IN THE CASE OF THE ASSESSEE THAT NO SUCH BUSINESS WAS BEING CARRIED ON BY THE ASSESSEE BUT ONLY PAPER TRANSACTIONS WERE CARRIED ON. AS THE ASSESSEE HAD CHANGED THE STAND REGARDING THE PARTICULARS OF SALES AND NO EVIDENCE WORTH ANY CREDENCE WAS FILED OF ANY OF THE PERSONS TO ESTABLISH THAT THE SALES HAD BEEN MADE AND THE CASH DEPOSITED IN THE BANK ACCOUNT WAS IN LIEU OF THE SALES MADE OF JEWELLERY. THE TRIBUNAL HELD IT TO BE A CASE WHERE ON THE BASIS OF EVIDENCE ON RECOR D AND ON THE BASIS OF 26 FINDINGS RECORDED BY BOTH THE ASSESSING OFFICER AND THE CIT (APPEALS), IT WAS HELD THAT THE SALES MADE BY THE ASSESSEE WER E UNVERIFIABLE AND UN- ACCEPTABLE AND WERE NOT SUPPORTED BY ANY EVIDENCE. IN THE ABOVE SAID CIRCUMSTANCES, THE INCOME BEING ESTIMATED IN THE HA NDS OF THE ASSESSEE JUSTIFIED THE LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. IN VIEW OF THE ABOVE SAID FINDINGS OF THE TRIBUNAL AND THE FACTS OF THE PRESENT CASE, WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE IN THIS REGARD AND DISMISSING THE SAME WE UPHOLD THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AS TH E ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME MAKI NG IT EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS DISMISSED. 38. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF MARCH, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25 TH MARCH, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH