JITENDRA KUMAR AGARWAL, Jaipur V. ACIT, Jaipur

ITA 940/JPR/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74870 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 21-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: S L PODDAR
• Keywords: Unexplained investment; Unexplained expenditure; Loose papers; Document seized; Bonafide belief; Question of law; Difference of opinion; Documents seized
• Section: 143(3); 133A; 27; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR ( BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAINI ) ITA NO. 940/JP/2012 ASSESSMENT YEAR: 2006-2007 PAN: AEDPA 0732 L SHRI JITENDRA KUMAR AGARWAL VS. THE ACIT PROP. GARG JEWELLERS CIRCLE-1 222,JOHRI BAZAR,JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.L.PODDAR DEPARTMENT BY : SHRI D.C. SHARMA DATE OF HEARING : 29.01.2014. DATE OF PRONOUNCEMENT : 05.03.2014 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD CIT(A),-1, JAIPUR DATED 16-11-2012 FOR THE A.Y. 20 06-07, AND HAS EMANATED FROM THE PENALTY ORDER DATED 23-08-2011 PA SSED U/S 271(1)( C) OF THE INCOME-TAX ACT, 1961 (THE ACT FOR SHORT). 2.1 BRIEFLY STATED, THE FACTS LEADING TO THIS IMPO SITION OF PENALTY ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME [ROI] DECLA RING TOTAL INCOME OF RS. 30,77,177/-.THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 02-02-2007. SUBSEQUENTLY, ON 21ST AND 22 ND JAN 2008, A SURVEY U/S 133A OF THE ACT WAS 2 CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY, IT WAS ADMITTED BY THE ASSESSEE AND HIS FAT HER THAT INCOME HAD NOT BEEN CORRECTLY DISCLOSED IN THE RETURN FILED FOR TH IS YEAR. ON THE BASIS OF THIS INFORMATION, NOTICE U/S 148 OF THE ACT WAS ISSUED O N 5-03-2009 AND AN ORDER WAS PASSED U/S 148/143(3) OF THE ACT ON 31-12-2009 BY DETERMINING TOTAL INCOME OF ASSESSEE AT RS. 5,21,23,050/-. THE SATISF ACTION WAS RECORDED IN THE ASSESSEE ASSESSMENT ORDER FOR INITIATING PENALTY PR OCEEDINGS U/S 271(1)(C ) OF THE ACT ON ACCOUNT OF CONCEALMENT OF INCOME/ FILING OF INACCURATE PARTICULARS OF INCOME AND CONSEQUENTLY A PENALTY OF RS. 14,75,8 12/- WAS IMPOSED VIDE ORDER DATED 27-07-2011. 2.2 IN FACT FOLLOWING ADDITIONS WERE MADE ON THE BA SIS OF DOCUMENTS FOUND DURING THE COURSE OF SURVEY PROCEEDINGS. (A)ADDITION ON ACCOUNT OF UNACCOUNTED SALES RS. 1 1,66,215/- (B) ADDITIONS ON ACCOUNT OF UNACCOUNTED AMOUNT IN LOOSE PAPERS RS. 44,50,235/- ADDITION ON ACCOUNT OF UNACCOUNTED INVESTMENT IN PURCHASE OF PLOT RS. 4,32,78,595/- (D) ADDITION ON ACCOUNT OF OTHER UNEXPLAINED EXPENSES RS. 1,50,828/- 3 AGAINST THE ABOVE QUANTUM ADDITIONS, THE ASSESSMENT ORDER SUFFERED TWO CONSECUTIVE APPEALS AND AFTER GIVING EFFECT TO THI S ORDER, FOLLOWING TWO ADDITIONS REMAINED CONFIRMED ON QUANTUM SIDE. A) ON ACCOUNT OF UNACCOUNTED SALES RS.1,39,946/- (B) ON ACCOUNT OF UNACCOUNTED LAND SALES RS. 43,2 7,859/- ON THE BASIS OF THESE CONFIRMED ADDITIONS, THE A.O. HAD INITIATED PENALTY PROCEEDINGS U/S 271(1)( C) OF THE ACT BY ISSUING NO TICE U/S 274 OF THE ACT. AGAINST THIS, PENALTY OF RS. 14,75,812/- WAS IMPOSE D AFTER APPLYING NET PROFIT RATE ON THE SALES FOUND IN THE LOOSE PAPERS AND DIARIES DURING SURVEY PROCEEDINGS. THE ASSESSEE WENT BEFORE THE LD CIT(A) AND THE LD CIT(A) BY IGNORING THE SUBMISSIONS OF THE ASSESSEE HAS CONFIR MED THIS PENALTY@ 100% ON THE TAX SOUGHT TO BE EVADED AS HAS BEEN DONE BY THE A.O.. 2.4 THE ASSESSEE IS FURTHER AGGRIEVED AND HAS FILED THIS SECOND APPEAL BY RAISING THE FOLLOWING GROUNDS. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE O RDER PASSED BY THE LEARNED CIT(A) U/S 271(1) (C) IS BAD IN LAW AND VO ID-AB-INTIO. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 14,75,812/ - U/S 271(1) (C) OF THE INCOME TAX ACT, 1961. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED ASSESSING OFFICER HAS ERRED IN PASSING THE ORDER U/S 271(1) (C) OF THE IT ACT, 1961 ON THE BASIS OF ORDER WHICH WAS PASSED BY MAKING ESTIMATED ADD ITIONS AND WITHOUT MENTIONING ANY SPECIFIC FINDING REGARDING CONCEALMENT OF INC OME OR FILING OF INACCURATE PARTICULARS . 4. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AMEND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARIN G. 4 2.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. BEFORE US, BOTH THE PART IES HAVE ADVANCED THEIR ARGUMENTS IN THEIR FAVOUR AND ALMOST REPEATED THE A RGUMENTS RAISED BEFORE THE LD CIT(A). THE LD. AR HAS VEHEMENTLY ARGUED THA T THE PENALTY IS BASED ON THE ESTIMATED ADDITION AND CONFIRMED BY THE HON' BLE ITAT AND LAW IN THIS REGARD IS SETTLED THAT WHEN THE ADDITION IS BA SED ON ESTIMATES ALONE, NO PENALTY IS LEVIABLE UNDER THE PROVISIONS OF SECTION 271(1) (C ) OF THE ACT. THE LD. AR APART FROM MAKING ORAL SUBMISSIONS HAS F ILED A WRITTEN SUBMISSION AND THE RELEVANT PORTION OF THE WRITTEN SUBMISSION IS BEING RETRACTED AS UNDER:- RETURN WAS FILED ON 31.10.2006 DECLARING TOTAL IN COME AT RS. 30,77,177/- . SUBSEQUENTLY THE LEARNED ASSESSING OFFICER ISSUED NOTICE U/S 148. THE ASSESSEE RETURNED THE SAME INCOME AS DISCLOSED IN THE ORIGIN AL RETURN OF INCOME FILED ON 31.10.2006. THE LEARNED ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 148/143(3) OF THE INCOME TAX ACT, 1961 ON 31.12.2009 DETERMINING TOTAL INCOME AT 5,21,23,050/- BY MAKING THE ADDITIONS AS NOTED BELOW ALONG WITH THE POSITION OF THESE ADDITIONS AFTER DECISIONS OF CIT(A)/ITAT SR. NO. PARTICULAR OF ADDITION QUANTUM OF ADDITION MADE BY THE LEARNED A.O. ADDITION UPHELD BY THE LEARNED CIT(A) POSITION OF ADDITION AFTER ITAT DECISION 1. UNACCOUNTED SALES 1166215 291554 (25% OF NP RATE APPLIED ON SALES OF RS. 11,66,215/-) 139946 (12% OF NP RATE APPLIED ON SALES OF RS. 11,66,215/-) 2. TRANSACTIONS IN LAND 43278595 8090000 4327860 5 (10% OF THE TURNOVER OF RS. 4,32,78,595/-) 3. ON THE BASIS OF LOOSE SHEETS 4450235 0 0 4. WITHOUT ANY BASIS 150828 0 0 ADDITION SUSTAINED 49045873 4467806 THE LEARNED ASSESSING OFFICER HAS IMPOSED PENALTY U /S 271(1)(C) IN RESPECT OF THE AFORESAID ADDITIONS. THE PENALTY LEVIED IS 100% OF TAX SOUGHT TO BE EVADED WHICH IS OF RS. 14,75,812/-. AGGRIEVED BY THE ORDER OF THE LEARNED ASSESSING OFF ICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) WHO HAS DISMISSED THE APP EAL OF THE ASSESSEE .NOW THE ASSESSEE IS IN APPEAL BEFORE THE HONORABLE BENCH . WITH THIS BACKGROUND THE INDIVIDUAL GROUNDS OF APPEAL ARE DWELT AS UNDER GROUND NO. 1 TO 3 :- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE O RDER PASSED BY THE LEARNED CIT(A) U/S 271(1) (C) IS BAD IN LAW AND VOID-AB-INTIO. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 14,75,812/- U/S 271(1 ) (C) OF THE INCOME TAX ACT, 1961. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED ASSESSING OFFICER HAS ERRED IN PASSING THE ORDER U/S 271(1)(C) OF THE IT ACT, 1961 ON THE BASIS OF ORDER WHICH WAS PASSED BY MAKING ESTIMATED ADDITIONS AND WITHOU T MENTIONING ANY SPECIFIC FINDING REGARDING CONCEALMENT OF INCOME OR FILING OF INACCU RATE PARTICULARS. 1. INCOME OF THE YEAR DISCLOSED IN A.Y.2008-09 IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS LEVIED THE PENALTY ON THE GROUND THAT IN THE CASE OF THE ASSESSEE ADDITIONS W ERE MADE IN RESPECT OF INCOME DETECTED DURING THE COURSE OF SURVEY ON THE BASIS O F VARIOUS LOOSE PAPERS. IN THIS REGARD IT IS SUBMITTED THAT THE SURVEY WAS CONDUCTE D ON 21.01.2008. DURING THE COURSE OF SURVEY SHRI CHANDRA PRAKASH GARG FATHER OF THE ASSESSEE WAS EXAMINED U/S 133A. IN REPLY TO QUESTION NO. 21 TO 24 IT WAS DEPOSED BY SHRI CHANDRA PRAKASH AGARWAL THAT WHATEVER INCOME IS FOUND DURIN G SURVEY SHALL BE DECLARED IN THE RETURN OF INCOME TO BE FILED FOR THE CURRENT FINANCIAL YEAR. A COPY OF THE STATEMENT IS AVAILABLE ON PAPER BOOK PAGE NO. 1 TO 11. THIS STATEMENT SHRI CHANDRA PRAKASH AGARWAL WAS NEITHER QUESTIONED NOR CHALLENGED BY THE LEARNED 6 ASSESSING OFFICER WHO HAD RECORDED THE STATEMENT. T HIS MAKES IT CLEAR THAT THE ASSESSEE GOT A GREEN SIGNAL FROM THE DEPARTMENT THA T HE COULD DECLARE HIS INCOME FOUND AND NOTICED DURING THE COURSE OF SURVEY IN TH E RETURN FOR THE CURRENT FINANCIAL YEAR WHICH IN THIS CASE MEANS ASSESSMENT YEAR 2008-09. FURTHER THIS STATEMENT OF HIS FATHER WAS ACCEPTED BY THE ASSESSE E WHEN HIS STATEMENT WAS RECORDED ON 22.01.2008. IN REPLY TO QUESTION NO. 12 THE ASSESSEE DEPOSED THAT HE AGREED WITH THE STATEMENT OF HIS FATHER AND HE WOUL D DECLARE THE INCOME IN THE CURRENT FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2008-09. A COPY OF THE STATEMENT OF THE ASSESSEE IS AVAILABLE ON PAPER BOOK PAGE NO. 12 TO 19. THUS ON THE BASIS OF THE STATEMENT OF HIS FATHER AS WELL AS OF HIS OWN STATEMENT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT WHATEVER FOUND DURING SURVEY COULD BE DECLARED AS PART OF INCOME FOR THE CURRENT FINANCIA L YEAR. ACCORDINGLY ASSESSEE FILED RETURN FOR THE ASSESSMENT YEAR 2008-08 ON 06. 08.2008 AND IN THIS RETURN OF INCOME HE DISCLOSED THE FOLLOWING INCOMES ON ACCOUN T OF SURVEY U/S 133A CASH 556676 FOREIGN CURRENCY 195600 DEBTORS 16755000 STOCK 12542150 30049426 THE ACTION OF THE ASSESSEE IN DECLARING INCOME IN A SSESSMENT YEAR 2008-09 WAS A BONAFIDE ACTION AND THE SAME IS IN THE FITNESS OF T HINGS AS ON THE BASIS OF ASSETS HE WAS FREE TO DECLARE THE SAME IN THE ASSESSMENT YEAR 2008-09. THUS THE ASSESSEE CANNOT BE CHARGED FOR ANY ACTION OF CONCEALMENT AS HE DECLARED THE ENTIRE INCOME IN THE ASSESSMENT YEAR 2008-09. A COPY OF THE ACKNO WLEDGEMENT OF RETURN ALONG WITH THE COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2008-09 IS AVAILABLE ON PAPER BOOK PAGE NO. 20 TO 22. ALTHOUGH THE LEARNED ASSESSING OFFICER RESORTED TO ACTION U/S 148 AND ACCORDINGLY BROUGHT TO TAX CERTAIN INCOMES AS DETAI LED ABOVE IN ASSESSMENT YEAR 2006-07 WHEREAS ALL THESE INCOMES WERE CONSIDERED A ND DISCLOSED IN THE ASSESSMENT YEAR 2008-09. THE ASSESSEE WAS OF A CONS IDERED VIEW THAT WHATEVER EARNED BY HIM IN SALES/LAND TRANSACTION ETC. ACCUMU LATED IN THE SHAPE OF CASH, STOCK AND DEBTORS ETC. AND AS SUCH HE WAS JUSTIFIED IN DECLARING ALL THESE IN AS HIS INCOME IN ASSESSMENT YEAR 2008-09. THE LEARNED ASSE SSING OFFICER INSTEAD OF ACCEPTING THE THEORY OF INCOME ON ASSET BASIS TOOK ACTION ON THE BASIS OF ACCRUAL OF INCOME. BUT THE ABOVE FACTS MAKE IT CLEAR THAT T HE ASSESSEE DECLARED EVERYTHING IN THE RETURN FOR THE ASSESSMENT YEAR 2008-09 AND A S SUCH THE DEPARTMENT CANNOT MAKE A CHARGE OF CONCEALMENT AGAINST HIM SIMPLY ON THE GROUND THAT INCOME WAS DETECTED DURING SURVEY. THE ASSESSEE AGITATED BEFORE THE ITAT THAT HIS INCO ME SHOULD NOT BE TAXED TWICE FIRST IN ASSESSMENT YEAR 2008-09 WHERE HE HAD DECLA RED THE ENTIRE INCOME NOTICED DURING SURVEY AND SECONDLY IN THE RESPECTIV E ASSESSMENT YEARS. THIS 7 SUBMISSION OF THE ASSESSEE FOUND FAVOUR WITH THE HO NBLE ITAT WHO IN THEIR ORDER IN ITA NO. 639, 1329, 1330 & 1331/JP/2010 DAT ED 30.12.2010 FOR THE ASSESSMENT YEAR 2004-05 TO 2007-08 HAVE GIVEN CLEAR DIRECTIONS IN PARA 28 APPEARING ON PAGE NO. 11 PARA 28 PAGE 11 'IN THIS ALTERNATE CONTENTION OF THE LEARNED COUNSE L OF THE ASSESSEE, WE ARE AGREE AS FROM THE DAY ONE IN THE STATEMENT GIVEN BY THE F ATHER OF THE ASSESSEE SHRI CHANDRA PRAKASH GARG HAD STATED THAT WHATEVER THE I NCOME REMAINS UNDISCLOSED FOR ASSESSMENT YEAR 2004-05 TO 2008-09 WILL BE SHOW N IN THE RETURN OF ASSESSMENT YEAR 2008-09. SOME OF THE QUESTION AND A NSWERS RELATING TO THE STATEMENT OF THE FATHER OF THE ASSESSEE HAVE BEEN R EPRODUCED IN THE ORDER OF ASSESSING OFFICER AND IT IS AMPLY PROVED THAT SHRI CHANDRA PRAKASH GARG, THE FATHER OF THE ASSESSEE HAS STATED MANY TIMES THAT T HE INCOME WILL BE COMPUTED ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SU RVEY THAT WILL BE SHOWN IN THE INCOME OF ASSESSMENT YEAR 2008-09 AND THE SAME HAS BEEN SHOWN ALSO. THEREFORE, IF SET OFF OF THIS INCOME IS NOT GIVEN F ROM THE INCOME ALREADY DECLARED FOR ASSESSMENT YEAR 2008-09 THAT WILL TANTAMOUNT TO DOUBLE ADDITION. THEREFORE, WHATEVER THE ADDITION IS SUSTAINED HERE THAT HAS TO BE REDUCED FROM THE INCOME SURRENDERED FOR ASSESSMENT YEAR 2008-09.' PARA 31 PAGE 11 'FOR THE SAKE OF CLARIFICATION, AGAIN WE WOULD LIKE TO MENTION THAT WHATEVER THE ADDITION IS MADE IN THE YEAR UNDER CONSIDERATION TH AT HAS TO BE REDUCED FROM THE INCOME FOR ASSESSMENT YEAR 2008-09 WITH A RIDER THA T THE INCOME SURRENDERED FOR ASSESSMENT YEAR 2008-09 WILL NOT BE LESS THAN THAT AMOUNT AFTER TAKING INTO CONSIDERATION THE ASSESSED INCOME OF ASSESSMENT YEA R 2004-05 TO ASSESSMENT YEAR 2007-08 MEANING THEREBY WHATEVER THE ADDITIONS ARE SUSTAINED FOR ASSESSMENT YEAR 2004-05 TO 2007-08 THE SET OFF HAS TO BE ALLOWED FROM THE INCOME SURRENDERED FOR ASSESSMENT YEAR 2008-09' PARA 55 PAGE 19 'THIS ISSUE WAS ALSO INVOLVED IN THE EARLIER YEAR'S APPEAL AND WE HAVE ALLOWED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND HAS DIRECT ED THE ASSESSING OFFICER TO REDUCE THE AMOUNT OF INCOME ASSESSED DURING THE YEA R FROM THE INCOME SURRENDERED FOR ASSESSMENT YEAR 2008-09 OTHERWISE I T WILL TANTAMOUNT TO DOUBLE ADDITION' THE AFORESAID OBSERVATION OF THE HONBLE ITAT ARE I N RESPECT OF APPEALS FOR ASSESSMENT YEAR 2004-05 & 2005-06 WHERE THE SAME IS SUE EXISTED AND AS SUCH THE HONBLE ITAT GAVE DIRECTIONS FOR ALL THE ASSESS MENT YEARS. WHILE DISPOSING THE APPEAL FOR THE ASSESSMENT YEAR 2006-07 THE HON BLE ITAT HELD THAT THE DIRECTIONS GIVEN IN ASSESSMENT YEAR 2004-05 & 2005- 06 WOULD HOLD EQUALLY 8 GOOD FOR ASSESSMENT YEAR 2006-07. (PARA 91). A COPY OF THE ITAT DECISION IS AVAILABLE ON PAPER BOOK PAGE NO. 23 TO 52. THE AFORESAID OBSERVATION OF THE HONBLE ITAT ESTAB LISH THAT ASSESSEE ACTED BONA-FIDE IN DECLARING ENTIRE INCOME IN ASSESSMENT YEAR 2008-09 AND THAT SINCE INCOME HAS BEEN ASSESSED IN RESPECTIVE ASSESSMENT Y EARS ON TECHNICAL GROUND ACCORDINGLY SET OFF WAS REQUIRED IN ASSESSMENT YEAR 2008-09. THUS INCOME STOOD DECLARED BY THE ASSESSEE IN 2008-09 BUT THE DEPARTMENT TECHNICALLY ASSESSED THE SAME IN DIFFERENT YEARS. THERE IS NO Q UESTION OF ANY CHARGE OF CONCEALMENT AGAINST THE ASSESSEE. HENCE THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVY THE PENALTY. THE SAME DESERVES TO THE QUASHED. THE AFORESAID SUBMISSION OF THE ASSESSEE THAT ONCE THE INCOME IS DISCLOSED IN THE RETURN OF INCOME COVERING ALL THE MATERIAL FOUND DU RING SURVEY CONDUCTED U/S 133A NO CONCEALMENT CAN BE ALLEGED ON THE PART OF T HE ASSESSEE SIMPLY ON THE GROUND THAT INCOME WAS DEDUCTED DURING SURVEY, IS S UPPORTED BY VARIOUS DECISION QUOTED BELOW (I) DEPUTY COMMISSIONER OF INCOME TAX VS. DR. SATISH B. GUPTA (2011) 49 DTR 262 (AHEMDABAD TRIB) THERE CANNOT BE ANY CONCEALMENT PRIOR TO FILING O F RETURN. (II) CIT VS. SAS PHARMACEUTICALS (2011) 335 ITD 259 (DEL HI HIGH COURT) THE QUESTION WHETHER THE PARTICULAR OF INCOME WERE CONCEALED BY THE ASSESSEE OR NOT WOULD DEPEND UPON WHETHER THIS CONC EALMENT HAD REFERENCE TO THE RETURN FILED BY THE ASSESSEE. THE RATIOS OF THE AFORESAID CASE LAWS ARE FULLY APP LICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. THE ASSESSEE DISCLOSED ENTIRE INCOME IN THE ASSESSMENT YEAR 2008- 09. THE ASSESSEE HAD ACTED UNDER BONA-FIDE BELIEF T HAT HE COULD DISCLOSE ENTIRE INCOME IN ASSESSMENT YEAR 2008-09. 2. PENALTY IMPOSED ON ADDITIONS MADE ON ESTIMATE BASIS NOTWITHSTANDING THE SUBMISSION MADE IN THE PRECEDIN G PARA IT IS FURTHER SUBMITTED THAT EVEN IN THE FACTS OF THE CASE PENALTY WAS NOT LEVIABLE IN THIS CASE. IT IS A CASE WHERE ADDITIONS HAVE BEEN MADE/SUSTAINED ON ESTIMAT E AGAINST ESTIMATE. IT IS SETTLED POSITION OF LAW THAT AN ESTIMATE CAN BE COR RECT AND CAN ALSO BE WRONG AND IN NO CASE AN ESTIMATE CAN BE CASE FOR LEVY OF PENA LTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. THE FOLLOWING CHART INDICATES THAT THE ADDITIONS WH ICH HAVE BEEN SUSTAINED BY THE HONBLE ITAT ARE PURELY ON ESTIMATE BASIS. BOTH THE ADDITION WHICH HAVE BEEN 9 SUSTAINED ARE ON ACCOUNT OF NP RATE APPLICATIONS. T HE ADDITIONS ARE A RESULT OF ESTIMATE AGAINST ESTIMATE. SR. NO. PARTICULAR OF ADDITION QUANTUM OF ADDITION MADE BY THE LEARNED A.O. ADDITION UPHELD BY THE LEARNED CIT(A) POSITION OF ADDITION AFTER ITAT DECISION 5. UNACCOUNTED SALES 1166215 291554 (25% OF NP RATE APPLIED ON SALES OF RS. 11,66,215/-) 139946 (12% OF NP RATE APPLIED ON SALES OF RS. 11,66,215/-) 6. TRANSACTIONS IN LAND 43278595 8090000 4327860 (10% OF THE TURNOVER OF RS. 4,32,78,595/-) 7. ON THE BASIS OF LOOSE SHEETS 4450235 0 0 8. WITHOUT ANY BASIS 150828 0 0 ADDITION SUSTAINED 4467806 IT IS SUBMITTED THAT THE AFORESAID INCOME WHICH HAS BEEN SUSTAINED PURELY ON ESTIMATE BASIS ALSO REQUIRED SET OFF IN THE INCOME OF ASSESSMENT YEAR 2008-09. IN OTHER WORDS THE INCOME DECLARED IN ASSESSMENT YEAR 2008-09 BY THE ASSESSEE OF RS. 30049426/- COVERED THE INCOME OF ASSESSMENT YEA R 2006-07. THE DETAILS OF INCOME SURRENDER OF RS. 3,00,49,426/- ARE CITED SUP RA. THUS IN FACT THE ASSESSEE DID NOT CONCEALED ANY INCOME. THERE ARE VARIOUS CAS E LAWS WHICH HAVE STIPULATED THAT PENALTY U/S 271(1)(C) CANNOT BE LEVIED IN A CA SE WHERE ADDITIONS HAVE BEEN MADE ON ESTIMATE BASIS. THE CASE OF THE ASSESSEE FU RTHER PECULIAR AND SPECIAL BECAUSE EVEN SUCH INCOME UPHELD ON THE BASIS OF EST IMATE ALSO STOOD DECLARED IN ASSESSMENT YEAR 2008-09. AS THE ASSESSEE WAS NOT KN OWING THE TECHNICALITY OF IT ACT OTHERWISE, HE WOULD HAVE SHOWN SUCH INCOME I N THE RESPECTIVE ASSESSMENT YEARS. IN ANY CASE ONCE INCOME HAS BEEN DISCLOSED BEFORE THE DEPARTMENT BY FILING A RETURN OF INCOME PENALTY U/S 271(1)(C) CANNOT BE LEVIED SIMPLY BECAUSE THE SAME WAS NOT SHOWN IN THE RELEVA NT ASSESSMENT YEAR. THE FOLLOWING CASE LAWS QUOTED IN SUPPORT 10 (I) CIT VS. MAHENDRA SINGH KHEDLA (2012) 71 DTR 189 (RA J) PENALTY U/S. 271(1) (C) ON THE BASIS OF ESTIMATION OF INCOMECONCEALMENT OF INCOMEINACCURATE PARTICULARS OF INCOMETRADING ADDITION WAS MADE BY THE AO ON THE BASIS OF ESTIMATION BECAUSE THE RE SULTS SHOWN BY THE ASSESSEE WAS NOT FOUND SATISFACTORY BY THE AOACCOR DINGLY, AO LEVIED PENALTY U/S. 271(1)(C) ON ALLEGED CONCEALED PARTICU LARS OF INCOME AND THEREBY FURNISHING INACCURATE PARTICULARS OF INCOME THE TRIBUNAL HELD THAT WHEN THERE WAS NO POSITIVE EVIDENCE BEYOND DOU BT REGARDING ESTIMATED TRADING ADDITION THAT THE AMOUNT IN DIFFE RENCE BETWEEN THE RESULT SHOWN BY THE ASSESSEE AND THAT ESTIMATED BY THE AO WAS RESULTANT OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE, PENALTY UNDER SECTION 271(1) (C) OF THE ACT CANNOT BE LEVIEDTHE TRIBUNAL UPHELD THE ACTION OF CIT (A) IN DELETING THE PENALTY IN ABSENCE OF POSITIVE EVIDENC E WITH THE DEPARTMENT THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE A SSESSEE TOWARDS THE ADDITION IN QUESTIONHELD, APPELLATE AUTHORITY AS W ELL AS APPELLATE TRIBUNAL BOTH CONSIDERED MATTER IN DETAIL AND BY SP EAKING ORDER SET ASIDE PENALTY LEVIED BY AOADDITIONS MADE BY AO WERE BASE D ON ESTIMATION ONLYFACT OR ALLEGATION BASED ON ESTIMATION CANNOT BE SAID TO BE CORRECT ONLY, IT CAN BE INCORRECT ALSOTHEREFORE, PENALTY W AS WRONGLY LEVIED AOBASIS FOR LEVYING PENALTY IN PRESENT CASE IS ONL Y ESTIMATION, WHICH IS PURELY QUESTION OF FACT AND THERE IS CONCURRENT FIN DING OF FACT RECORDED BY FIRST APPELLATE AUTHORITY AS WELL AS THE APPELLATE TRIBUNAL BOTHNO SUBSTANTIAL QUESTION OF LAW INVOLVED IN THE PRESENT APPEALREVENUES APPEAL DISMISSED (II) CIT VS.DR. GIRIRAJ AGARWAL (2012) 346 ITR 152 (RAJ) IMPOSITION OF PENALTY DEPENDS ON FACTS AND CIRCUMST ANCES OF EACH CASE. THE AO IMPOSED THE PENALTY ON SO CALLED THREE ITEMS OF SO CALLED CONCEALED INCOME. EACH ITEM WAS EXAMINED, THOROUGHL Y AND IN DETAIL, BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AS WELL AS THE INCOME TAX APPELLATE TRIBUNAL AND BY A REASONED ORDER, BOTH CA ME TO A CONCLUSION THAT ADDITIONS ARE BASED ON ESTIMATION ONLY. A FACT OR ALLEGATION BASED ON ESTIMATION, CANNOT BE SAID TO BE CORRECT ONLY, IT C AN BE INCORRECT ALSO. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, PENALTY WAS WRONGLY IMPOSED BY THE ASSESSING OFFICER. THEREFORE APPEAL FILED BY APPELLANT REJECTED. (III) CIT VS. KRISHI TYRE RETREADING AND RUBBER INDUSTRIE S (2013) 263 CTR 484 (RAJ) ADDITION MADE ON ESTIMATE BASIS NO PENALTY U/S 27 1(1)(C) IS LEVIABLE. 11 (IV) DR. HAKIM VS. ASSISTANT COMMISSIONER OF INCOME TAX (2009) 314 ITR (AT) 290 (CHENNAI) PROCEEDINGS FOR IMPOSITION OF PENALTY THOUGH EMANAT ING FROM THE ASSESSMENT PROCEEDINGS ARE ESSENTIALLY INDEPENDENT. FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RELEVANT AND HAVE PROBAT IVE VALUE BUT SUCH FINDING ARE MATERIAL ALONE AND MAY NOT JUSTIFY THE IMPOSITION OF PENALTY IN A GIVEN CASE BECAUSE THE CONSIDERATION THAT ARISE I N PENALTY PROCEEDINGS ARE DIFFERENT FROM THOSE THAT ARISE IN ASSESSMENT P ROCEEDINGS. FINDING RECORDED IN THE ASSESSMENT ORDER CONSTITUTE GOOD EVIDENCE BUT THOSE FINDINGS CANNOT BE REGARDED AS CONCLUSIVE FOR THE PURPOSE OF PENALTY PROCEEDINGS. THE PROCESS OF IMPOSITION OF PENALTY I S NOT AUTOMATIC IN THE EVENTUALITY OF ESTIMATED INCOME. THE LEVY OF PENALT Y MUST BE CONSIDERED ON THE BASIS OF JUDICIAL DETERMINATION. IT MUST BE PROVED BEYOND DOUBT THAT THESE WAS ACTUALLY INCOME AND FURTHER THAT THE INCO ME WAS NOT DISCLOSED . THE DEGREE OF PROOF REQUIRED FOR THE IMPOSITION OF PENALTY IS QUITE DIFFERENT FROM AND IS OF A MUCH HIGH ORDER THAN WHA T IS REQUIRED FOR THE PURPOSE OF MAKING ADDITION ON THE BASIS OF ESTIMATE .' (V) THE DECISION OF HON'BLE ITAT, JAIPUR BENCH, JAIPUR IN THE CASE OF ACIT V/S B.P. KHANDELWAL IS APPLICABLE REPORTED IN TAX W ORLD, VOLUME-XXXV, PART-1, PAGE-30 WHEREIN THE HON'BLE MEMBER OF THE I TAT HAS HELD AS UNDER: 'IT IS ALSO NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE HAD FURNISHED ANY FALSE EXPLANATION OR EXPLANATION FURNISHED BY T HE ASSESSEE COULD BE FOUND FALSE BUT THE EXPLANATION OR CLAIM OF THE ASS ESSEE WAS NOT ACCEPTABLE TO THE AO AND, ACCORDINGLY, ADDITIONS WERE MADE AND REDUCED BY APPELLATE AUTHORITIES ON ESTIMATE BASIS. THESE CIRCUMSTANCES GIVE A SCOPE OF DEBATE AND ARGUMENT THAT THE ASSESSEE MAY BE AT FAULT OR M AY NOT BE AT FAULT. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER, AS THE LD. CIT(A), ON THE BASIS OF RATIO LAID DOWN IN DIFFERENT DECISIONS ON THE ISSUE OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT THAT THE PENAL PROVISIONS CANNOT BE ATTR ACTED TO CASES WHERE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND THE ADDITIONS WERE MADE THEREIN ON ESTIMATE BASIS, HAS RIGHTLY DELETED THE PENALTY.' (VI) CIT VS. AERO TRADERS PVT. LTD. (2010) 322 ITR 316 ( DEL) 12 ASSESSMENT BASED ON ESTIMATE PROFIT. NOT A FIT CASE OF CONCEALMENT OF INCOME FOR LEVY OF PENALTY. (VII) SHIV LAL TAK VS. CIT, RAJATHAN HIGH COURT, 121 TAXM AN 99. PENALTY CANNOT BE IMPOSED WHERE ADDITION HAS BEEN M ADE ON ESTIMATED BASIS. (VIII) GULRAJ VASWANI VS. ACIT, (ITSSA NO. 21/JP/06) IN TA X WORLD VOL- XXXIX PAGE-35 HELD THAT ' BEFORE TRIBUNAL IT HAS BEEN SUBMITTED THAT AT EVERY LEVEL THERE HAS BEEN AN ESTIMATION VARYING AS PER DIFFERENCE OF OPINION FROM AUTHORITY TO AUTHORITY AND HENCE PENAL TY CANNOT BE LEVIED ON THE ESTIMATED ADDITION (IX) HARIGOPAL SINGH VS. COMMISSIONER OF INCOME TAX 258 ITR 85 (P & H): PROVISIONS OF SECTION 271(1)(C) ARE NOT ATTRACTED T O CASES WHERE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND THE A DDITIONS WERE MADE THERE IN ESTIMATE BASIS (X) SMT. BITOLI DEVI VS. ACIT(2007), 110 TTJ (LUCK) 735 ( UNLESS ANY POSITIVE CONCEALMENT IS FOUND NO PENALTY IS LEVIABL E ON BASIS OF ADDITION MADE ON ESTIMATE. (XI) IT IS SETTLED LAW THAT NO PENALTY CAN BE LEVIED ON ESTIMATED DISALLOWANCE OR ADDITION. IT WAS HELD SO IN CIT V/S SUBHASH TRADING CO. 13 CTR PAGE 121 (GUJ.) IN VIEW OF THE AFORESAID SUBMISSION PENALTY MAY KI NDLY BE DELETED. COPY OF SUBMISSION MADE BEFORE THE LEARNED CIT(A) IS AVAILABLE ON PAPER BOOK PAGE NO. 54 TO 64. 2.6 ON THE OTHER HAND, THE LD DR HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. ON 28-01-2014 WHEN THIS APPEAL WAS FIXED FOR HEARING, THE SENIOR LD DR HAS FILED AN APPLICATION STATING THEREIN THAT TH E PAPER BOOK HAS BEEN SERVED ON HIM ONLY ON 24-01-2014 FOR THE DATE OF HE ARING FIXED FOR 28-01- 2014. WHEN THIS FACT WAS BROUGHT TO THE NOTICE OF T HE LD. AR THEN HE STATED THAT IN THE PAPER BOOK PAGES ONLY ORDERS OF THE TRI BUNAL AND SOME COPIES OF 13 THE STATEMENTS AND SUBMISSIONS MADE BEFORE THE LD C IT(A) ARE ENCLOSED. HE STATED THAT ENTIRE SUBMISSIONS MADE BEFORE THE LD C IT(A) HAS BEEN EXTRACTED BY HIM IN HIS ORDER. THUS HE STATED THAT THERE IS N OTHING NEW WHICH IS NOT AVAILABLE IN THE RECORDS ALREADY FILED. HOWEVER, IN THE INTEREST OF JUSTICE, THE CASE WAS ADJOURNED SO THAT THE LD. SENIOR DR SHRI D .C. SHARMA COULD GO THROUGH THE PAPER BOOK AND WRITTEN SUBMISSION FILED BY THE LD. AR. HOWEVER, ON 29-01-2014, WHEN THE APPEAL WAS TAKEN U P FOR HEARING THE LD. SENIOR DR, AS USUAL, SIMPLY RELIED ON THE ORDERS O F THE A.O. AND THE LD CIT(A) AND DID NOT UTTER EVEN A SINGLE ARGUMENT. . IT IS STRANGE TO NOTE THAT ON 28-01-2014 THE LD SENIOR DR FILED CYCLOSTYLED APPLICATIONS FOR ADJOURNMENT IN MOST OF THE CASES ALLOTTED TO HIM IN A CASUAL MANNER BY FILLING THE COLUMNS OF ALREADY TYPED LETTER MENTION ING THEREIN ONLY ONE REASON THAT PAPER BOOK FILED BY THE LD. AR WAS ON SUCH AND SUCH DATE DESPITE THE FACT THAT THESE WERE SERVED ON HIM 4/5 DAYS BEFORE. BE THAT AS IT MAY, ON THE FACTS OF THIS CASE, WE ARE CONSCIOUS TH AT EVEN IF THE LD SENIOR DR HAS NOT STATED ANYTHING AND SIMPLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. WE ARE DUTY BOUND TO DO JUSTICE TO THE PART IES AND WE HAVE GONE THROUGH EACH PAGE AND EACH WORD OF THE ORDERS OF TH E AUTHORITIES BELOW. THEREFORE, WE INCORPORATE THE ENTIRE PENALTY ORDER HEREIN AS BELOW. 14 THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCO ME TAX ACT 1961 WERE INITIATED AGAINST THE ASSESSEE WHILE PASSING ORDER U/S 143(3) READ WITH SECTION 148 OF THE INCOME TAX ACT 1961. THE ADDITION WERE MADE IN THE INCOME OF THE ASSESSEE AS PER THE RETURN FILED VIDE RECEIPT NO 2100000461 DATED 31.10.2006. IN RES PONSE TO NOTICE U/S 148, THE ASSESSEE STATED THAT THE RETURN FILED EARLIEST MAY BE TREATE D AS THE RETURN FIELD IN RESPONSE TO THE SAID NOTICE. THE ADDITIONS WERE MADE AND PENALTY PROCEEDINGS U/ S271(1)(C) OF THE INCOME TAX ACT, 1961 WERE INITIATED ACCORDINGLY ON EACH POINT :- A) ADDITION OF ACCOUNT OF UNACCOUNTED SALES; : RS. 1 1,66,215/- B) ADDITION ON ACCOUNT OF UNACCOUNTED AMOUNT IN LOOSE: RS. 44,50,235/- PAPERS. C) ADDITION ON ACCOUNT OF UNACCOUNTED INVESTMENT : RS . 4,32,78,595/- IN THE PURCHASE OF PLOT D) ADDITION ON ACCOUNT OF OTHER UNEXPLAINED EXPENSES : RS. 1,50,828/- THE ADDITION AT POINT A) WAS MADE ON ACCOUNT OF THE TRANSACTIONS FOUND IN THE SEIZED DOCUMENTS NUMBERING A-3 & A-5 RELATING TO THE UNACC OUNTED SALES AND WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THE ASSE SSEE COULD NOT GIVE ANY SATISFACTORY EXPLANATION FOR THE SALES RECORDED ON LOOSE PAPERS FOUND AND SEIZED FROM THE PREMISES. THE LD. CIT(A) REDUCED THE ADDITION MADE AS PER (A) TO RS. 2,91,554/- BY AND IT WAS FURTHER REDUCED TO RS. 1,39,946/- BY THE HONBLE IT AT. THE HONBLE ITAT STATED THAT ADDITION ON ACCOUNT OF UNACCOUNTED SALES @ 25% IS V ERY HIGH AND ADDITION @ 12% IS REASONABLE. THE ADDITION MADE AT POINT NO (B) WAS MADE BY THE AO, AS NO REPLY WAS FILED BY THE ASSESSEE, ON ACCOUNT OF UNEXPLAINED EXPENDITURE S AND P & L ACCOUNT ON ACCOUNT OF SONA JEWAR NAFA; CHANDI BARTAN NAFA & DIAMOND NAFA RECORDED ON THE LOOSE PAPERS IN ANNEXURE A-39 TO A-46 AND WAS FOUND NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THE ADDITION MAD EAT POINT NO (D) WAS MADE BY THE A O ON ACCOUNT OF UNEXPLAINED EXPENDITURES AS FOUND RECORDED ON THE LOOSE PAPERS AS NO EXPLAINED WAS GIVEN BY THE ASSESSEE. THE CIT(A) DELETED THE ADDITION ON BOTH THE ACCOUNT S STATING THERE IN THAT ALL THESE FIGURES IN LOOSE PAPERS HAVE BEEN RECORDED IN THE R EGULAR BOOKS OF ACCOUNTS. THE HONBLE ITAT CONFIRMED THE DECISION OF THE LD. CIT(A). THE ADDITION MADE AT POINT NO (C) WAS MADE BY THE A O ON ACCOUNT OF UNEXPLAINED INVESTMENTS MADE IN THE PURCHASES OF THE LAND AS RE CORDED ON LOOSE PAPERS AS PER ANNEXURE A-5. THE ASSESSEE CONTENDED THAT HE HAD EA RNED COMMISSION ON THE SALE/PURCHASE OF LAND OF THE VALUES MENTIONED IN TH ESE PAPERS. THE AO FOUND THE REPLY FILED BY THE ASSESSEE AS UNSATISFACTORY S HE COULD NOT SUBSTANTIATE HIS CLAIM THAT A) THESE SALES WERE MADE OUT OF THE SALES RECORDED IN THE BOOKS OF ACCOUNTS 15 B) HE COULD NOT GIVE THE DETAILS OF THE PERSONS / PART IES FOR WHOM THESE SALES WERE MADE AND HE HAD EARNED COMMISSION FROM THESE SALES. THE ADDITION MADE AT POINT NO. (C) HAS BEEN REDUCED TO RS. 80,90,000/- BY THE LD. CIT(A) GIVING THE FINDING THAT THE BALANCE HAS ALRE ADY BEEN CONSIDERED FOR THE PERIOD RELEVANT TO A.Y. 2004-05. THE HONBLE ITAT FURTHER REDUCED THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENTS IN THE SALE / PURCHASE OF T HE LAND TO RS. 43,27,859/-. THE HONBLE ITAT STATED THAT N. P. RATE OF 10% SHOULD B E APPLIED. NOTICE U/S 271(1)(C) OF THE INCOME TAX ACT 1961 WAS ISSUED ON 31.12.2009 AND SUBSEQUENTLY ON 14.06.2011. THE ASSESSEE FILED THE REPLY TO NOTICE VIDE LETTER DATED. IN THE SAID LETTER THE ASSESSEES COUNSEL SUBMITTED THAT A FTER THE RELIEF GIVEN BY THE LD. CIT(A) AND THE HONBLE ITAT, THE TOTAL ADDITION IS AS GIVE N BELOW :- A) ON ACCOUNT OF UNACCOUNTED SALES : RS. 1,39,946/- B) ON ACCOUNT OF UNACCOUNTED LAND SALES : RS. 43,27, 859/- SO ALL THE ADDITIONS MADE HAS BEEN ON ACCOUNT OF AD DITIONS MADE ON ESTIMATION OF THE INCOME AND PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961 CANNOT BE IMPOSED AND SUBMITTED THE FOLLOWING CASE LAWS IN SUPPORT OF HIS CONTENTION :- 1) DEVSONS P LTD VS CIT (2010) REPORTED IN ITR AS 329 ITR 483 (DELHI). 2) CIT VS BHARAT LAL DAGA (HUF) AS REPORTED IN 335 ITR 345 (PB & HARYANA). 3) CIT VS. AERO TRADERS P LTD AS REPORTED IN 322 ITR 3 16 (DELHI). IN ALL THESE CASES THE HONBLE HIGH COURT HAVE GIVE N FINDING THAT THE INCOME ADDITIONS MADE ON ESTIMATION BASIS CANNOT BE REASON FOR IMPOSING PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961. I HAVE GONE THROUGH THE CONTENTION OF THE ASSESSEE. THE CASES, MENTIONED ABOVE, WERE THE CASES WHERE THE ADDITION IN THE INCOME HAD BEEN ON THE ESTIMATION BASIS. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE AS ITS INCOME HAS BEEN ASSESSED BY APPLYING N.P. ON THE SALES WHICH COULD NOT BE EXPLAINED & WE RE PROVED BOGUS AND ON THE VARIOUS UNEXPLAINED INVESTMENTS AS RECORDED IN LOOSE PAPERS AND DAIRIES SEIZED DURING THE SURVEY U/S 133A OF THE INCOME TAX ACT 1961. IN THE CASES ( WHERE THE ASSESSEE TOOK THE PLEA THAT PENALTY CANNOT BE IMPOSED FOR THE ADDITIONS MADE ON ACCOUNT OF ESTIMATION BASIS) ARE OF THE FACTS OF ENTIRELY DIFFERENT NATURE FROM THE INS TANT CASE. HERE THE ASSESSEE COULD NOT GIVEN THE PROPER EXPLANATION FOR THE SOURCES OF INV ESTMENTS MADE AS PER THE LOOSE PAPERS SEIZED DURING THE SURVEY U/S 133A OF THE INCOME TAX 1961 AND NOT RECORDED IN THE BOOKS OF ACCOUNTS. FURTHER AS REGARDS THE ADDITION ON ACCOUNT OF INVES TMENTS UNACCOUNTED LAND SALES, THE ASSESSEE COULD NOT PROVIDE THE SATISFACTORY EXPLANA TION AND IT HAS ALSO BEEN HELD EVEN BY THE HONBLE ITAT THAT THE INVESTMENTS IN THE SALES OF LAND ARE UNACCOUNTED. 16 SO I IMPOSE A PENALTY OF RS. 14,75,812/-, AN AMOUN T EQUAL TO THE AMOUNT OF TAX SOUGHT TO BE EVADED. THE PENALTY HAS BEEN IMPOSED A FTER SEEKING APPROVAL OF THE ADDL. CIT, RANGE-1, JAIPUR VIDE LETTER NO. 1020 DATED 27/ 07/2011. FURTHER MORE, WE WILL EXTRACT THE PARA 4.2 OF THE LD CIT(A)S ORDER IN WHICH THE SUBMISSIONS MADE SHRI S.L. PODDAR, LD. AR APPEA RING FOR THE ASSESSEE HAS BEEN INCORPORATED. 1. NO CONCEALMENT OF INCOME IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS LEVIED THE PENALTY ON THE GROUND THAT IN THE CASE OF THE ASSESSEE ADDITIONS W ERE MADE IN RESPECT OF INCOME DETECTED DURING THE COURSE OF SURVEY ON THE BASIS O F VARIOUS LOOSE PAPERS. IN THIS REGARD IT IS SUBMITTED THAT THE SURVEY WAS CONDUCTE D ON 21.01.2008. DURING THE COURSE OF SURVEY SHRI CHANDRA PRAKASH GARG FATHER OF THE ASSESSEE WAS EXAMINED U/S 133A. IN REPLY TO QUESTION NO. 21 TO 24 IT WAS DEPOSED BY SHRI CHANDRA PRAKASH AGARWAL THAT WHATEVER INCOME IS FOUND DURIN G SURVEY SHALL BE DECLARED IN THE RETURN OF INCOME TO BE FILED FOR THE CURRENT FINANCIAL YEAR. A COPY OF THE STATEMENT IS AVAILABLE ON PAPER BOOK PAGE NO. 1 TO 11. THIS STATEMENT SHRI CHANDRA PRAKASH AGARWAL WAS NEITHER QUESTIONED NOR CHALLENGED BY THE LEARNED ASSESSING OFFICER WHO HAD RECORDED THE STATEMENT. T HIS MAKES IT CLEAR THAT THE ASSESSEE GOT A GREEN SIGNAL FROM THE DEPARTMENT THA T HE COULD DECLARE HIS INCOME FOUND AND NOTICED DURING THE COURSE OF SURVEY IN TH E RETURN FOR THE CURRENT FINANCIAL YEAR WHICH IN THIS CASE MEANS ASSESSMENT YEAR 2008-09. FURTHER THIS STATEMENT OF HIS FATHER WAS ACCEPTED BY THE ASSESSE E WHEN HIS STATEMENT WAS RECORDED ON 22.01.2008. IN REPLY TO QUESTION NO. 12 THE ASSESSEE DEPOSED THAT HE AGREED WITH THE STATEMENT OF HIS FATHER AND HE WOUL D DECLARE THE INCOME IN THE CURRENT FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2008-09. A COPY OF THE STATEMENT OF THE ASSESSEE IS AVAILABLE ON PAPER BOOK PAGE NO. 12 TO 19. THUS ON THE BASIS OF THE STATEMENT OF HIS FATHER AS WELL AS OF HIS OWN STATEMENT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT WHATEVER FOUND DURING SURVEY COULD BE DECLARED AS PART OF INCOME FOR THE CURRENT FINANCIA L YEAR. ACCORDINGLY ASSESSEE FILED RETURN FOR THE ASSESSMENT YEAR 2008-08 ON 06. 08.2008 AND IN THIS RETURN OF INCOME HE DISCLOSED THE FOLLOWING INCOMES ON ACCOUN T OF SURVEY U/S 133A CASH 556676 FOREIGN CURRENCY 195600 DEBTORS 16755000 STOCK 12542150 30049426 17 THE ACTION OF THE ASSESSEE IN DECLARING INCOME IN A SSESSMENT YEAR 2008-09 WAS A BONAFIDE ACTION AND THE SAME IS IN THE FITNESS OF T HINGS AS ON THE BASIS OF ASSETS HE WAS FREE TO DECLARE THE SAME IN THE ASSESSMENT YEAR 2008-09. THUS THE ASSESSEE CANNOT BE CHARGED FOR ANY ACTION OF CONCEALMENT AS HE DECLARED THE ENTIRE INCOME IN THE ASSESSMENT YEAR 2008-09. A COPY OF THE ACKNO WLEDGEMENT OF RETURN ALONG WITH THE COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2008-09 IS AVAILABLE ON PAPER BOOK PAGE NO. 20 TO 22. ALTHOUGH THE LEARNED ASSESSING OFFICER RESORTED TO ACTION U/S 148 AND ACCORDINGLY BROUGHT TO TAX CERTAIN INCOMES AS DETAI LED ABOVE IN ASSESSMENT YEAR 2006-07 WHEREAS ALL THESE INCOMES WERE CONSIDERED A ND DISCLOSED IN THE ASSESSMENT YEAR 2008-09. THE ASSESSEE WAS OF A CONS IDERED VIEW THAT WHATEVER EARNED BY HIM IN SALES/LAND TRANSACTION ETC. ACCUMU LATED IN THE SHAPE OF CASH, STOCK AND DEBTORS ETC. AND AS SUCH HE WAS JUSTIFIED IN DECLARING ALL THESE IN AS HIS INCOME IN ASSESSMENT YEAR 2008-09. THE LEARNED ASSE SSING OFFICER INSTEAD OF ACCEPTING THE THEORY OF INCOME ON ASSET BASIS TOOK ACTION ON THE BASIS OF ACCRUAL OF INCOME. BUT THE ABOVE FACTS MAKE IT CLEAR THAT T HE ASSESSEE DECLARED EVERYTHING IN THE RETURN FOR THE ASSESSMENT YEAR 2008-09 AND A S SUCH THE DEPARTMENT CANNOT MAKE A CHARGE OF CONCEALMENT AGAINST HIM SIMPLY ON THE GROUND THAT INCOME WAS DETECTED DURING SURVEY. THE ASSESSEE AGITATED BEFORE THE ITAT THAT HIS INCO ME SHOULD NOT BE TAXED TWICE FIRST IN ASSESSMENT YEAR 2008-09 WHERE HE HAD DECLA RED THE ENTIRE INCOME NOTICED DURING SURVEY AND SECONDLY IN THE RESPECTIV E ASSESSMENT YEARS. THIS SUBMISSION OF THE ASSESSEE FOUND FAVOUR WITH THE HO NBLE ITAT WHO IN THEIR ORDER IN ITA NO. 639, 1329, 1330 & 1331/JP/2010 DAT ED 30.12.2010 FOR THE ASSESSMENT YEAR 2004-05 TO 2007-08 HAVE GIVEN CLEAR DIRECTIONS IN PARA 28 APPEARING ON PAGE NO. 11 PARA 28 PAGE 11 'IN THIS ALTERNATE CONTENTION OF THE LEARNED COUNSE L OF THE ASSESSEE, WE ARE AGREE AS FROM THE DAY ONE IN THE STATEMENT GIVEN BY THE F ATHER OF THE ASSESSEE SHRI CHANDRA PRAKASH GARG HAD STATED THAT WHATEVER THE I NCOME REMAINS UNDISCLOSED FOR ASSESSMENT YEAR 2004-05 TO 2008-09 WILL BE SHOW N IN THE RETURN OF ASSESSMENT YEAR 2008-09. SOME OF THE QUESTION AND A NSWERS RELATING TO THE STATEMENT OF THE FATHER OF THE ASSESSEE HAVE BEEN R EPRODUCED IN THE ORDER OF ASSESSING OFFICER AND IT IS AMPLY PROVED THAT SHRI CHANDRA PRAKASH GARG, THE FATHER OF THE ASSESSEE HAS STATED MANY TIMES THAT T HE INCOME WILL BE COMPUTED ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SU RVEY THAT WILL BE SHOWN IN THE INCOME OF ASSESSMENT YEAR 2008-09 AND THE SAME HAS BEEN SHOWN ALSO. THEREFORE, IF SET OFF OF THIS INCOME IS NOT GIVEN F ROM THE INCOME ALREADY DECLARED FOR ASSESSMENT YEAR 2008-09 THAT WILL TANTAMOUNT TO DOUBLE ADDITION. THEREFORE, WHATEVER THE ADDITION IS SUSTAINED HERE THAT HAS TO BE REDUCED FROM THE INCOME SURRENDERED FOR ASSESSMENT YEAR 2008-09.' 18 PARA 31 PAGE 11 'FOR THE SAKE OF CLARIFICATION, AGAIN WE WOULD LIKE TO MENTION THAT WHATEVER THE ADDITION IS MADE IN THE YEAR UNDER CONSIDERATION TH AT HAS TO BE REDUCED FROM THE INCOME FOR ASSESSMENT YEAR 2008-09 WITH A RIDER THA T THE INCOME SURRENDERED FOR ASSESSMENT YEAR 2008-09 WILL NOT BE LESS THAN THAT AMOUNT AFTER TAKING INTO CONSIDERATION THE ASSESSED INCOME OF ASSESSMENT YEA R 2004-05 TO ASSESSMENT YEAR 2007-08 MEANING THEREBY WHATEVER THE ADDITIONS ARE SUSTAINED FOR ASSESSMENT YEAR 2004-05 TO 2007-08 THE SET OFF HAS TO BE ALLOWED FROM THE INCOME SURRENDERED FOR ASSESSMENT YEAR 2008-09' PARA 55 PAGE 19 'THIS ISSUE WAS ALSO INVOLVED IN THE EARLIER YEAR'S APPEAL AND WE HAVE ALLOWED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND HAS DIRECT ED THE ASSESSING OFFICER TO REDUCE THE AMOUNT OF INCOME ASSESSED DURING THE YEA R FROM THE INCOME SURRENDERED FOR ASSESSMENT YEAR 2008-09 OTHERWISE I T WILL TANTAMOUNT TO DOUBLE ADDITION' THE AFORESAID OBSERVATION OF THE HONBLE ITAT ARE I N RESPECT OF APPEALS FOR ASSESSMENT YEAR 2004-05 & 2005-06 WHERE THE SAME IS SUE EXISTED AND AS SUCH THE HONBLE ITAT GAVE DIRECTIONS FOR ALL THE ASSESS MENT YEARS. WHILE DISPOSING THE APPEAL FOR THE ASSESSMENT YEAR 2006-07 THE HON BLE ITAT HELD THAT THE DIRECTIONS GIVEN IN ASSESSMENT YEAR 2004-05 & 2005- 06 WOULD HOLD EQUALLY GOOD FOR ASSESSMENT YEAR 2006-07. (PARA 91). A COPY OF THE ITAT DECISION IS AVAILABLE ON PAPER BOOK PAGE NO. 23 TO 52. THE AFORESAID OBSERVATION OF THE HONBLE ITAT ESTAB LISH THAT ASSESSEE ACTED BONA-FIDE IN DECLARING ENTIRE INCOME IN ASSESSMENT YEAR 2008-09 AND THAT SINCE INCOME HAS BEEN ASSESSED IN RESPECTIVE ASSESSMENT Y EARS ON TECHNICAL GROUND ACCORDINGLY SET OFF WAS REQUIRED IN ASSESSMENT YEAR 2008-09. THUS INCOME STOOD DECLARED BY THE ASSESSEE IN 2008-09 BUT THE DEPARTMENT TECHNICALLY ASSESSED THE SAME IN DIFFERENT YEARS. THERE IS NO Q UESTION OF ANY CHARGE OF CONCEALMENT AGAINST THE ASSESSEE. HENCE THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVY THE PENALTY. THE SAME DESERVES TO THE QUASHED. THE AFORESAID SUBMISSION OF THE ASSESSEE THAT ONCE THE INCOME IS DISCLOSED IN THE RETURN OF INCOME COVERING ALL THE MATERIAL FOUND DU RING SURVEY CONDUCTED U/S 133A NO CONCEALMENT CAN BE ALLEGED ON THE PART OF T HE ASSESSEE SIMPLY ON THE GROUND THAT INCOME WAS DEDUCTED DURING SURVEY, IS S UPPORTED BY VARIOUS DECISION QUOTED BELOW (I) DEPUTY COMMISSIONER OF INCOME TAX VS. DR. SATIS H B.GUPTA (2011) 49 DTR 262 (AHEMDABAD TRIB) 19 THERE CANNOT BE ANY CONCEALMENT PRIOR TO FILING O F RETURN. (II) CIT VS. SAS PHARMACEUTICALS (2011) 335 ITD 259 (DELHI HIGH COURT) THE QUESTION WHETHER THE PARTICULAR OF INCOME WERE CONCEALED BY THE ASSESSEE OR NOT WOULD DEPEND UPON WHETHER THIS CONC EALMENT HAD REFERENCE TO THE RETURN FILED BY THE ASSESSEE. THE RATIOS OF THE AFORESAID CASE LAWS ARE FULLY APP LICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. THE ASSESSEE DISCLOSED ENTIRE INCOME IN THE ASSESSMENT YEAR 2008- 09. THE ASSESSEE HAD ACTED UNDER BONA-FIDE BELIEF T HAT HE COULD DISCLOSE ENTIRE INCOME IN ASSESSMENT YEAR 2008-09. 2. PENALTY IMPOSED ON ADDITIONS MADE ON ESTIMATE BA SIS NOTWITHSTANDING THE SUBMISSION MADE IN THE PRECEDIN G PARA IT IS FURTHER SUBMITTED THAT EVEN IN THE FACTS OF THE CASE PENALTY WAS NOT LEVIABLE IN THIS CASE. IT IS A CASE WHERE ADDITIONS HAVE BEEN MADE/SUSTAINED ON ESTIMAT E AGAINST ESTIMATE. SR. NO. PARTICULAR OF ADDITION QUANTUM OF ADDITION MADE BY THE LEARNED A.O. ADDITION UPHELD BY THE LEARNED CIT(A) POSITION OF ADDITION AFTER ITAT DECISION 1 UNACCOUNTED SALES 1166215 291554 (25% OF NP RATE APPLIED ON SALES OF RS. 11,66,215/-) 139946 (12% OF NP RATE APPLIED ON SALES OF RS. 11,66,215/-) 2 TRANSACTIONS IN LAND 43278595 8090000 4327860 (10% OF THE TURNOVER OF RS. 4,32,78,595/-) 3 ON THE BASIS OF LOOSE SHEETS 4450235 0 0 4 WITHOUT ANY BASIS 150828 0 0 ADDITION SUSTAINED 4467806 20 IT IS SUBMITTED THAT THE AFORESAID INCOME WHICH HAS BEEN SUSTAINED PURELY ON ESTIMATE BASIS ALSO REQUIRED SET OFF IN THE INCOME OF ASSESS MENT YEAR 2008-09. IN OTHER WORDS THE INCOME DECLARED IN ASSESSMENT YEAR 2008-09 BY THE A SSESSEE OF RS. 30049426/- COVERED THE INCOME OF ASSESSMENT YEAR 2006-07. THE DETAILS OF INCOME SURRENDER OF RS. 3,00,49,426/- ARE CITED SUPRA. THUS IN FACT THE ASS ESSEE DID NOT CONCEALED ANY INCOME. THERE ARE VARIOUS CASE LAWS WHICH HAVE STIPULATED T HAT PENALTY U/S 271(1)(C) CANNOT BE LEVIED IN A CASE WHERE ADDITIONS HAVE BEEN MADE ON ESTIMATE BASIS. THE CASE OF THE ASSESSEE FURTHER PECULIAR AND SPECIAL BECAUSE EVEN SUCH INCOME UPHELD ON THE BASIS OF ESTIMATE ALSO STOOD DECLARED IN ASSESSMENT YEAR 200 8-09. AS THE ASSESSEE WAS NOT KNOWING THE TECHNICALITY OF IT ACT OTHERWISE, HE WO ULD HAVE SHOWN SUCH INCOME IN THE RESPECTIVE ASSESSMENT YEARS. IN ANY CASE ONCE INCOM E HAS BEEN DISCLOSED BEFORE THE DEPARTMENT BY FILING A RETURN OF INCOME PENALTY U/S 271(1)(C) CANNOT BE LEVIED SIMPLY BECAUSE THE SAME WAS NOT SHOWN IN THE RELEVANT ASSE SSMENT YEAR. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- (I) CIT VS AERO TRADERS (P) LTD. (2010) 322 ITR 31 6 (DEL.) (II) GULRAJ VASWANI VS ACIT,(ITTSA NO.21/JP/06 IN TAX WORLD VOL.XXXIX PAGE 35. (III) SMT. BITOLI DEVI VS ACIT (2007) 110 TTJ (LUC K) 735 (IV) CIT VS MAHENDRA SINGH KHEDIA (2012) 71 DTR 18 9 (RAJ.) (V) CIT VS SUBHASH TRADING CO. 13 CTR 121 (GUJ.) (VI) SHIV LAL TAK VS CIT, 121 TM 99. IT WAS PRAYED THAT THE ASSESSEE BE GRANTED RELIEF ON THE BASIS OF THE ABOVE SUBMISSIONS. FURTHER THE LD CIT(A) HAS OBSERVED THAT BUT FOR THE SURVEY PROCEEDINGS, THE CONCEALMENT OF INCOME WOULD NOT HAVE COME TO FORTH . IT CAN BE HELD THAT THIS IS A CASE OF CONCEALMENT OF INCOME BUT AT THE SAME TIME, HE HAS AGREED THAT THE ADDITIONS ARE ESTIMATED ADDITIONS ONLY AND ARE BASED ON EVIDENCE FOUND DURING SURVEY. 2.7 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE WOU LD LIKE TO MENTION THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URING AND TRADING IN 21 JEWELLERY BEING PROP. OF M/S. GARG JEWELLERS. A SUR VEY U/S 133A OF THEACT WAS CONDUCTED ON 21-01-2008. DURING THE COURSE OF S URVEY, CERTAIN INCRIMINATING AND UNEXPLAINED ASSETS WERE FOUND. TH E STATEMENT OF THE FATHER OF THE ASSESSEE SHRI CHANDRA PRAKASH AGARWAL WAS RE CORDED AND HE STATED THAT WHATEVER INCOME WAS DISCOVERED DURING SURVEY S HALL BE DISCLOSED IN THE RETURN FOR THE A.Y. 2008-09. ON THE BASIS OF THIS S TATEMENT, THE ASSESSEE DISCLOSED ALL THE INCOME FOUND IN THE SURVEY PROCEE DINGS FOLLOWING ASSETS INCOME THEORY ON THE BASIS OF THE ASSETS FOUND. A R ETURN FOR THE A.Y. 2008- 09 WAS FILED ON 6-08-2008. HOWEVER, SUBSEQUENTLY, T HE A.O. ON THE BASIS OF THESE VERY FACTS, ISSUED NOTICE U/S 148 OF THE ACT FOR THE A.Y. 2006-07 ON 5- 03-2009. THIS NOTICE WAS UNDENIABLY ISSUED SUBSEQUE NT TO THE RETURN FOR THE A.Y. 2008-09 (BEING 06-08-2008). THE ASSESSEE HAS D ISCLOSED ALL THE FACTS TO THE DEPARTMENT IN THIS RETURN FOR THE A.Y. 2008-09 FILED MUCH BEFORE THE ISSUANCE OF NOTICE FOR A.Y. 2006-07. THE DEPARTMEN T HAS ASSESSED THE INCOME IN DIFFERENT ASSESSMENT YEARS INCLUDING THE A.Y. 2006-07 ON ACCRUAL BASIS INSTEAD OF ASSESSING THE ENTIRE INCOME IN ONE YEAR I.E. 2008-09 IN WHICH YEAR HE HAS DISCLOSED THE ENTIRE INCOME FOUND DURIN G THE COURSE OF SURVEY. THUS WE DO NOT SEE ANY REASON TO HOLD THAT ANY INCO ME IS FOUND CONCEALED ON THE PART OF THE ASSESSEE IN A.Y. 2006-07. AFTER GOING THROUGH THE ENTIRE RECORDS, IT IS FOUND THAT IMPUGNED PENALTY IS BASED ON ESTIMATED ADDITION 22 REGARDING UNACCOUNTED SALES AND INCOME HAS BEEN DET ERMINED BY APPLYING NET PROFIT RATE OF 12% TO THE DECLARED SALES. THE A DDITION MADE AND SUSTAINED ON ACCOUNT OF TRANSACTION DONE IN LANDS IS ALSO BAS ED ON ESTIMATION SUSTAINED @ 10% OF THE TURNOVER. UNDENIABLY, NO ADDITION MADE ON THE BASIS OF LOOSE SHEETS FOUND DURING SURVEY HAS BEEN SUSTAINED OR CO NFIRMED. WE HAVE GONE THROUGH THE SUBMISSIONS OF THE ASSESSEE AS WELL AS DEPARTMENT. BEFORE, WE GIVE FINAL VERDICT, LET US EXAMINE THE SCHEME OF PE NALTY U/S 271(1)( C) OF THE ACT. 2.8 BEFORE WE CONSIDER THE FACTUAL MATRIX OF THIS CASE TO ASCERTAIN AS TO WHETHER IN THE EYES OF THE PROVISIONS OF THE ACT AS EXPLAIN ED BY NUMEROUS JUDICIAL PRONOUNCEMENTS, PENALTY CAN BE LEVIED IN THIS CASE OR NOT, WE WOULD LIKE TO DISCUSS IN NUT SHELL THE RELEVANT LEGAL POSITION REGARDING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND AS TO HOW AND WHEN SUCH PENALTY CAN BE LEVIED UNDER THIS SECTION. THERE ARE NO TWO OPINIONS ABOUT THE SETTLED POSITIO N OF LAW THAT REGULAR ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO ENTIRELY DIFFERENT SUBJECTS WHICH OPERATE IN DISTINCT AND SEPARATE SPHERES SO MUCH SO THAT ENTIRELY DIFFERENT PARAMETERS ARE APPLICABLE FOR MAKING QUANTUM ADDITI ON AND FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THERE CAN BE N O DISPUTE WITH REGARD TO THE POSITION OF LAW THAT UNDER SECTION 271(1)(C) PENALT Y CAN BE LEVIED ONLY IF EITHER THE ACT OF 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME' IS FOUND TO HAVE BEEN COMMIT TED BY THE ASSESSEE. THESE ARE 23 TWO DIFFERENT OMISSIONS OR DEFAULTS ALBEIT THEY REF ER TO DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD N OT CONSTITUTE A DELIBERATE ACT OF EITHER SUPPRESSIO VERI OR SUGGESTIO FALSY. BY THE MERE REASON OF SUCH CONCEALMENT OR OF FURNISHING OF INACCURATE PARTICUL ARS ALONE, THE ASSESSEE DOES NOT, IPSO FACTO, BECOME LIABLE TO A PENALTY. IMPOSITION OF PENALTY IS NOT AT ALL AUTOMATIC. MEANING THEREBY, ANY ADDITION IN QUANTU M WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. NOT ONLY IS THE LEVY OF PENA LTY DISCRETIONARY IN NATURE BUT THE DISCRETION HAS TO BE EXERCISED KEEPING THE RELE VANT FACTORS IN MIND AND THE APPROACH OF THE TAXMAN MUST BE FAIR AND OBJECTIVE. THIS SUBJECT HAS BEEN A MATTER OF GREAT CONTROVERSY. FINALLY, AFTER REFERRING TO THE DECISIONS IN THE CASE OF DILIP N. SHROFF VS JCIT & ANOTHER, 291 ITR 519, UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369, AS WELL AS UN ION OF INDIA VS RAJASTHAN SPG. & WVG. MILLS [2009] 13 SCC 448, THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD, 322 ITR 158 , HAS RECENTLY HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECO NDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTI- CULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY , UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO 24 STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAI M TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INC OME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARI SE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRE CT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271 (1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNO T AMOUNT TO FURNISHING INACCURATE PARTICULARS. 2.9 ADVERTING TO THE FACTS OF THIS CASE, WE HAVE FO UND THAT PENALTY IN QUESTION IS SIMPLY BASED ON ESTIMATED ADDITION WHIC H CANNOT SURVIVE IN THE EYES OF LAW AS DISCUSSED ABOVE AND PARTICULARLY IN THE LIGHT OF THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SHIV LA L TAK VS CIT, 121 TM 99. THE ITAT LUCKNOW BENCH WHILE DECIDING THE CASE OF SMT. BITOLI DEVI VS ACIT (2007) 110 TTJ 735 HAS HELD THAT UNLESS ANY POSITIVE CONCEALMENT IS FOUND, NO PENALTY IS LEVIABLE ON THE BASIS OF AD DITION MADE ON ESTIMATE. LIKEWISE THE HON'BLE PUNJAB& HARYANA HIGH COURT IN THE CASE OF HARIGOPAL SINGH VS CIT 258 ITR 85 HAS TAKEN SIMILAR VIEW AND HON'BLE GUJARAT HIGH 25 COURT IN THE CASE CIT VS SUBHASH TRADING CO. 13 CTR 121 HAS ALSO TAKEN THE SAME VIEW. THE HON'BLE DELHI HIGH COURT WHILE D ECIDING THE CASE OF CIT VS AERO TRADERS (P) LTD. (2010) 322 ITR 316 HAS ALSO AFFIRMED THIS VIEW. WE MAY MENTION THAT THE QUANTUM PROCEEDINGS A ND PENALTY PROCEEDINGS ARE TWO SEPARATE AND PROCEEDINGS BOTH O F THEM TRAVEL AND TRAVERSE IN DIFFERENT SPHERES FOR WHICH DIFFERENT K IND OF EVIDENCE AND PROOF ARE REQUIRED. BOTH THESE PROCEEDINGS ARE IN FACT ES SENTIALLY INDEPENDENT. HOWEVER, THE FINDINGS GIVEN IN ASSESSMENT PROCEEDIN GS MAY BE RELEVANT AND HAVE PROBATIVE VALUE BUT THIS ALONE MAY NOT JUSTIFY THE IMPOSITION OF PENALTY IN A GIVEN CASE BECAUSE CONSIDERATIONS REQUIRED FOR IMPOSITION OF PENALTY ARE ENTIRELY DIFFERENT FROM THOSE WHICH ARE REQUIRED FO R MAKING QUANTUM ADDITIONS. THUS THE FINDINGS RECORDED IN ASSESSMENT ORDER MAY CONSTITUTE GOOD EVIDENCE AND ARE NOT CONCLUSIVE FOR THE PURPOS E OF PENALTY PROCEEDINGS. THUS THE SUSTAINED AND CONFIRMED ADDIT ION DOES NOT AUTOMATICALLY LEAD TO IMPOSITION OF PENALTY. THE LE VY OF PENALTY HAS TO BE CONSIDERED ON THE BASIS OF JUDICIAL DETERMINATION. IN THIS CASE, THE A.O. HAS IMPOSED PENALTY ON THE BASIS OF THREE ADDITIONS IN WHICH HE HAS TREATED THE AMOUNT OF CONCEALED INCOME, EACH OF THE ITEMS OF IN COME WAS EXAMINED THOROUGHLY IN DETAIL BY THE LD CIT(A) AS WELL ITAT AND BY REASONED ORDERS, BOTH HAVE COME TO CONCLUSION THAT THE ADDITIONS ARE BASED ON ESTIMATION 26 ONLY. THE FACT OR ALLEGATION BASED ON ESTIMATION CA NNOT BE SAID TO BE CORRECT OR INCORRECT AS WELL. THEREFORE, BY FOLLOWING THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS DR. GIRI RAJ AGARWAL (2012) 346 ITR 152 AND IN VIEW OF OTHER DECISIONS DISCUSSED AB OVE AND IN VIEW OF SETTLED POSITION OF LAW, WE ORDER TO DELETE THE IMP UGNED PENALTY. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED. 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05-0 3-2014. SD/- SD/- ( N.K. SAINI ) (HARI OM MARATHA ) ACCOUNTANT MEMBER JUDICIAL MEMBER *MISHRA COPY FORWARDED TO :- 1. SHRI JITENDER KUMAR AGARWAL, JAIPUR 2. THE ACIT, CIRCLE-1, JAIPUR 3. THE LD.CIT(A) 3. THE LD CIT 4. THE D/R 5. GUARD FILE (ITA NO.940/JP/2012) BY ORDER, AR ITAT, JAIPUR 27 28