M/s. Tirupati Construction Co., Bharuch V. The ACIT.,Cent.Circle-2, Baroda

ITSSA 251/AHD/2012

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3178 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 31-03-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 08-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Income from undisclosed sources; Document seized; Principle of natural justice; Period of limitation; Retrospective amendment; Bad and doubtful debts; Tax effect; Time period of passing order; Documents seized
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD , ACCOUNTANT MEMBER ./ ITSS NO. 251 & 274 / AHD /201 2 / ASSTT. YEAR: 20 0 4 - 20 05 M/S.TIRUPATI CONSTRUCTIONS CO, BHAGYODAYA ESTATE, ZADESHWAR ROAD, BHARUCH PAN : AACFT 9517 H VS . ACIT, CENTRAL CIRCLE - 2, VADODARA (APPLICANT) (RESPONENT) ASSESSEE BY : SHRI M.K. PATEL , AR REVENUE BY : SHRI JAMES KURIAN , SR.DR / DATE OF HEARING : 31 / 03 / 201 7 / DATE OF PRONOUNCEMENT: 05 / 04 /201 7 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THESE CROSS APPEAL S BY A SSESSEE AND REVENUE FOR ASST.YEAR 2004 - 2005 IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - IV , AHMEDABAD , DATED 30 / 0 3 / 201 2 , V IDE APPEAL NO.CIT(A) - IV/97 - B/CC - 2/10 - 11 ARISING OUT OF ORDER U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) FRAMED ON 02/02/2010 BY ACIT, CEN TRAL CIRCLE - 2, VADODARA. 2 . BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE RECORDS ARE THAT , ASSE SSE IS A PARTNERSHIP FIRM ENGAGED IN BUSINESS OF ROAD CONSTRUCTION . A SEARCH U/S.132 OF THE ACT, WAS CARRIED OUT IN THE CASE OF VIJAY K SHAH GROUP OF CASES ON ITA NO.251&274/AHD/2012 ASSTT. YEAR 2004 - 05 2 17/01/2007 . CONSEQUENT TO THE SEARCH ACTION AND BASED ON SUCH MATERIAL FOUND DURING THE COURSE OF SEARCH , THE PROCEEDINGS U/S.153A OF THE ACT, WAS INITIATED. ASSESSEE HAS FILED ITS R ETURN OF INCOME DECLARING LOSS AT RS.1,59,660/ - ON 24/12/2007 AS AGAINST DECLARED INCOME OF RS.4,88,697/ - SHOWN IN THE ORIGINAL RETURN OF INCOME FILED U/S.139(1) OF THE ACT. ASSESSMENT WAS COMPLETED U/S.153A(B) OF THE ACT R.W.S 143(3) OF TH E ACT, A SSESSIN G THE INCOME OF RS.1,64,67,923/ - AFTER MAKING VARIOUS ADDITIONS. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT, WAS INITIATED. 3 . IN QUANTUM APPEAL, ASSESSEE GOT PART RELIEF AND PURSUANT THERE TO PENALTY OF RS.11,77,000/ - U/S . 271(1)(C) OF THE ACT, W A S IMPOSED ON FOLLOWING TWO ADDITION S CONFIRMED BY LD.CIT(A). I) DISALLOWANCE OF BAD DEBTS OF RS.13,36,322/ - II) UNDISCLOSED INCOME OF RS.19,42,771/ - EMINATING OUT OF TRANSACTION S MENTIONED IN DIARY ANNEXED AT ANN.A1 /6 SEIZED DURING COURSE OF SEARCH. 4 . AGGRIEVED ASSESSEE CAME IN APPEAL BEFORE CIT(A) AGAINST THE IMPUGNED PENALTY U/S.271(1)(C) OF THE ACT, AND GOT PARTLY SUCCEEDED AS THE PENALTY U/S.271(1)(C) WAS DELETED FOR THE DISALLOW ANCE OF BAD DEBTS AND CONFIRMED FOR UNACCOUNTED INCOME OF RS.19,42,7 71/ - HAVING IT SOURCE FROM SEIZED MATERIAL. 5 . AGGRIEVED BOTH REVENUE AND ASSESSEE ARE IN APPEAL BEFORE THE TRIBUNAL , AGAINST THE ORDER OF LD .CIT(A) ARISING OUT OF U/S.271(1)(C) OF THE ACT, FRAMED BY LD. ASSESSING OFFICER. 6 . FIRST, WE TAKE REVENUE APPEAL VIDE IT(SS) NO.274/AHD/2012 RAISING A SINGLE GROUND AGAINST CIT(A)S ORDER DELETING PENALTY OF RS.4,79,410/ - OUT OF ITA NO.251&274/AHD/2012 ASSTT. YEAR 2004 - 05 3 TOTAL PENALTY LEVIED BY LD. ASSESSING OFFICER U/S.271(1)(C) OF THE ACT, OF RS,11,77,000/ - 7 . WE OBSERVE THAT THIS APPEAL OF REVENUE DESERVE S TO BE DISMISSED IN VIEW OF CBDT CIRCULAR NO.21/2015. ON 10.12.2015 THE CBDT HAS ISSUED INSTRUCTIONS BEARING NO. 21/2015 PROHIBITING ITS SUBORDINATE AUTHORITIES FROM FILING OF THE APPEAL TO THE TRIBUNAL AGAINST THE ORDER OF THE CIT(A) WHERE THE TAX EFFECT BY VIRT UE OF THE RELIEF GIVEN BY THE CIT(A) IS LESS THAN RS.10 LAKHS. THE INSTRUCTIONS HAVE BEEN MADE APPLICABLE WITH RETROSPECTIVE EFFECT, MEANING THEREBY, THESE INSTRUCTIONS ARE APPLICABLE ON PENDING APPEAL ALSO. THE TAX EFFECT ON DELETION OF THE TOTAL ADDITION IN THIS APPEAL IS LESS THAN RS.10 LAKHS. THE PRESENT APPEAL DESERVES TO BE DISMISSED BEING TREATED TO BE FILED IN VIOLATION OF CBDT INSTRUCTIONS. THE CASE DOES NOT FALL WITHIN THE AMBIT OF EXCEPTIONS PROVIDED IN THE INSTRUCTIONS. IT IS FURTHER OBSERVED THAT SINCE, WHILE HEARING THE APPEAL, SUCH FACTORS WERE NOT CONSIDERED, THEREFORE, IN CASE, ON RE - VERIFICATION AT THE END OF THE AO, IT CAME TO THE NOTICE THAT THE TAX EFFECT IS MORE OR THEY FALL WITHIN THE AMBIT OF EXCEPTION PROVIDED IN THE INSTRUCTION, T HEN THE DEPARTMENT WILL BE AT LIBERTY TO APPROACH THE TRIBUNAL FOR RECALL OF THIS ORDER. SUCH APPLICATION SHOULD BE FILED WITHIN LIMITATION PERIOD PROVIDED IN LAW. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE IS DISMISSED. 8 . NOW, WE TAKE UP APPEAL OF THE ASS ESSEE VIDE IT(SS)NO.251/AHD/2012 RAISING FOLLOWING GROUND OF APPEAL. 1.1 THE ORDER PASSED U/S.250 ON 30.03.2012 BY CIT(A) - IV, ABAD, CONFIRMING THE PENALTY LEVIED U/S.271(1)(C) IN RESPECT OF ADDITION OF RS.19,42,771/ - ON THE BASED OF SEIZED DIARY, IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. ITA NO.251&274/AHD/2012 ASSTT. YEAR 2004 - 05 4 2 .1 T HE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING THAT THE APPELLANT HAD CONCEALED INCOME TO THE EXTENT OF ADDITION OF RS.19,43,771/ - MADE IN RESPECT OF SEIZED DIAR Y AND THEREBY CONFIRMED THE PENALTY U/S.271(1)(C). 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THAT THE APPELLANT HAD CONCEALED INCOME BY FURNISHING INACCURATE PARTICULARS TO EXTENT OF RS. 19,43,771/ - IN RESPECT OF THE ADDITIONS CONFIRMED ON THE BASIS OF SEIZED DIARY. 9 . BRIEF FACTS RELATING TO T HESE GROUNDS ARE THAT DURING THE COURSE OF SEARCH , A DIARY ANNEXED AS A1/6 WAS SEIZED, WHEREIN UNACCOUNTED TRANSACTION S W ERE ENTERED INTO. BASED ON THE SEIZED MATERIAL , I.E DIARY AT A NNEXURE A1/6 THE ASSESSEE PREPARE D A WORKING SHEET ON THE BASIS OF WHICH FOR THE ASSESSMENT YEAR 2004 - 05 THE TOTAL RECEIPTS OF THE TRANSACTION S FALLING UNDER THIS PERIOD SHOWN IN THE SEIZED DIARY WERE CALCULATED AT RS .1,01,41,101/ - AND TOTAL OF PAYMENT FOR THE SAME PERIOD WAS CALCULATED AT RS.99,69,706/ - . 10 . THE LD. ASSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKING ADDITION ON GROSS RECEIPTS OF RS. 1,04,41,104 / - . W HEN THE QUANTUM ISSUE CAME IN APPEAL BEFORE CIT( A) HE THOUGHT IT DESIRABLE TO SUSTAIN THE ADDITION TO THE PEAK AMOUNT RATHER THAN GROSS AMOUNT AND ACCORDINGLY CALCULATED THE PEAK AT RS.14 , 35 , 666/ - AND FURTHER ADDED 5 PERCENT AS NET PROFIT OF THE GROSS RECEIPTS OF RS.1,01,42,101/ - AND SUSTAINED THE ADDIT ION OF RS.19 , 42 , 771/ - (PEAK A MOUNT AT RS.14,35,666/ - PLUS NET PROFIT AT RS.5,07,105/ - ) 11 . THEREAFTER, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF LD.CIT(A) AND GOT A MINOR RELIEF AS THE QUANTUM ADDITION ON ACCOUNT OF SEIZED DI ARY WAS RESTRICTED TO RS.14,35,666/ - BY THE CO - ORDINATE BENCH BY OBSERVING AS FOLLOWS VIDE ITS ORDER DATED 13/11/2013 (ITA NO.178 & OTHER S ): - ITA NO.251&274/AHD/2012 ASSTT. YEAR 2004 - 05 5 WE HAVE CONSIDERED RIVAL SUBMISSION AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE PEAK AMOUNT CREDIT AND DEBIT ENTRIES ON THE SEIZED PAPERS AMOUN TING TO RS.14,35,666/ - COULD BE VALIDITY TAXED IN THE HAND OF THE ASSESSEE. IN OUR VIEW, THERE IS NO JUSTIFICATION FOR FURTHER ADDING NET PROFIT AT THE RATE OF 5% ON THE GROSS RECEIPTS ON THE SEIZED PAPERS OF THE ASSESSEE. THERE IS ALSO NO JUSTIFICATION FO R THE AO TO ADD THE ENTIRE RECEIPTS SIDE OF THESE SEIZED PAPER, AND NOT CONSIDERING THE PEAK OF THE CREDIT AND DEBIT ENTRIES. IN THIS VIEW OF THE MATTER, WE HOLD THAT THE ADDITION SHOULD BE SUSTAINED TO THE EXTENT OF RS.14,35,666/ - AS AGAINST RS.19,42,771/ - SUSTAINED BY THE LEARNED CIT(A), AND THE GROUND OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED TO THIS EXTENT. 12. THE PRESENT APPEAL OF THE ASSESSEE IS AGAINST THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT, ON THE ADDITION SUSTAINED BY LD.CIT(A). IN T HE PENALTY ORDER ALLEGED INCOME OF RS.92,42,771/ - WAS TREATED AS UNEXPLAINED AND UNACCOUNTED INCO ME CONCEALED BY THE ASSESSEE AS THE NECESSARY PARTICULAR THEREOF WERE NOT FURNISHED IN THE REGULAR RETU RN OF INCOME AND THU S IT WAS LIABLE FOR PENALTY IN POSI TION U/S.271(1)(C) OF THE ACT. THE IMPUGNED PENALTY U/S.271(1)(C) ON THE SUSTAINED ADDITION OF RS.19,42,771/ - WAS FURTHER CONFIRMED BY LD.CIT(A). 13. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL , AGAINST THE PENALTY U/S.271(1) (C) OF THE ACT, CONFIRMED BY LD .CIT(A). 14. LD.COUNSEL SUBMITTED THAT NO PENALTY SHOULD HAVE BEEN SUSTAINED BECAUSE LD. ASSESSING OFFIC ER MADE A GROSS ADDITION OF RS.1 , 04 , 42 , 101/ - BY MERELY ADDING ALL THE RECEIPTS SHOWN IN SEIZED DIARY . THESE ADDITION S MA DE BY ASSESSING OFFICER WAS SCALED DOWN BY LD.CIT(A) BY APPLYING THE PEAK AT RS.14,35,666/ - AND ADDING NET PROFIT OF 5 PERCENT ON THE GROSS RECEIPTS OF RS.1.01 CRORES. LD.COU N SEL FURTHER ADDED THAT ADDITION SUSTAINED BY LD CIT(A) ITA NO.251&274/AHD/2012 ASSTT. YEAR 2004 - 05 6 WAS FURTHER BROUGHT DOWN BY CO - ORDINATE BENCH. IN THE S E CIRCUMSTANCES , WHEN THE IMPUGNED ADDITION IS CHANGING IT S SHAPE AND COMING DOWN STEP BY STEP , IT CLEARLY MEANS THAT THERE IS A MERE ESTIMATION OF CONCEALED INCOME ON WHICH NO PENALTY SHOULD HAVE BEEN IMPOSED U/S.271(1)(C) OF THE ACT . 15. ON THE OTHER HAND LD .DR VEHEMENTLY ARGUED SUPPORTING THE ORDER OF LD.CIT(A). 16. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE RECORDS PLACED BEFORE US. THROUGH THIS APPEAL ASSESSE H AS RAISED A SINGLE GROUND AGAINST CIT(A)S ORDER CONFIRMING PENALTY LEVIED U/S.2 71(1)(C) OF THE A CT, IN RESPECT OF ADDITION OF RS.19,42,771/ - ON THE BASIS OF SEIZED DIARY IMPOSED BY LD. ASSESSING OFFICER. WE OBSERV E THAT DURING THE COURSE OF SEARCH PROCEEDING S CARRIED OUT U/S.132 OF THE A CT, AT THE ASSESSEE PREMISES IN THE CASE OF VIJAY K. SHAH GROU P ON 17/01/ 2007 DOCUMENTS PERTAINING TO THE ASSESSEE WERE ALSO SEIZED INCLUDING DIARY . IN THIS SEIZED DIARY THERE WERE VARIOUS UNACCOUNTED TRANSACTIONS OF THE ASSESSEES GROUP. UNDISPUTEDLY , THESE TRANSACTIONS WERE NO T FORMING PART OF THE REGULAR BOOK OF ACCOUNT S AND THERE WAS A N ELEMENT OF CONCEALED INCOME IN THESE TRANSACTIONS . LD. ASSESSING OFFICER MADE AN ADDITION S OF THE TOTAL RECEIPTS OF TRANSACTIONS OF R.1 , 01 , 41 , 101 PERTAINING TO ASSESSMENT YEAR 2004 - 05. 17 . WE OBSERVE THAT LD.CIT(A) RESTRICTED THESE ADDITION S TO THE PEAK AMOUNT OF RS.14 , 45 , 666/ - AND ALSO ADDED 5 PERCENT AS NET PROFIT ON GROSS RECEIPTS. HOWEVER, CO - ORDINATE BENCH DELETED THE PORTION OF FIVE PERCENT NET PROFIT AND CONFIRME D THE REMAINING ADDITION OF RS. 14 , 45 , 666/ - . I T IS NOT THE CASE OF ASSESSEE THAT THERE IS NO ELEMENT OF CONCEALED INCOME IN THE ALLEGED TRANSACTIONS SHOWN IN THE SEIZED DIARY. IT CERTAINLY MEANS THAT THERE WAS CONCEALMENT OF PARTICULAR OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULAR OF INCOME BY ITA NO.251&274/AHD/2012 ASSTT. YEAR 2004 - 05 7 THE ASSESSEE AS THEY WERE NOT SHOWN IN REGULAR RETURN OF INCOME AND THEREFORE , IT ATTRACT S THE PENAL PROVISION U/S . 271(1)(C ) OF THE ACT. WE FURTHER OBSERVE THAT LD .CIT(A) HAS CONFIRMED PENALTY ON THE UNDISCLOSED INCOME OF RS.19 , 47 , 771/ - IN RIGHT PERSPECTIVE BY OBSERVING AS FOLLOWS: 7. SO FAR AS PENALTY LEVIED IN RESPECT OF UNDISCLOSED INCOME OF RS.10,42,771/ - IS CONCERNED, IT IS NOTED THAT THE SEIZED DIARY (A1/6) CONTAINED ACCOUNTED AND UNACCOUNTED TRANSACTIONS OF THE APPELLANT FIRM. BASED ON THE UNACCOUNTED TRANSACTIONS RELATED TO RECEIPTS - AND PAYMENTS, THE CIT (APPEAL) VIDE ORDER NO.CIT(A) - IV/234 - B/CC - 1/08 - 09 DTD.03/11/2009 HAS NOTED THAT MANY ENTRIES RELATED TO UNACCOUNTED RECEIPTS FOR WHICH SOURCE IS NOT EXPLAINED FURTHER, THERE IS INCOMING AND OUTGOING OF SUCH RECEIPTS. AT TIMES EXPENSES ARE MORE THAN THE AVAILABLE R ECEIPT ALTHOUGH SUCH RECEIPTS MUST BE METED OUT OF THE RECEIPTS NOT APPEARING IN THE DIARY OF PECULIAR FACTS OF THIS CASE THE CIT(A) HAS GIVEN THE FINDING AS UNDER: 'IN VIEW OF THE ABOVE PECULIAR FACTS OF THE CASE, THE TAXING OF THE INCOME OF THE APPELLANT ON THE BASIS OF HIGHEST PEAK IS THE MOST APPROPRIATE METHOD WHICH COVERS ALL THE RECEIPTS AS WELL AS EXPENSES WHETHER ACCOUNTED OR UNACCOUNTED. IN ADDITION TO IT, THE INCOME FROM THE . GROSS RECEIPTS WILL A/SO BE SUBJECT TO TAX BY APPLYING THE NET PROFIT RATE OF 5% ON THE GROSS - RECEIPTS AS HELD AND CONFIRMED BY THE OIL (A) IN THE CASE OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION IN REGULAR ASSESSMENT. IN VIEW THEREOF, IT IS HELD THAT THE INCOME FROM THE TRANSACTIONS RECORDED IN THE SEIZED DIAR Y AT ANN.A1 - 6 IS DETERMINED ON THE BASIS OF HIGHEST PEAK AS INCREASED BY THE NET PROFIT OF 5% ON THE RECEIPTS AND TAXED ACCORDINGLY FOR THE AY 2004 - 05, AY 2005 - 06 AND AY 2006 - 07. THE PEAK WORKING IS AS UNDER: JS. NO. AY PARTICULARS AMOUNT (RS.) TAXABL E PEAK (RS.) 1 2004 - 05 MAXIMUM POSITIVE BALANCE MAXIMUM NEGATIVE BALANCE TOTAL 13,22,8197 - 1,12,8477 - 14,45,6667 - 14,45,6667 - IN VIEW OF THE A BOVE WORKING, THE INCOME OF RS.14,35,666/ - WILL BE SUBJECT TO TAX ON ACCOUNT OF HIGHEST PEAK. THE INCOME FROM THE GROSS RECEIPTS WILL BE FOR RS.5,07,1057 - BY APPLYING, THE NET PROFIT RATE OF 5% OF THE GROSS RECEIPTS OF RS:1,Q1,42,101/~. THE TAXABLE INCOME WILL THUS BE FOR RS.19,42,771/ - AND THE SAME IS CONFIRMED TO THIS EXTENT.' ITA NO.251&274/AHD/2012 ASSTT. YEAR 2004 - 05 8 THE PENALTY HAS BEEN LEVIED BY THE AO IN RESPECT OF ABOVE AMOUNT OF UNDISCLOSED INCOME BASED ON PEAK METHOD WHICH IS SUITABLY ENHANCED BY NET PROFIT. SINCE THE APPELLANT DID NOT SUBMIT ANY REPLY DURING THE COURSE OF PENALTY PROCEEDINGS, THE AO HAS LEVIED PENALTY IN RE SPECT OF THE ABOVE ADDITION OF UNACCOUNTED INCOME WHICH IS DULY CONFIRMED BY THE CIT (A). 7.1 THE CONTENTION OF THE APPELLANT IS THAT THE APPELLANT HAS EXPLAINED THE CONTENTS OF THE DIARY BEFORE THE CIT (A) AS WELL AS AO, THE ADDITION OF UNDISCLOSED INCOM E OF RS, 19,42,771/ - HAS BEEN ASSESSED ON ESTIMATED BASIS BY REJECTING THE EXPLANATION. ON THE PERUSAL OF THE ADDITION OF UNDISCLOSED INCOME AS CONFIRMED BY THE CIT (A), IT IS NOTED THAT THE SAME IS BASED ON SCRUTINY OF SEIZED DOCUMENTS I.E. DIARY WHICH CO NTAINS UNACCOUNTED TRANSACTIONS: RELATED TO RECEIPTS AND PAYMENTS OF THE APPELLANT FIRM. BASED ON THE ANALYSIS OF THESE UNACCOUNTED TRANSACTIONS, TAXING UNACCOUNTED INCOME BASED ON THE PEAK METHOD IS OBVIOUSLY THE MOST APPROPRIATE METHOD. 7.2 I AGREE THAT THE PENALTY CANNOT BE LEVIED WHERE ADDITION IS MADE ON ESTIMATED BASTE UNLESS IT IS ESTABLISHED THAT ESTIMATION IS BASED ON ACTUAL CONCEALMENT RELATED TO ANY ADVERSE EVIDENCE/MATERIAL. IN THE PRESENT CASE THE SEIZED DIARY CONTAINS THE UNACCOUNTED INCOME O F THE APPELLANT AS IT RELATES TO UNACCOUNTED TRANSACTIONS OF THE FIRM WHICH ARE NOT RECORDED; IN THE REGULAR BOOKS OF ACCOUNTS. THEREFORE, ANY INCOME ESTIMATED ON SUCH ADVERSE EVIDENCE DEFINITELY LEADS TO CONCEALMENT OF PARTICULARS INCOME OF THE APPELLANT. THIS IS NOT A CASE OF ESTIMATION OF INCOME AS IS MADE CUT BY THE APPELLANT. IN FACT, THIS IS A CASE OF CONCEALMENT OF INCOME DETECTED DURING THE COURSE OF SEARCH IN THE FORM OF UNACCOUNTED FINANCIAL TRANSACTIONS. SUCH UNACCOUNTED TRANSACTIONS CANNOT BE WI THOUT THE KNOWLEDGE OF APPELLANT. ONCE INCOME IS ESTIMATED BASED ON THE CONCEALMENT OF PARTICULARS OF INCOME, THE SAME CANNOT BE EQUATED WITH THE CASES OF GENERAL ESTIMATION OF INCOME WITHOUT ANY MATERIAL EVIDENCE. THEREFORE, THERE IS NO SCOPE FOR ANY DOUB T THAT ACCOUNT BOOKS OF THE APPELLANT HAVE NOT DEPICTED TRUE STATE OF AFFAIRS. IN THIS REGARD, FINDINGS OF HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF SUSHIL KUMAR SARAD KUMAR [1998] 232 1TR 588 (ALL) ARE REPRODUCED AS UNDER: 'THERE WAS NO SUBSTANCE IN THE CONTENTION OF THE ASSESSES THAT PENALTY UNDER SECTION 271(1)(C) CANNOT BE IMPOSED IN ALL CIRCUMSTANCES WHENEVER THE INCOME IS ASSESSED ON ESTIMATE REJECTING THE EXPLANATION OF THE ASSESSEE FOR LOW DOMESTIC WITHDRAWALS OR FOR ALIKE REASONS BECAUSE THER E COULD NOT BE ANY SUCH INFLEXIBLE RULE. THERE MIGHT BE CASES WHERE ADDITIONS COULD BE MADE PURELY ON ESTIMATE WITHOUT REFERENCE TO ANY EVIDENCE/MATERIALS BEING ON RECORD. IN SUCH A CASE, IT COULD BE ARGUED WITH SOME FORCE THAT THE PENALTY COULD NOT BE LEV IED ON THE FIGURES WHICH WERE MERELY BASED ON GUESS WORK OR ESTIMATE. BUT, IN THE INSTANT CASE, WHERE AFTER A DETAILED INVESTIGATION THE ASSESSEE WAS CONFRONTED WITH EVIDENCE AND MATERIALS AND HE FAILED TO DISLODGE THE FACTUAL POSITION ON THE BASIS OF WHIC H ADDITIONS WERE MADE, IT WAS A/WAYS OPEN TO DRAW AN INFERENCE OF CONCEALMENT OR OF FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN LAW IN CONFIRMING PENALTIES FOR THE ASSESSMENT YEARS 1972 - 73, 1 973 - 74 AND 1 974 - 75. ' ITA NO.251&274/AHD/2012 ASSTT. YEAR 2004 - 05 9 7.3 I N VIEW OF THE ABOV E I AM OF THE CONSIDERED OPINION TH AT PENALTY LEVIED BY THE AO IN RESPECT OF ADDITION OF UNDISCLOSED INCOME WHICH IS BASED ON SEIZED MATERIAL IN THE FORM OF DIARY CONTAINING UNACCOUNTED TRANSACTIONS IS PERFECTLY JUSTIFIED AND, THEREFORE, PENALTY LE VIED IN RESPECT OF THE ADDITION OF RS.19,42,771/ - ON ACCOUNT OF UNDISCLOSED INCOME IS, ACCORDINGLY, CONFIRMED . FURTHER, PENALTY LEVIED IN RESPECT OF DISALLOWANCE OF B AD DEBTS IS CANCELLED. THEREFORE, THE AO IS DIRECTED TO RECALCULATE THE AMOUNT OF PENALTY LEVIABLE IN RESPECT OF ADDITION OF UNDISCLOSED INCOME OF RS. 19,42,771/ - AT THE MINIMUM RATE OF 100% OF TAX SOUGHT TO BE EVADED. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 18 . FROM GOING THROUGH THE ABOVE DISCUSSION AND THE F INDINGS OF LD.CIT(A) WE ARE OF THE CONSIDERED OPINION THAT ALLEGED DIARY SEIZED DURING THE COURSE OF SEARCH WAS CONSISTING OF VARIOUS UNACCOUNTED TRANSACTIONS WHICH WERE THE SOURCE OF UNACCOUNTED INCOME OF THE ASSESSEE. IN THE GIVEN FACTS ASSESSEE DESERVES TO BE PENALIZED U/S.271(1)(C) OF THE ACT, BUT ONLY ON ADD I TION OF RS.14,35,666/ - AS CONFIRMED BY THE CO - ORDINATE BENCH IN THE QUANTUM APPEAL . 19 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 5 TH A PRIL , 2017 AT AHMEDABAD. SD/ - SD/ - ( RAJPAL YADAV ) JUDICIAL MEMBER (MANISH BORA D ) ACCOUNTANT MEMBER A HMEDABAD; DATED 05 / 04 /2017 MANISH / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE .