ACIT, New Delhi V. M/s Vinod Raj & Co., Delhi

ITSSA 36/DEL/2012

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1706 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 11-02-2016
• Assessment Year: misc
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SULEKHA VERMA
• Keywords: Loose papers; Peak credit; Block assessment
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER IT(SS)A NOS. 37 & 36/DEL/2012 BLOCK PERIOD : 01.04.1996 TO 25.02.2003 ASSISTANT COMMISSIONER OF INCOME TAX VS. M/S VINOD RAJ CO. CIRCLE 28(1), NEW DELHI 445, KATRA MEDIGRAM KHA RI ROOM NO. 105, DRUM SHAPE BUILDING, BALOLI, IP ESTATE, NEW DELHI 2 DELHI-6 (PAN:AAAFV0109R) (APPELLANT) (RESPONDENT) DEPARTMENT BY : MRS. SULEKHA VERMA, CI T(DR) ASSESSEE BY : SH. K. SAMPATH, ADV. DATE OF HEARING : 11-02-2016 DATE OF ORDER : 10-3-2016 ORDER PER H.S. SIDHU, J.M. THE DEPARTMENT HAS FILED THESE APPEALS AGAINST THE IMPUGNED ORDERS BOTH DATED 08.05.2012 RELATING TO DELETION OF ADDIT ION OF RS. 21,36,111/- AND RELATING TO DELETION OF PENALTY OF RS. 43,42,100/- U/S. 158BFA(2) OF THE INCOME TAX ACT, 1961 RELEVANT TO BLOCK PERIOD 01.04.1996 T O 25.02.2003. SINCE THE ISSUES INVOLVED IN BOTH THE APPEALS ARE INTER-LINKE D, THEREFORE, THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED IN IT(SS)A NO. 37/DEL/2012 RE AD AS UNDER:- 1. ON THE FACTS AND LAW THE LD. CIT(A), NEW DELHI HAS ERRED IN DELETING THE ADDITION OF RS. 21,36,111/- MADE BY TH E AO BY IGNORING THE FACT THAT ADDITION MADE ON THE BASIS O F GP RATE AND PEAK CREDIT ARE SEPARATE AND IN ADDITION TO ALREADY UNDISCLOSED INCOME OF RS. 65.78 LACS. IT(SS)A NOS.37 & 36/DEL/2012 2 2. ON THE FACT AND LAW THE LD. CIT(A), NEW DELHI HA S ERRED IN DELETING THE ADDITION OF RS. 21,36,111/- MADE BY TH E AO BY IGNORING THE FACT THAT ADDITION MADE BY THE AO SHOU LD BE ADDED TO THE INCOME WHICH HAS BEEN RETURNED BY THE ASSESSEE . 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RI GHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS HEARING. 3. THE GROUNDS RAISED IN IT(SS)A NO. 36/DEL/2012 RE AD AS UNDER:- 1. ON THE FACTS AND LAW THE LD. CIT(A), NEW DELHI H AS ERRED IN DELETING THE ENTIRE CONCEALMENT PENALTY OF RS. 43,4 2,100/- IN SPITE OF THE FACT THAT THE QUANTUM ADDITION HAD BEEN CONF IRMED BY THE ITAT. 2. ON THE FACTS AND LAW THE LD. CIT(A), NEW DELHI H AS ERRED IN DELETING THE ENTIRE PENALTY DESPITE THE FACT THAT T HE ADDITION WAS MADE ONLY AFTER SEARCH OPERATION, OTHERWISE THE ASS ESSEE WAS DELIBERATELY CONCEALING THE FACTS AND HAD FILED INA CCURATE PARTICULARS OF INCOME. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE R IGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS HEARING. IT(SS)A NO. 37/DEL/2012 4. THE BRIEF FACTS OF THE CASE ARE THAT THE SEARC H AND SEIZURE OPERATION WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESS EE. DURING THE SEARCH PROCEEDINGS, CERTAIN INCRIMINATING DOCUMENTS WERE F OUND CONSISTING OF A BUNG OF LOOSE PAPERS, A POCKET DIARY, DUPLICATE BOOK, NO TE BOOK AND LEDGER. A NOTICE U/S. 158BC DATED 27.5.2004 WAS ISSUED AND DULY SER VED ON THE ASSESSEE. THE ASSESSEE FILED A RETURN OF INCOME FOR THE ABOVE MEN TIONED BLOCK PERIOD DECLARING TOTAL UNDISCLOSED INCOME AT RS. 21,36,111 /-. THE ORDER U/S. 158BC DATED 25.2.2005 WAS PASSED BY THE AO DECLARING THE TOTAL UNDISCLOSED INCOME AT RS. 2,92,43,457/- AGAINST THE RETURNED UNDISCLOS ED INCOME OF RS. 21,36,111/-. 4.1 AGGRIEVED WITH THE ASSESSMENT ORDER DATED 25.2. 2005, ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHO HAS HELD THAT THE UNACCOUNTED CASH BALANCE IT(SS)A NOS.37 & 36/DEL/2012 3 WITH THE ASSESSEE AT ANY POINT OF TIME WAS NOT MORE THAN 6,76,393/- AND ACCORDINGLY CONFIRMED THE ADDITION OF RS. 6,76,393/ - ONLY AND DELETED THE BALANCE ADDITION OF RS. 2,35,65,207/-. AGAINST WHI CH THE ASSESSEE AS WELL AS THE DEPARTMENT WAS IN APPEAL BEFORE THE TRIBUNAL AN D THE TRIBUNAL HAS UPHELD THE ESTIMATED GP RATE @4.4% WHICH WAS TAKEN BY THE AO AND AS SUCH HAS REVERED THE ORDER OF THE CIT(A) WHICH HAD UPHELD TH E GP RATE ADDITION @2.39% WHICH WAS TAKEN ON THE BASIS OF SEIZED BOOKS AND D OCUMENTS. REGARDING THE ADDITION OF RS. 2,42,41,600/- MADE BY THE AO UNDER THE HEAD PEAK CONFIRMED THE ADDITION OF RS. 6,76,393/- ONLY AS AGAINST THE ADDITION OF RS. 2,42,41,600/- MADE BY THE AO. THEREAFTER THE AO HAD GIVEN THE E FFECT AFTER THE ORDER OF THE TRIBUNAL IN THE ORDER DATED 30.12.2007 AND FINALLY THE ADDITION OF RS. 65,78,933/- WAS MADE AND AS SUCH THE TOTAL INCOME W AS ASSESSED AT RS. 87,15,044/- WHICH INCLUDED THE ASSESSEES UNDISCLOS ED BLOCK RETURN INCOME OF RS. 21,36,111/-. AFTER THAT ASSESSEE FILED PETITIO N U/S. 154 BEFORE THE AO WHICH WAS REJECTED BY THE AO VIDE ORDER DATED 20.6.2011 P ASSED U/S. 154/254 READ WITH SECTION 158BC OF THE I.T. ACT, 1961 DETERMININ G TOTAL INCOME AT RS. 87,15,040/- AS AGAINST THE RETURNED INCOME OF RS. 2 1,36,111/- AGAINST WHICH THE ASSESSEE FILED THE APPEAL BEFORE THE LD. CIT(A)-XXV , NEW DELHI WHO VIDE IMPUGNED ORDER 08.5.2012 HAS ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A)S, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD. DR RELIED UPON THE ORDER OF THE ASSESSING OF FICER AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 6.1 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE AND THE SAME M AY BE UPHELD. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDER OF THE REVENUE AUTHORITIES. THE FACTS EMERGE S FROM THE ORDER OF THE AO IS THAT A SEARCH U/S 132(1) WAS CONDUCTED IN THIS CASE ON 25/02/2003 AND VARIOUS INCRIMINATING BOOKS OF DOCUMENTS WERE SEIZED DURING THE COURSE OF SEARCH. THE BLOCK ASSESSMENT PROCEEDINGS WERE INITIATED FOR THE BLOCK PERIOD 1.4.1996 TO 25.2.2003 AND THE AO HAD ISSUED NOTICE U/S. 158BC F OR FILING OF THE BLOCK IT(SS)A NOS.37 & 36/DEL/2012 4 RETURN. THE ASSESSEE HAD FILED THE BLOCK RETURN AND DECLARED UNDISCLOSED INCOME IN THE BLOCK RETURN OF RS. 21,36,111/-. THE AO HAD TAKEN UP THE CASE FOR SCRUTINY AND COMPLETED THE BLOCK ASSESSMENT AT THE TOTAL ASSESSED INCOME OF RS. 2,92,43,457/- AS AGAINST THE UNDISCLOSED BLOCK RETU RN INCOME OF RS. 21,36,111/- AND AS SUCH HAS MADE THE ADDITION OF RS. 2,71,07,34 6/- (RS. 2,92,43,457 (-) RS. 21,36,111) UNDER THE TWO DIFFERENT HEADS WHICH ARE UNDER THE HEAD ESTIMATED GP ADDITION @ 4.4.% OF RS. 50,01,857/- ON THE GROUND OF UNACCOUNTED PURCHASE AND SALE AND ALSO UNDER THE PE AK CREDIT OF RS. 2,42,41,600/- ON THE GROUND OF CAPITAL INVESTMENT I N UNACCOUNTED PURCHASES AND SALES. THEREAFTER, THE ASSESSEE HAD FILED APPE AL AGAINST THE ORDER OF THE AO AND THE THEN LD. CITA(A) HAD HELD THE AO COULD TAKE THE ESTIMATED GP @ 2.39% ONLY WHICH IS ON THE BASIS OF SEIZED BOOKS A ND DOCUMENTS AND THE AO IS NOT JUSTIFIED TO TAKE THE ESTIMATED GP @ 4.4% WHICH IS ON THE BASIS OF REGULAR RETURNS OF INCOME OF THE ASSESSEE. REGARDING THE AD DITION OF RS 2,42,41,600/- UNDER THE HEAD PEAK CREDIT OF THE CAPITAL INVESTMEN TS, THE LD.CIT(A) HELD THAT THE UNACCOUNTED CASH BALANCE WITH THE ASSESSEE AT A NY POINT OF TIME WAS NOT MORE THAN RS 6,76,393/- AND ACCORDINGLY CONFIRMED T HE ADDITION OF RS. 6,76,393/- ONLY AND DELETED THE BALANCE GP RATE ADD ITION @ 2.39% WHICH WAS TAKEN ON THE BASIS OF SEIZED BOOKS AND ADDITION OF RS 2,35,65,207/- (RS.2,42,41,600/- (-) RS 6,76,393/-). THEREAFTER, T HE ASSESSEE AS WELL AS THE DEPARTMENT WAS IN APPEAL BEFORE THE TRIBUNAL AND T HE TRIBUNAL IN THE FIRST ROUND HAS UPHELD THE ESTIMATED GP RATE @ 4.4% WHICH WAS TAKEN BY THE AO AND AS SUCH HAS REVERSED THE ORDER OF THE LD.CIT(A) WHICH HAD UPHELD THE GP RATE ADDITION @2.39% WHICH WAS TAKEN ON THE BASIS OF SEIZED BOOKS AND DOCUMENTS. REGARDING THE ADDITION OF RS 2,42,41,60 0/- MADE BY THE AO UNDER THE HEAD PEAK CREDIT THE TRIBUNAL HAS CONFIRMED TH E ORDER OF THE LD.CIT(A) WHICH HAD CONFIRMED THE ADDITION OF RS 6,76,393/- O NLY AS AGAINST THE ADDITION OF RS. 2,42,41,600/- MADE BY THE AO. THE AO HAD GI VEN THE APPEAL EFFECT AFTER THE ORDER OF THE TRIBUNAL IN THE ORDER DATED 30/12/ 2007 AND FINALLY THE ADDITION OF RS. 65,78,933/- (GP OF RS. 59,02,540/) + PEAK CR EDIT OF RS. 6,76,393/- HAS BEEN MADE AND AS SUCH THE TOTAL ASSESSED INCOME IS RS. 87,15,044/- WHICH INCLUDED THE ASSESSEES UNDISCLOSED BLOCK RETURN IN COME OF RS. 21,36,111/-. IT(SS)A NOS.37 & 36/DEL/2012 5 THE ASSESSEE HAD FILED A PETITION U/S 154 BEFORE TH E AO AND IT WAS SUBMITTED THAT THE AO WAS NOT JUSTIFIED TO MAKE THE TOTAL ASS ESSMENT AT RS 87,15,044/- AS THE AO HAS ALSO ADDED THE UNDISCLOSED BLOCK RETURN INCOME OF RS 21,36,111/- OF THE ASSESSEE WHICH WAS FILED DURING THE COURSE OF B LOCK PROCEEDINGS. IT WAS SUBMITTED THAT THE ASSESSEE HAS VOLUNTARILY OFFERED THE UNDISCLOSED INCOME OF RS 21,36,111/- AND THE FINAL ASSESSED INCOME AS PER THE ORDER OF THE TRIBUNAL IS RS 65,78,933/- ONLY (GP OF RS 59,02,540/-- (+) PEAK CREDIT OF RS. 6,76,393/-) AND AS SUCH THE ASSESSED INCOME OF THE ASSESSEE SHO ULD BE RS 65,78,933/- ONLY AS THE UNDISCLOSED BLOCK INCOME OF RS 21,36,111/- H AS ALREADY BEEN OFFERED BY THE ASSESSEE. THE PETITION U/S 154 SUBMITTED BY THE ASSESSEE WAS REJECTED BY THE AO ON THE GROUND THAT THE AO HAS MADE THE CORRECT A SSESSMENT WHICH HAS BEEN UPHELD BY THE TRIBUNAL. 7.1 THE ASSESSEE WAS IN APPEAL AGAINST THE ORDE R OF THE REJECTION OF PETITION U/S 154 BY THE AO AND IT WAS SUBMITTED THAT THE AO WAS NOT JUSTIFIED TO REJECT THE PETITION U/S 154 OF THE ASSESSEE WITHOUT ANY VA LID REASONS. IT WAS SUBMITTED THAT THE ASSESSEE HAD ALREADY FILED THE UNDISCLOSED BLOCK RETURN OF RS 21,36,111/- WHEREAS THE TRIBUNAL HAS CONFIRMED THE UNDISCLOSED INCOME OF RS 65,78,933/- ONLY WHICH INCLUDED THE UNDISCLOSED B LOCK RETURN INCOME OF THE ASSESSEE OF RS. 21,36,111/-. IT WAS FURTHER SUBMIT TED THAT THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE IS RS 65,78,933/- AFTER THE ORDERS OF THE LD.CIT(A) AND THE TRIBUNAL AND THERE IS DOUBLE ADDITION OF THE U NDISCLOSED BLOCK INCOME OF RS 21,36,111/- WHICH HAS BEEN OFFERED BY THE ASSESS EE IN THE BLOCK RETURN ON THE BASIS OF SEIZED BOOKS AND DOCUMENTS ETC. IT WAS SUBMITTED THAT THE FINAL AND TOTAL UNDISCLOSED INCOME AS PER THE ORDER OF THE LD .CIT(A) AND THE TRIBUNAL IS RS 65,78,933/- WHICH INCLUDED THE UNDISCLOSED BLOCK RETURN INCOME OF RS 21,36,111/- AND AS SUCH THE AO SHOULD ONLY ASSESS THE TOTAL INCOME OF RS 65,78,933/- ONLY. THE MAIN SUBMISSION OF THE ASSESS EE IS THAT THE ASSESSEE HAS FILED THE BLOCK RETURN INCOME OF RS 21,36,111/- ON THE BASIS OF SEIZED BOOKS OF DOCUMENTS ETC AND THE AO HAS ALSO MADE THE ADDITION S ON THE BASIS OF SAME SEIZED BOOKS OF DOCUMENTS ETC AND FINALLY THE LD. CIT(A) AND THE TRIBUNAL HAS CONFIRMED THE TOTAL ADDITION OF RS 65,78,933/- WHIC H INCLUDES THE DECLARED BLOCK RETURN INCOME OF RS. 21,36,111/- AND AS SUCH THE AO SHOULD NOT ADD THE IT(SS)A NOS.37 & 36/DEL/2012 6 BLOCK RETURN INCOME OF RS.21 ,36,111/- IN ADDITION TO RS 65,78,933/-) IT WAS SUBMITTED THAT THE AO DID NOT MAKE ANY SEPARATE ADD ITION OF RS 21,36,111/- IN ORIGINAL ORDER U/S 158BC DATED 25/02/2005 IN WHICH THE BLOCK RETURN INCOME OF THE ASSESSEE OF RS 21,36,111/- HAD BEEN MERGED WITH THE TOTAL ASSESSED INCOME AND AS SUCH THE AO IS NOT JUSTIFIED TO MAKE THE SEP ARATE ADDITION OF RS 21,36,111/- WHILE GIVING THE APPEAL EFFECT TO THE O RDER OF THE TRIBUNAL. 7.2 WE FIND THAT THE AO WAS NOT JUSTIFIED TO MAKE T HE ADDITION OF RS 65,78,933/- IN ADDITION TO THE UNDISCLOSED RETUR N INCOME OF RS 21,36,111/- WHICH WAS FILED BY THE ASSESSEE DURING THE COURSE O F BLOCK PROCEEDINGS AND AS SUCH THE AO HAS IGNORED THE BLOCK RETURN INCOME OF RS. 21,36,111/- WHICH IS THE PART OF THE TOTAL UNDISCLOSED INCOME OF THE ASS ESSEE OF RS. 65,78,933/-. IT IS APPARENT THAT THE TOTAL UNDISCLOSED INCOME AS PER T HE ORDER OF THE LD.CIT(A) AND THE TRIBUNAL IS RS 65,78,933/- WHICH INCLUDED THE UNDISCLOSED BLOCK RETURN INCOME OF RS 21,36,111/- AND AS SUCH THE AO SHOULD ONLY ASSESS THE TOTAL INCOME OF RS 65,78,933/- ONLY. WE FIND CONSIDERABL E COGENCY IN THE LD. CIT(A) ORDER WHEREIN THE OBSERVED THAT THE ASSESSEE HAS STATED THAT THAT THE AO HAS MADE DOUBLE ADDITION OF RS. 21,36,111/- WHICH H AS ALREADY BEEN OFFERED BY THE ASSESSEE IN THE BLOCK RETURN INCOME AND ACCOR DINGLY, THE LD. CIT(A) HAS RIGHTLY DIRECTED THE AO TO ASSESS THE TOTAL UNDISCL OSED INCOME OF RS. 65,78,933/- ONLY (RS. 6,76,393/- + RS. 59,02,540/-) AFTER THE ORDER OF THE TRIBUNAL AND AS SUCH THE APPEAL OF THE ASSESSE WAS RIGHTLY ALLOWED. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHICH IN OUR OPINION, DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND DISMISS THE GROUND RAISED BY THE REVENU E. AS A RESULT, THE REVENUES APPEAL STANDS DISMISSED. IT(SS) NO. 36/DEL/2012 8. THE BRIEF FACTS OF THE CASE ARE THAT THE AO HA S PASSED THE PENALTY ORDER U/S. 158BFA(2) ON 30.12.2009 IMPOSING THE PENALTY OF RS. 43,42,100/- AGAINST WHICH THE ASSESSEE HAS FILED THE APPEAL ON 27.1.20 10 BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER 08.5.2012 HAS DELETED THE P ENALTY IN DISPUTE AND ALLOWED THE APPEAL OF THE ASSESSEE. IT(SS)A NOS.37 & 36/DEL/2012 7 9. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) DATED 8.5.2012, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 10. LD. DR RELIED UPON THE ORDER OF THE ASSESSING O FFICER AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. IN S UPPORT OF HER CONTENTION, SHE FILED A COPY OF THE DECISION OF THE HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS. HARKARAN DAS VED PAL REPORTED IN 336 ITR 8 (DEL HI) AND STATED THAT THE PRESENT ISSUE OF PENALTY IS FULLY COVERED BY THE SA ID DECISION AND HENCE, BY FOLLOWING THE SAME THE APPEAL OF THE REVENUE MAY BE ALLOWED. 11. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, THEREFORE, THE SAME MAY BE UPHELD. HE FURTHER STATED THAT THE AO HAS LEVIED THE PENALTY O N THE ESTIMATED INCOME AND AS SUCH THERE IS NO PROPER JUSTIFICATION FOR THE LEVY OF PENALTY ON THE ESTIMATED INCOME, HENCE, THE LEVY OF PENALTY IS NOT SUSTAINAB LE AND ACCORDINGLY BE CANCELLED. IN SUPPORT OF HIS CONTENTION HE FILED THE COPY OF THE FOLLOWING DECISIONS WHEREIN IT WAS HELD THAT NO PENALTY WAS LEVIABLE UNDER SECTION 158BFA WHERE ALLEGED UNDISCLOSED INCOME WAS COMPUTE D ON THE BASIS OF ESTIMATION. - RAJASTHAN HIGH COURT DECISION IN THE CASE OF CIT VS. DR. GIRIRAJ AGARWAL GIRI REPORTED IN 346 ITR 152 (RAJAS THAN) - ITAT JAIPUR BENCH IN THE CASE OF ACIT VS. SHANTI KUMAR CHABRA REPORTED IN (2009) 32 SOT (JP) (URO). - ITAT, JODHPUR IN THE CASE OF ANIL KUMAR JAIN VS. ACIT REPORTED IN (2014) 49 TAXMANN.COM 139 (JODHPUR- TRI B) 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AN D THE CASE LAWS CITED BY BOTH THE PARTIES. WE FIND THAT AFTER THE ORDER OF THE TRIBUNAL THE AO HAD INITIATED PENALTY PROCEEDINGS U/S. 158BFA(2) AND HAS LEVIED PENALTY @ 100% OF RS. 43,42,100/- ON THE ADDITION OF RS 65,78,933/-. AGAI NST WHICH THE ASSESSEE IT(SS)A NOS.37 & 36/DEL/2012 8 PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND HAS S UBMITTED THAT THE AO WAS NOT JUSTIFIED TO LEVY THE PENALTY WITHOUT ANY VALID REASONS. IT WAS SUBMITTED THAT THE ASSESSEE HAD ALREADY FILED THE UNDISCLOSED BLOC K RETURN OF RS 21,36,111/- WHEREAS THE TRIBUNAL HAS CONFIRMED THE UNDISCLOSED INCOME OF RS 65,78,933/- WHICH INCLUDED THE UNDISCLOSED BLOCK RETURN INCOME OF THE ASSESSEE OF RS 21,36,111/-. IT WAS SUBMITTED THAT THE TOTAL UNDIS CLOSED INCOME OF THE ASSESSEE IS RS. 65,78,933/- AFTER THE ORDERS OF THE LD.CIT( A) AND THE TRIBUNAL AND THERE IS DOUBLE ADDITION OF THE UNDISCLOSED BLOCK INCOME OF RS 21,36,111/- WHICH HAS BEEN OFFERED BY THE ASSESSEE IN THE BLOCK RETURN ON THE BASIS OF SEIZED BOOKS AND DOCUMENTS ETC. IT WAS FURTHER SUBMITTED THAT THE FI NAL AND TOTAL UNDISCLOSED INCOME AS PER THE ORDER OF THE LD.CIT(A) AND THE T RIBUNAL IS RS 65,78,933/- WHICH INCLUDED THE UNDISCLOSED BLOCK RETURN INCOME OF RS 21,36 111/- AND AS SUCH THE AO SHOULD ONLY ASSESS THE TOTAL INCOME OF RS 65,78,933/-. THE MAIN SUBMISSION OF THE ASSESSEE WAS THAT THE ASSESSEE HA S FILED THE BLOCK RETURN INCOME OF RS. 21,36,111/- ON THE BASIS OF SEIZED BO OKS OF DOCUMENTS ETC AND THE AO HAS ALSO MADE THE ADDITIONS ON THE BASIS OF SAME SEIZED BOOKS OF DOCUMENTS ETC AND FINALLY THE LD.CIT(A) AND THE TRI BUNAL HAS CONFIRMED THE TOTAL ADDITION OF RS 65,78,933/- WHICH INCLUDES THE DECLARED BLOCK RETURN INCOME OF RS 21,36,111/- AND AS SUCH THE AO SHOULD NOT ADD THE BLOCK RETURN INCOME OF RS 21,36,111/- IN ADDITION TO RS 65,78,93 3/-. IT IS SUBMITTED THAT THE AO DID NOT MAKE ANY SEPARATE ADDITION OF RS 21,36,1 11/- IN ORIGINAL ORDER U/S 158BC DATED 25/02/2005 IN WHICH THE BLOCK RETURN IN COME OF THE ASSESSEE OF RS. 21,36,111/- HAD BEEN MERGED WITH THE TOTAL ASSE SSED INCOME AND AS SUCH THE AO IS NOT JUSTIFIED TO MAKE THE SEPARATE ADDITION O F RS 21,36,111/- WHILE GIVING THE APPEAL EFFECT TO THE ORDER OF THE TRIBUNAL. IT WAS FURTHER SUBMITTED THAT AT THE BEST THE AO COULD LEVY THE PENALTY ON THE EXTRA ADD ITION OF RS44,42,822/- (RS 65,78,933/- (-) RS 21,36,111/-). IT WAS FURTHER SU BMITTED BEFORE THE LD. CIT(A) THAT THE AO WAS NOT JUSTIFIED TO LEVY ANY PENALTY A S THE ENTIRE ADDITION HAS BEEN MADE ON THE ESTIMATED BASIS. IT IS SUBMITTED THAT T HE ASSESSEE HAD ESTIMATED AND FILED BLOCK RETURN INCOME OF RS 21,36,111/- ON THE BASIS OF SEIZED BOOKS OF DOCUMENTS BUT THE AO DID NOT ACCEPT THE BLOCK RETUR N INCOME OF THE ASSESSEE AND THE AO ESTIMATED THE UNACCOUNTED GP @ 4.4% OF R S 50,01,857/- ON THE IT(SS)A NOS.37 & 36/DEL/2012 9 BASIS OF GP OF THE REGULAR RETURNS OF THE ASSESSEE . BUT THE LD.CIT(A) HAD OVERTURNED THE FINDING OF THE AO AND HAD ESTIMATED THE GP @2.39% WHICH WAS ON THE BASIS OF SEIZED BOOKS AND DOCUMENTS. THE TRI BUNAL HAS AGAIN REVERSED THE FINDING OF THE LD.CIT(A) AND HAS ESTIMATED THE GP @ 4.4%. IT WAS SUBMITTED THAT THE ENTIRE GP ADDITION OF RS 50,01,8 57/- IS ON THE BASIS OF ESTIMATE ONLY AND AS SUCH THE AO IS NOT JUSTIFIED T O LEVY THE PENALTY ON THE BASIS OF ESTIMATED INCOME. IT WAS SUBMITTED THAT THE OTHE R ESTIMATED ADDITION OF RS 2,42,41,600/- MADE BY THE AO IN THE ORIGINAL ASSESS MENT UNDER THE HEAD PEAK INVESTMENT WAS OVERTURNED BY THE LD.CIT(A) AND THE ADDITION TO THE EXTENT OF RS 6,76,393/- WAS ONLY CONFIRMED AND THE BALANCE AD DITIONS WERE DELETED AND THE SAME FINDING OF THE LD.CIT(A) HAS BEEN UPHELD B Y THE TRIBUNAL. IT IS SUBMITTED THAT IT IS APPARENT THAT THE INCOME OF TH E ASSESSEE HAS BEEN ESTIMATED AS THERE HAS BEEN DIFFERENCES OF OPINION AMONG THE ASSESSEE, AO, THE LD.CIT(A) AND THE TRIBUNAL REGARDING THE UNDISCLOS ED INCOME/ADDITIONS AND AS SUCH THE AO IS NOT JUSTIFIED TO LEVY THE PENALTY ON THE ESTIMATED INCOME. IT IS SUBMITTED THAT THE LEVY OF PENALTY IS A DISCRETIONA RY IN NATURE AND IT IS NOT MANDATORY FOR THE AO THAT THE AO HAS TO LEVY THE PE NALTY MANDATORILY EVEN ON THE ESTIMATED INCOME. IT WAS SUBMITTED THAT ALL THE ABOVE ADDITIONS ARE ON THE BASIS OF ESTIMATED INCOME ONLY AND THERE IS ALSO DI FFERENCES OF OPINION AND AS' SUCH THE AO IS NOT JUSTIFIED TO LEVY THE PENALTY ON THE BASIS OF ESTIMATED INCOME AND THE ASSESSEE ALSO RELIED ON VARIOUS CASE LAWS O N THE ISSUE THAT THE PENALTY IS NOT LEVIABLE IN THE CASE OF ESTIMATED INCOME/ESTIMA TED ADDITION AND SOME OF THE CASE LAWS ARE :- (I) ACIT VS SHANTI KUMAR CHABARA, [2009] 121 TTJ (JAIPUR) 985 (II) DCIT VS KOATEX INFRASTRUCTURE LTD, [2006] 102 TTJ (MUMBAI) 737 (III) SMT. MALA DAYANITHI VS DCIT, [2005] 92 TTJ (BANGALORE) 270 (IV) CIT VS RAVI KANT JAIN, 250 ITR 141 (DEL) [20 01] 12.1 FROM THE ABOVE, IT WAS FOUND THAT AO WAS NOT JUSTIFIED TO MAKE THE ADDITION OF RS 65,78,933/- IN ADDITION TO THE UNDI SCLOSED RETURN INCOME OF RS. IT(SS)A NOS.37 & 36/DEL/2012 10 21,36,111/- WHICH WAS FILED BY THE ASSESSEE DURING THE COURSE OF BLOCK PROCEEDINGS AND AS SUCH THE AO HAS IGNORED THE BLOC K RETURN INCOME OF RS. 21,36,111/- WHICH IS THE PART OF THE TOTAL UNDISCLO SED INCOME OF THE ASSESSEE OF RS. 65,78,933/-. IT IS APPARENT THAT THE TOTAL UNDI SCLOSED INCOME AS PER THE ORDER OF THE LD.CIT(A) AND THE TRIBUNAL IS RS. 65,78,933/ - WHICH INCLUDED THE UNDISCLOSED BLOCK RETURN INCOME OF RS. 21,36,111/- AND AS SUCH THE AO SHOULD ONLY ASSESS THE TOTAL INCOME OF RS. 65,78,933/- ONL Y. SINCE THE BLOCK RETURN INCOME OF RS. 21,36,111/- IS INCLUDED OR INBUILT I N THE INCOME OF RS. 65,78,933/- THE AO AT THE BEST COULD HAVE LEVIED T HE PENALTY ONLY ON THE ADDITIONAL INCOME OF RS. 44,42,822/- (RS. 65,78,933 (-) RS. 21,36,111/-). WE ALSO FIND THAT IT IS APPARENT THAT THERE HAS BEEN D IFFERENCES OF OPINIONS AMONG THE ASSESSEE, AO, LD. CIT(A) AND THE TRIBUNAL AND A S SUCH THERE IS ALSO A VARIATION OF ESTIMATE OF INCOME AT EVERY STAGE AND AS SUCH INCOME OF THE ASSESSEE HAS BEEN ESTIMATED AT EVERY STAGE AND T HE AO WAS NOT JUSTIFIED TO LEVY OF PENALTY ON ESTIMATE BASIS. WE ALSO FIND CO NSIDERABLE COGENCY IN THE CASE LAWS CITED BY THE LD. COUNSEL OF THE ASSESSEE, AS AFORESAID, ARE APPLICABLE TO THE ISSUE IN HAND WHEREIN IT HAS BEEN HELD THA T NO PENALTY WAS LEVIABLE UNDER SECTION 158BFA WHERE ALLEGED UNDISCLOSED INCO ME WAS COMPUTED ON THE BASIS OF ESTIMATION. HOWEVER, WE NOTE THAT THE CASE LAW CITED BY THE LD . DR IS ON THE DIFFERENT FACTS AND HENCE, IS NOT APPLICABLE . 12.2 IN THE BACKGROUND OF THE AFORESAID DISCUSSI ONS AND PRECEDENTS RELIED UPON, IN THE CIT(A)S AS WELL AS CASE LAWS CITED B EFORE US BY THE LD. COUNSEL OF THE ASSESSEE, WE ARE OF THE VIEW THAT AO HAS LEV IED THE PENALTY ON THE ESTIMATED INCOME AND AS SUCH THERE IS NO PROPER JU STIFICATION FOR THE LEVY OF IT(SS)A NOS.37 & 36/DEL/2012 11 PENALTY ON THE ESTIMATED, HENCE, THE LD. CIT(A) HAS RIGHTLY CANCELLED THE PENALTY, WHICH IN OUR CONSIDERED OPINION DOES NOT N EED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE ON WHICH HE CANCELLED THE PENALTY IN DISPUTE AND DISMISS THE GR OUND RAISED BY THE REVENUE. AS A RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. 13. IN THE RESULT, BOTH THE REVENUES APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/03/2016. SD/- SD/- (L.P. SAHU) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 10/03/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSITANT REGISTRAR