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2012 (8) TMI 299 - AT - Income TaxRejecting application for rectification of mistake - mistake in sales for 2 months - Held that - As per the Tribunal order in the first round it was directed by the Tribunal that the sales of two months i.e. 01.01.2000 to 29.02.2000 should be estimated but there is no such direction by the tribunal that the same has to be estimated on the basis of sale for six months i.e. from 01.07.1999 to 31.12.1999. Therefore such estimation has to be made as close as possible to the actual figure - As the A.O. himself noted the sale figure from 01.12.1999 to 26.02.2000 and the sale figure for Dec 1999 is separately available there is no requirement to estimate the sale from 01.01.2000 to 26.02.2000 because the actual sale figure for this period can be easily worked out by reducing the sale figure of De 1999 form the sale figure of 01.12.1999 to 26.02.2000 - direction to A.O. to adopt the estimated sale figure of two months from 01.01.2000 to 29.02.2000 at Rs.74, 81, 858/- and thus assessee gets relief of Rs.12, 55, 994/- over and above the relief allowed by the A.O - partly in favour of assessee. Mistake in amount of expenditure allowed - Held that - As the tribunal in the first round noted that chart submitted by the assessee as per which it was claimed by the assessee that the A.O. has not allowed in full the deduction being the difference of expenditure claimed in the receipt and payment account and in the P & L account. The tribunal has restored back the matter to the file of the A.O. for examination of this contention of the assessee and to decide the matter afresh. The A.O. has allowed deduction of Rs.47, 87, 106/- without giving any basis for working out of this amount as against claim of the assessee - as in the interest of justice this matter should go back to the file of the A.O. for a fresh decision - in favour of assessee for statistical purposes Mistake in not granting deduction of sales tax - Held that - As per the computation of income filed by the assessee for the AY. 1997-98 and as per the assessment order for this year u/s 43B it is seen that there was unpaid sales tax as on 31.03.1997 as per books of account out of which an amount of Rs.10, 11, 681/- was for the period up to 31.03.1996 and the sales tax outstanding for the financial year 1996-97 was Rs.7, 24, 521 - assessee is having collection of sales tax as per books and the same is not credited to the sales account but credited to liability account - the A.O. should examine the records afresh to find out as to how much sales tax was collected during the block period and credited to the liability account without crediting to the sales account as per the books of account. He should also find the deferment of sales tax as permitted by the State Government - in favour of assessee for statistical purposes. Disallowance of claim of debit under the head debtors is in the nature of discount and commission - Held that - As it is evident that the less sales shown by assessee is because of less number of boxes sold and not because of any discount or commission being reduced from the gross sales as assessee has not brought on record any evidence to support the contention that there is general trade practice in this line of business of allowing cash discount to trades and which is separately paid to them - unable to accept the assessee s contention that debit under the head debtors in the receipt and payment account reflects payment of discount and commission by the assessee on the sales - as every outgoing is not an expenditure and burden is upon the assessee to establish that any outgoing is in the nature of an expenditure incurred for the purpose of business. The assessee except making a claim that debit under the head debtors is in the nature of discount and commission has not brought on record any evidence to support this claim - that the amount debited in the receipt and payment account is payment to debtors is not an allowable expenditure - against assessee. Penalty u/s. 158BFA(2) - Held that - As penalty u/s 158BFA(2) is not mandatory - in the facts of the present case a person of reasonable prudence can have this possible view that no undisclosed income is arising on the basis of seized material and therefore even though addition is confirmed by the Tribunal penalty is not justified because there is a reasonable and bona fide reason due to which assessee was having a possible view that no undisclosed income is arising out of the seized material and therefore penalty u/s 158BFA(2) is not justified - in favour of assessee.
Issues Involved:
1. Quantum Appeal - Rectification of Mistake in Sales Estimation. 2. Quantum Appeal - Rectification of Mistake in Expenditure Allowed. 3. Quantum Appeal - Deduction of Sales Tax. 4. Penalty Appeal - Confirmation of Penalty under Section 158BFA(2). Issue-wise Detailed Analysis: 1. Quantum Appeal - Rectification of Mistake in Sales Estimation: The assessee contended that there was a mistake in the sales estimation for the period 01.01.2000 to 29.02.2000, which was estimated based on sales data from 01.07.1999 to 31.12.1999. The Tribunal directed the A.O. to estimate sales for two months, but the A.O. used data for six months, leading to discrepancies. The Tribunal found that actual sales figures for the period 01.01.2000 to 26.02.2000 were available and should have been used instead of estimates. The sales figure for 57 days was calculated, and the sales for the remaining three days of February were estimated, resulting in a total sales figure of Rs.74,81,858/-. The Tribunal directed the A.O. to adopt this figure, granting the assessee relief of Rs.12,55,994/- over the relief initially allowed by the A.O. 2. Quantum Appeal - Rectification of Mistake in Expenditure Allowed: The assessee argued that the A.O. had short-allowed expenditure by Rs.73,64,574/- in the appeal effect order. The Tribunal had previously directed the A.O. to verify the assessee's chart and allow deductions for excess expenditure debited in the receipt and payment account over the P&L account. The A.O. allowed Rs.47,87,106/- but did not provide a basis for this amount. The Tribunal restored the matter to the A.O. for fresh examination and a reasoned order, emphasizing the need for adequate opportunity for the assessee to be heard. 3. Quantum Appeal - Deduction of Sales Tax: The assessee claimed that sales tax collections should be added to book sales for comparison with sales recorded in the receipt and payment account. The Tribunal directed the A.O. to verify separate collections of sales tax. The A.O. rejected the claim, stating no separate collection was recorded. The Tribunal found that unpaid sales tax was disallowed under Section 43B but allowed in subsequent assessments due to sales tax deferment. The Tribunal restored the matter to the A.O. for fresh examination, directing him to add sales tax collections to book sales and verify deferment eligibility. 4. Penalty Appeal - Confirmation of Penalty under Section 158BFA(2): The A.O. imposed a penalty of Rs.2,42,26,944/- for concealed income based on discrepancies found during the search. The CIT(A) reduced the penalty to Rs.1,96,71,944/-. The Tribunal noted that the quantum addition had not reached finality as the assessee's appeal was admitted by the Hon'ble Gujarat High Court. The Tribunal emphasized that penalty under Section 158BFA(2) is discretionary, not mandatory. It held that a person of reasonable prudence could believe no undisclosed income arose from the seized material, given the substantial questions of law admitted by the High Court. The Tribunal concluded that penalty was not justified in this case, as the assessee had a bona fide belief in their claim. The penalty was therefore deleted. Conclusion: - The Tribunal allowed partial relief in the quantum appeal by correcting the sales estimation and restoring the expenditure and sales tax deduction issues to the A.O. for fresh examination. - In the penalty appeal, the Tribunal deleted the penalty, citing the bona fide belief of the assessee and the discretionary nature of Section 158BFA(2).
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