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TMI Blog2009 (2) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... s already passed the Order against the order passed by Hon ble CIT(A) under section 250 by estimating the net profit at the rate of 6 per cent on gross receipts which is already higher than the main contractor of the appellant. So such sum may please not be imposed. 4.The denial of such sum by the appellant is sustainable because the Assessing Officer had pressurized during the time of statement recorded by him (The appellant first time faced before IT Department) where he had added unwanted receipts in appellants total income." Grounds in Revenue s appeal vide ITA 6918/M/2005 "1.( i )The learned CIT(A) has erred on facts and in law in directing that the penalty under section 271(1)( c ) be imposed on the income estimated at 6 per cent of the receipts instead of the income estimated at 15 per cent of the receipts by the Assessing Officer. ( ii )The ld. CIT(A) has erred on facts and in law in reducing the penalty without considering the fact that the department is in appeal before the Bombay High Court against the decision of the ITAT A Bench, Mumbai ITA No. 3278/Mum./2001, dated 11-3-2005 in the case of Shri Kripashankar Chaturvedi on the issue of estimation of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the following amounts which were not originally disclosed by the assessee in the returns. Their details are : Amount received Name of the Party Amount received in Name of 1. Rs. 4,15,493 Jai Bhavani Enterprise K. S. Corporation 2. Rs. 9,02,740 Palak Construction Ltd. K. S. Corporation 3. Rs. 6,08,000 Singal Brothers K. S. Corporation 4. Rs. 5,00,000 Singal Brothers S. D. Corporation Initially, the assessee denied of any relationship or connection with the said concerns. Assessing Officer made intensive enquiries with the concerned parties and banks. On verifying the bank statements of account with CITI Bank standing in the name of assessee (Prop. K. S. Corporation), Assessing Officer came to the conclusion that the said payments were finally found traced to assessee s account. Accordingly, the Assessing Officer intimated these facts to the assessee vide his letter dated 5-2-2003 requiring the assessee to furnish the explanation as to why the payment received in the name of K. S. Corporation of Rs. 19,26,233 should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,979. Assessing Officer also initiated penalty proceedings under section 271(1)( c ) by issue of statutory notices in this regard. Assessee replied to the same praying for dropping of penalty proceedings and his replies in this regard are as under: "This has reference to your notice dated 28-2-2003 received by us on 26-3-2003. Please note that as far as concealment of income is concerned, point of receipt by S. D. Corporation is taken as concealment of income but dear sir please refer to your own order where you have very clearly mentioned that the account belongs to Mr. Hariram K. Mishra which has no connection at all with us which is also verified by you from the bank, you have made addition on unjust statement made by the criminal main contractor who is also party in the whole case and want to trouble Mr. K. S. Chaturvedi because he has not concealed to his criminal plan of avoiding taxation and cheating the Income-tax Deptt. Please do some detail inquiry of this main contractor instead of harassing us, you will get crores of Rupees as black money and avoidance of taxes, also note that apply this section in his case instead of our case. Please drop the proceedings under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er directed the Assessing Officer to impose penalty at the rate of 200 per cent of the tax on the income which must be estimated at the rate of 6 per cent of the gross receipts in tune with the order of the Hon ble ITAT. In effect, CIT(A) rejected the assessee s contention that the income was arrived at merely on estimation basis. Consequently, while the assessee is aggrieved against the confirming of the penalty by the CIT(A), the revenue is aggrieved on issue of downward revision of the concealed income as result of the reduction in rate of 6 per cent from 15 per cent. 6. During the proceedings before us, revenue has argued that the CIT(A) has erred in reducing the penalty quantitatively relying on the order of the Tribunal dated 11-3-2005, when the said Tribunal s order was appealed against by the revenue before Hon ble High Court on the issue of estimation of income at 6 per cent of the gross receipts. On the other hand, Learned Counsel for the assessee argued stating that the CIT(A) is bound by the order of the Tribunal and accordingly, he has directed the Assessing Officer to reduce the NP from 15 per cent of the receipt to 6 per cent of the receipt. As penalty is quantit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the ITAT. Further, the assessee filed return of income declaring the total income of only Rs. 1,82,010 against the final assessed income of Rs. 10,75,191 at the end of the appeal proceedings before the ITAT. It is also an admitted position that the assessee admitted to an additional contract receipts of Rs. 35,52,620 and the same was done after the issue of show-cause notice. 8. Thus, there is an issue of concealment of income relatable to the additional contract receipts of Rs. 35,52,620 and the concealed income relatable to the declared contract receipts. Further there is also another issue of quantum of penalty, i.e., 200 per cent or otherwise. 9. Insofar as the concealment of income relatable to the additional contract receipts of Rs. 35,52,620 is concerned, we find that in this case the Assessing Officer made various enquiries with the banks in connection with the payments standing in the name of K. S. Corporation as well as S. G. Corporation, and these enquiries resulted in unearthing concealed contract payments which stood in the names of Jaibhawani Enterprises, Palak Construction Co. Ltd. and Singal Brother, which were finally received by the assessee in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied , the satisfaction of the Assessing Officer, as the case may be should have the satisfaction in this regard. From the Explanation 1 above, it refers to a couple of independent groups of cases. They are: ( A ) This group covers cases, there are again two sub-groups of persons and they are: ( i ) the persons, who fail to offer an explanation or ( ii ) the persons, who have offered an explanation which is found to be outright false by the revenue authorities; or ( B ) This group refers to cases where the explanation offered by the person is not found false outright, but they refer to those cases other than such false explanation cases. These are identified by the following symptoms. They are: ( i ) such person does not able to substantiate the explanation offered; and ( ii ) such person not only fails to prove that the such explanation is bona fide but disclosed all the facts relating to the such explanation and material to the computation of his total income. 12. On comparison of facts where the assessee suppressed the receipts and admitted them to the Assessing Officer during the assessment proceedings, i.e., during the post enquiries period, the assessee s case i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for attracting civil liability, as is the case in the matter of prosecution under section 276C (para 25)." 13. The assessee s explanation in this regard is neither substantiated nor proved bona fide. His explanation refers to blame games involving the CA and his lack legal knowledge and also estimations. In the situations, where the assessee suppressed the receipts at the back of the revenue and the Assessing Officer dug them out by their arduous investigations and when the assessee failed to disprove the adverse conclusions, the Assessing Officer does not have to disprove the explanation or establish the mala fide intentions of the assessee. Consequently, the income relatable to the suppressed receipts, which was added in computing the total income of the assessee is a deemed to represent the income in respect of which the particulars have been concealed with in the meaning of the Explanation 1 to section 271(1)( c ). 14. Thus, we find that it is a case where the assessee has not only concealed the labour contract receipts but also concealed the relatable income while filing the return of income. Therefore, we have no hesitation in confirming this aspect of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dispute regarding the Assessing Officer s decision of rejection of books on the ground of inflation of expenses and suppression of contract receipts has been finally settled in favour of the revenue and Assessing Officer is statutorily directed to estimate the income of the assessee by way of best judgment assessment, we have examined the manner of determining the income by the revenue authorities, We find that the Assessing Officer originally estimated the income at the rate of 30 per cent relying on the figures of assessee s own concerns such as K.P. Enterprises and Cupid Constructions as discussed in para 7.2 of the Assessing Officer s order dated 29-3-2001 appearing on page 99 of the paper book. However, the CIT(A) gave a finding that the said 30 per cent is arrived at without any basis and he proceeded to direct the Assessing Officer to adopt 15 per cent as per his discussion given in para 13 appearing on page 108 of the paper book. He held that 30 per cent is excessive, although the profit margin is higher on the labour contractor s cases. Referring to the 8 per cent margin specified in section 44D of the Act, although not relied on, CIT(A) held that the 15 per cent woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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