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TMI Blog2013 (8) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the facts and circumstances of the case at estimate of income, would not be warranted – Decided in favor of Assessee. - ITA No. 420/Agra/2012 - - - Dated:- 23-8-2013 - Shri Bhavnesh Saini And Shri A. L. Gehlot,JJ. For the Appellant : Shri Rajendra Sharma, Advocate. For the Respondent : Shri Athesham Ansari, Jr. D.R. ORDER Per Bhavnesh Saini, J.M. This appeal by the assessee is directed against the order of ld. CIT(A), Ghaziabad dated 14.06.2012 for the assessment year 2005-06, challenging the levy of penalty u/s. 271(1)(c) of the IT Act. 2. Earlier, the appeal of the assessee was dismissed in default vide order dated 29.01.2013. The assessee moved M.A. No. 24 of 2013 explaining the reasons for non-appearance on the date of hearing. The earlier order dated 29.01.2013 was recalled by allowing the miscellaneous application of the assessee vide order dated 07.08.2013 and the appeal of the assessee was refixed for hearing on merits. 3. Briefly, the facts of the case are that the assessee is a firm and filed return of income disclosing the income of ₹ 74,71,629/-. The assessee is a contractor and derives income from executing the contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or deriving income from executing contract works of the government departments. It is not a denying fact that in the government contract, profit margin is always very low as compared to others. The assessee furnished complete details before the AO at the assessment stage as required by the AO, however, according to the AO certain expenses which were incurred in cash were not subjected to verification. Therefore, to cover all the discrepancies of expenses, book results were rejected and profit rate from 2.1% was enhanced to 3.1%. The AO did not mention in the assessment order as to which particulars have been concealed by the assessee. In the penalty order, the AO did not mention whether he has imposed the penalty for concealment of income or for furnishing inaccurate particulars of income. Hon'ble Gujrate High court in the case of New Sorathia Engineering Co. vs. CIT, 282 ITR 642, held : It is incumbent upon the Assessing Officer to state whether penalty was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished by the assessee. The issue is, therefore, squarely covered in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naccurate particulars of income or concealed the particulars of income. The assessee also explained that due to health problem and business is not being run smoothly, therefore, in order to buy peace the assessee made surrender in both the cases for possible leakage of income for non-maintenance of documents and vouchers. It would, therefore, prove that there was no definite finding of fact recorded by the A.O. that it is a case of filing of inaccurate particulars of income. The explanation of the assessee has been found to be reasonable and acceptable to the A.O. and the offer of surrender made by the assessee in response to the rejection of the books of accounts have been ultimately accepted by the A.O. When A.O. accepted surrender in both the cases as against proposed rejection of the books of accounts and estimate of income, the A.O. should not have initiated the penalty proceedings against the assessee. 7. We may also note here that in ITA No.545/Agr/2012 if as per proposed notice of the A.O. the enhanced turnover and enhanced N.P. rate is taken into consideration, the total income should be computed at ₹ 33,45,000/- but the A.O. after accepting the surrender of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the assessing authority is given the discretion to levy a penalty if there is concealment of particulars of income and even as regards the quantum of the penalty there is a discretion. That discretion was available to the Tribunal as well when it considered the matter in appeal. Of greater importance is the necessity for a definite finding that there is concealment, as without such a finding of concealment, there can be no question of imposing any penalty. The mere revision of the income to a higher figure by the assessing authority did not automatically warrant an inference of concealment of the expenditure on the construction. The addition to the income of the assessee based on the report of the valuer was rightly regarded by the Tribunal as being insufficient for recording a finding of concealment of income. Concealment implies some deliberate act on the part of the assessee in withholding the true facts from the authorities. The fact that the valuer assessed the building at a figure higher than the one reported by the assessee did not by itself lead to the inference that there had been concealment. There was no evidence to show that the assessee had deliberately concealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Balaramkrishna Engg. Contrs. Corpn Vs. Deputy Commissioner of Income-tax (1996) 56 ITD 411 held-- Section 271(1)(c) of the Income-tax Act, 1961 - Penalty- For concealment of income- Whether, on facts stated under head 'best judgment assessment', gross profit addition would be a matter of estimating profit or disallowance of routine nature and would not constitute concealment on part of assessee and no penalty would be leviable on this account - Held, yes - Whether though sum of ₹ 8,28,781/- represented concealment because of suppression of receipts, yet no penalty with respect thereto could be levied because returned income as well as assessed income was a loss and there was no tax payable by assessee - Held, yes 8. Considering the above discussion, in the light of the above decisions, it is clear that no definite finding of fact or any contrary material has been brought on record to prove that the assessee has filed inaccurate particulars of income. In the absence any detailed discussion, any material on record, we are of the view that levy of penalty under Section 271(1)(c) of the Act in the facts and circumstances of the case at estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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