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TMI Blog2014 (1) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Since it was a survey case the same was converted into scrutiny. The Assessing Officer estimated the income from construction at Rs.63,28,006/- i.e., 8% of the gross turnover of Rs.7,91,00,078/- clear of all expenditure and depreciation. Finally, the income was assessed at Rs.63,40,757/-, and raising a demand of Rs.36,22,398/- for the assessment year 2007-2008. For the Assessment Year 2008-2009 the Assessing Officer estimated the income from construction at Rs.17,18,720/- i.e., 8% of gross turnover of Rs.2,14,84,000/- clear of all expenditure and depreciation and finally the income was assessed at Rs.22,37,868/- and demanded tax payable at Rs.10,36,587/- for the assessment year 2008-2009. This led to initiation of penalty proceedings u/s 271(1)(c) of the IT Act. 3. In course of assessment proceedings, the assessee company expressed its inability to produce the books of accounts as the same was not readily available. It was submitted because of dispute with some of the creditors, because of non-payment of their dues due to financial difficulties, there was scuffle with them. It was explained before the Assessing Officer that in the process books, computers were taken by creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 160 ITR 94 AP FB. Therefore, it was submitted that merely because the income was enhanced because of estimation, the same would not lead to imposition of penalty for concealment of income. 5. It was further submitted by the learned Counsel for the assessee before the CIT(A) that penalty can only be imposed on computed income but not on estimated income and the language of section is a clear pointer in this direction. It was submitted that it has been held in the case of Shivlal Tak vs. CIT 251 ITR 373 Raj that the income so arrived by estimate takes the character of substituted income but not computed income which alone will attract penalty. It was pointed out that there may be cases where an income may be inferred from the circumstances of a case, so as to justify addition to the total income for the purpose of assessment, but where there is no positive evidence that such income has been received by the assessee, penalty cannot be justified. The learned Counsel further submitted before the CIT(A) that there can be no penalty on estimated income and in support of his contention, the learned Counsel for the assessee relied upon the following case laws : (i) Harigopal Singh V CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court cases in the case of Union of India & others vs. Dharmendra Textile Processors 306 ITR 277 (SC). 8. Aggrieved, assessee is in appeal before the Tribunal. The learned Counsel for the assessee Shri K.C. Devdas, reiterated the contentions raised before the CIT(A). The learned Counsel for the assessee further relied on the Judgment in the case of CIT vs. Sangrur Vanaspati Mills Ltd. (2008) 216 CTR (Punj. & Har.) 92 wherein it was held that in order to attract clause (c) of section 271 (1) of the Income Tax Act, 1961, it is necessary that there must be concealment by the assessee of the particulars of his income or furnishing of inaccurate particulars of such income. The provisions of section 271(1)(c) of the Act are not attracted to cases where the income of an assessee is assessed on estimate basis and additions are made therein. When the additions have been made on the basis of estimate and not on account of any concrete evidence of concealment, then the penalty is not leviable. 8.1. The learned Counsel for the assessee Shri K.C. Devadas, further submitted before us that mere fact of agreed addition does not lead to a conclusion that the amount agreed to be added as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncern of the assessee; 7) The Assessing Officer had to satisfy whether the penalty proceedings were initiated or not during the course of the assessment proceedings and the Assessing Officer was not required to record his satisfaction in a particular manner or reduce it into writing. Thus, there was no illegality in action of department in initiating penalty proceedings - 11. In the instant case, for the assessment year 2007- 2008 there was a survey in the premises of M/s Simclar Constructions (Firm) on 29.10.2007, wherein certain books of accounts and documents of the Assessee were found and impounded. A notice u/s 148 was issued on 1.7.2009. In response to the notice issued the Assessee filed a return of income on 5.10.2009 declaring an income of Rs. 46,82,540/-. In the course of assessment the MD of the Assessee had indicated that their books and computers were forcibly taken away from their office by a couple of suppliers who were not paid by the Assessee. They had requested the income to be determined at 6% of the total receipts. The AO completed the reassessment determining the income at 8% of the turnover at 63,40,757/-. The tax on the same worked out to Rs. 21,34,298/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r AY 2007-08 supra, we uphold the levy of penalty u/s 271(1)(c) as the Assessee had not provided reason for not offering the income earlier and hence the amount returned by him should be treated as concealed income on which penalty is leviable. But as held in that appeal, the AO did not accept the profitability returned by the Assessee but adopted 8% without giving any basis for adopting that percentage. We therefore hold that the concealed income should be taken as the income offered by the Assessee in his return of income. The addition made by the AO by adopting an adhoc percentage of profitability cannot be considered as income concealed by the Assessee. 16. Therefore, following our decision in the Assessee's case for earlier AY 2007-08 in ITA No 531/H/13 supra, for this year also we direct that the Assessing officer determine the income eligible for penalty at the income returned by the Assessee in his return of income filed on 5.10.2009 and rework and levy minimum penalty based on the tax liability computed on the income offered by the Assessee in his return of income. 17. In the result, appeal of the Assessee in 532/H/13 is partly allowed for statistical purposes. 18. To s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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