9911796707
TMI Blog2014 (12) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A), with the submission that the addition was restricted on estimate basis after confirming the rejection of the books of account made by the Assessing Officer. He has filed written submissions before the ld. CIT(A) which is extracted in para 4 of the order of the ld. CIT(A). The ld. CIT(A) re-examined the contentions of the assessee in the light of the fact that addition was restricted on estimate basis, besides confirming the rejection of the books of account and was of the view that no positive act of concealment on the part of the assessee has been brought on record and therefore the penalty under section 271(1)(c) of the Act is not sustainable in the eyes of law. The relevant observations of the ld. CIT(A) are extracted hereunder:- "5.1 I have considered the arguments taken by the Ld. AR in the above written submission and also considered the discussion made by the AO in the impugned penalty order as reproduced in brief in para no. 3 of this order. The Ld. AR has pointed out that the addition of Rs. 10,00,000/- on the basis of which, the penalty u/s 271(1)(c) has been levied by the AO, as made by the Ld. CIT(A)-II, Kanpur is in fact an estimated addition, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of imposition of penalty is determined to Rs. 10,00,000/- as upheld by the CIT(A)-II, Kanpur. Now, before adjudicating upon the validity of penalty u/s 271(1)(c) imposed upon the assesse , the issue to be decided is whether CIT(A) has upheld the purchases to the extent of Rs. 10,00,000/- as bogus or he has upheld the addition on account of his finding of considering the books of account as not correct and enhancing the sale on estimate basis as argued by the Ld. AR. In order to find out whether, there is any difference of opinion between the finding of the CIT(A) and the AO as regards to the addition of Rs. 79,94,642/- which was restricted to Rs. 10,00,000/- in appellate order, I have carefully perused the appellate order dated 19.03.2010 passed by the Ld. CIT(A)-II, Kanpur. After going through this appellate order, I found that the CIT(A) has not agreed with the AO for holding the entire purchase of Rs. 79,94,642/- as bogus purchases and therefore, after rejecting the books of account of the assessee (appellant), he estimated sales at Rs. 7,27,00,639/- instead of reported sale of Rs. 7,17,00,639/- and therefore, confirmed the addition to the extent of Rs. 10,00,000/- taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 271 (1 )(c) are not attracted. In this case, assessee was a sweet seller and he was not maintaining any accounts and therefore, he declared his income on estimate basis. The assessing officer, however, assessed the income at a higher figure by estimating the assessee's sale and gross profit. The appeal was dismissed by the Commissioner (Appeals). On further appeal, the Tribunal observed that the estimate made by the Assessing Officer was highly excessive and, therefore, reduced the addition. Thereafter, the Assessing Officer initiated penalty proceedings against the assessee by invoking section 271(1)(c) along with Explanation 1(B), and found that since the assessee had not filed any fresh evidence in penalty proceedings to prove that there was no attempt on his part to conceal his income, he imposed a penalty. On appeal, the Commissioner-(Appeals) deleted the penalty. However, the Tribunal confirmed the penalty. On appeal before the Hon'ble High Court, it has been held as under:- "In order to attract clause (c) of sect/on 271(1), it is necessary that there must be concealment by the assessee of the particulars of his income or if he furnishes inaccurate partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven the details of the decision of Hon'bie Chattisgarh High Court in the case of CIT Vs. Vijay Kumar Jain (supra) in which, it has been held that no penalty can be levied in the case of estimating the rate of profit and more particularly in a case where the AO has made addition by applying 10% of net profit rate that was subsequently reduced by the Tribunal to 6%. 5.3 In the present case, the AO has made addition altogether on a different premises holding that the entire purchase of Rs. 79,94,642/- shown by the assessee from her sister concern are bogus purchases but the CIT(A) has confirmed the addition in quantum only up to Rs. 10,00,000/- taking a different basis by estimating the sale in excess of Rs. 10,00,000/- as compared to the amount shown by the assessee in the return and such estimation of sale was made after rejecting books of account while the AO in the assessment order did not record any finding that the books of account maintained by the assessee(appellant) were incorrect and liable to be rejected u/s 145(3). Such difference of opinion between two authorities itself shows that there is no positive finding about either concealment of particular of income or furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the estimated addition. 4. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that undisputedly the books of account of the assessee were initially rejected and the Assessing Officer has made the additions under different heads and in appeal, the ld. CIT(A) has deleted the additions made under the head unexplained cash credit and under section 40A(3) of the Act on account of cash payment. Under the head unexplained receipt against bogus purchases, the addition was made to the extent of Rs. 79,94,642/- by the Assessing Officer, but in appeal the ld. CIT(A) has restricted it to Rs. 10 lakhs only on estimate basis. Therefore, no positive act of concealment of income chargeable to tax has been brought out on record. Since the addition was made on estimate basis, the penalty under section 271(1)(c) of the Act is not leviable. We have also carefully examined the order of the ld. CIT(A) and we find that the ld. CIT(A) has adjudicated the issue in the light of various judicial pronouncements, in which it has been categorically held that penalty cannot be levied on estimated addition. Therefore, we find no merit in the Revenue's app ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
