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TMI Blog2015 (10) TMI 1493X X X X Extracts X X X X X X X X Extracts X X X X ..... rt from the discussion on labour expenses in the assessment order, there is no reference to detection of any concealment of facts or income. In appeal, the CIT(A) reduced the addition made by the Assessing Officer. In Second Appeal, ITAT also reduced the Net Profit rate to 3%. Reduction in the rate of profit itself shows the fact that nothing could be certain with regard to profit which ipsofacto could not tantamount to concealment of income. The assessee cannot be said to have concealed the particulars of income merely because the books of accounts were rejected by the Assessing Officer and subsequently, the Assessing Officer and CIT(A) applied different Net Profit rate to estimate the income. In diamond job work, labourers keep on migrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order was passed on addition confirmed in 2nd appeal and assessee had failed to offer any explanation to the show cause notice issued prior to levy of penalty. 3. It is, therefore, prayed that the appellate order of the Ld. CIT(A) be set-aside and that of the A.O. restored back. 2. The brief facts of the case are that the assessee is a partnership firm engaged in the business of diamonds cutting and polishing on job labour basis. During the year the assessee had shown Gross Profit of 1.74% on job labour receipt of ₹ 19,45,65,313/-. The Assessing Officer issued letters u/s 133(6) of the Act on 7 persons for confirming the labour payment made by the assessee. Some letters were not served on the address given by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us by the Revenue inter alia stating that the CIT(A) erred in deleting the penalty levied by the Assessing Officer u/s 271(1)(c) of ₹ 17,42,370/- in respect of enhancement of net Profit on account of unproved labour payments. The ld. Departmental Representative also submitted that on the facts and in the circumstances of the case, the CIT(A) ought to have upheld the order of the Assessing Officer, especially so since the order was passed on addition confirmed in Second Appeal and the assessee had failed to offer any explanation to the show-cause notice issue prior to levy of penalty. Therefore, he submitted that the order of the CIT(A) be set aside and that of the Assessing Officer be restored. On the other hand, none appeared on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer and CIT(A) applied different Net Profit rate to estimate the income. In diamond job work, labourers keep on migrating one place to another and in most cases, they are not traceable as they normally do not have permanent establishment. In absence of details of labourers, it cannot be inferred that how much services have been rendered by them to the assessee. In the case before us, the assessee had submitted a party-wise list of sub-contractors with details of TDS. So, the expenses incurred cannot be said to be bogus; however, here in the case before us, the recourse of estimation of Net Profit was made because the assessee could not provide certain facts/details about labourers which cannot be a sound basis for levying penalty u/s 271(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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