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TMI Blog2010 (10) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... e rebuttable as provided in the said Explanation 1 itself. 2. On the facts and in the circumstances of the case and in law the penalty u/s 271(1)(c) levied by A.O and confirmed by ld. CIT(A) as there is no finding in the assessment order that the addition made to total income and sustained by Hon ble ITAT which addition was only on the basis of estimation of income @ 1.5% as against estimated by the assessee while filing the return as no books of account were maintained. The penalty deserves to be cancelled. 3. On the facts and in the circumstances of the case and in law and since the addition to total income is on estimation basis such addition has not been established or can be reasonably inferred that it was on account of contumacious conduct or can be inferred or established that the assessee s explanation was not bonafide. In such a scenario no penalty u/s 271(1)(c) would be sustained even after the pronouncement of the judgment of the Hon ble Supreme Court in Dharmanedra Textile s case. The penalty be quashed. 4. On the facts and in the circumstances of the case and in law the penalty u/s 271(1)(c) has been levied by A.O and confirmed by ld. CIT(A) as if it is an aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Mills, Krishna Weaving Mills, Mayur Mills, Piyush Textiles and Shyam Fabrics was taken as basis and the credits/turnover in various years considered both by the assessee and A.O is as under: Financial year A.Y. Total credits Net profit % of Agarwal group Income escaped 97-98 98-99 4,176,340 -- 1,041,760 98-99 99-00 88,894,920 0.19 168,898 99-00 00-01 32,798,920 0.34 111,516 00-01 01-02 25,712,875 0.71 182,561 01-02 02-03 47,204,510 0.66 311,549 02-03 03-04 83,209,114 0.4 332,836 03-04 04-05 126,280,134 0.21 265,188 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo years from the end of the assessment year in which the income is first assessable had not expired when the appellant filed its return in pursuance of notice u/s 147 issued by the A.O. The notices were issued in A.Y. 2003-04 and the returns were filed subsequently, whereas the time limit for A.Y. 2003-04 was 31-3-2006 and for A.Y. 2004-05 and 2005-06 were even alter. As such, the provisions of Explanation 3 also do not apply to these years. 18. In summary it is held as under: The provisions of Explanation 3 are applicable only in respect of A.Y. 1998-99 and not to any of the subsequent assessment years. Therefore, for the A.Y. 1999-00 to 205-06 penalty should be reworked and levied only on the additional income brought to tax as a result of assessment over and above the income returned. In case of A.Y. 1998-99 however, the penalty levied u/s 271(1)(c) read with Explanation 3 is justified and therefore confirmed. The assessee is contesting the same. 7. The learned counsel placed on record the synopsis of 11 pages and assessment orders of various years in pages 12 to 53, notices issued from pages 54 to 71 and various copies of judgments from pages 72 onwards in the pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imation basis. It is also a fact that survey was conducted on 23/24-2-2005, till that date the assessee has not filed any return of income for the A.Y. 1998-99. Thus the intention of the assessee was very much clear not to pay tax on income earned by the AOP. As such concealment of income is crystal clear. The assessee in his reply has relied upon various decisions stating that the addition to the income are being purely on estimated basis. There cannot be any penalty leviable u/s 271(1)(c). One of the decisions quoted by the assessee is in the case of Harigopal Singh Vs. CIT in 258 ITR 85. The facts of the case are not all applicable in the case of assessee. In the said case (supra) the assessee was not maintaining books of accounts and therefore, the assessee has filed his return of income voluntarily on estimate basis and declared his income at ₹ 52,000/-. Whereas in the case of the assessee, the returns of income was never filed and the assessee never intended to file returns. The present return is filed only in response to notice issued by the department. In order to attract clause (c) of section 271(1) of the Act, it is necessary that there must be concealment by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99 to A.Y. 2002-03 in time as provided. No bonafide explanation was on record why the returns were not filed. Only consequent to the survey u/s 133A and unearthing of bank accounts which are not disclosed to the department earlier, the assessee has filed returns of income in response to notices u/s 148, accepting the credits in A.Y. 1998-99 as income and for other years as turnover and estimation of income thereon. Even the estimation is not uniform. Even though the grounds raised mention the rate of estimation by the assessee at 0.19% that was only in A.Y. 1999-00 on a turnover of ₹ 8.88 crores. In later years, the assessee estimated the income at 0.34%, 0.71%, 0.66%, 0.40%, 0.21% so as to offer income at a lesser rate depending on the turnover. These facts can be noticed from the table extracted in para 3.1 above in this order. Since there is no basis for estimating at different rates in various years, the A.O is correct in taking the rate of estimation at 1.5% uniformly which was however restricted to 1.0% ultimately. As seen from the facts, only quantification of income was on the basis of 1% estimation whereas there is no doubt about the escapement of income in respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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