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TMI Blog2013 (8) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... documentary evidence in support of purchase as well as all the expenses debited to profit and loss account. The genuineness of purchases, sales and expenses remained unverified. The A.O. asked the assessee as to why book results should not be rejected for the above defects and sales should not be estimated at Rs. 11,15,00,000/- as against the sales shown above and why the net profit rate of 3% should not be applied against the profit rate disclosed at 2.29%. The assessee's counsel submitted in the statement signed by Smt. Kalpana Shivhare in which she has surrendered Rs. 4,00,000/- for possible leakage of income for non maintenance of some documents and vouchers in proper manner. In respect of company, it was also submitted that assessee is filing return of income regularly and all sales, purchases and expenses are fully verifiable and goods are purchased from the Excise Department and remained under the control of Excise Act. The books of account are audited. Since shops are located at different locations, therefore, the documents could not be produced and some of the documents have been destroyed or are not traceable. It was also explained that she is heart patient and complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee would have been estimated by enhancing the sales and net profit rate. Therefore, assessee agreed to make surrender and surrender of the assessee has been accepted by the A.O., therefore, it is not a case of filing inaccurate particulars of income. He has submitted that A.O. has not brought any material on record to prove as to how it is a case of filing inaccurate particulars of income. He has submitted that for filing of inaccurate particulars, Explanation 1 to Section 271(1)(c) of the Act would not be attracted because it applies to the concealment of particulars of income. Ld. Counsel for the assessee, therefore, submitted that since it is a estimated income, therefore, no penalty is leviable and relied upon the decision of the Hon'ble Chhattisgarh High Court in the case of Commissioner of Income Tax Vs. Vijay Kumar Jain 232 CTR 255 in which it was held-- "Penalty under s. 271(1)(c)-Concealment ---Addition on account of application of higher net profit rate-Since the assessee did not produce any evidence and books of account including the balance sheet, net profit was estimated @ 10 per cent on the receipts from all source as against 6.36 per cent shown by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be produced, higher income was estimated. Hon'ble Chattisgarh High Court in the case of CIT vs. Vijay Kumar Jain (supra) held that non-production of books of account and estimate of higher net profit did not find it justified to levy the penalty. The other decisions cited by the ld. counsel for the assessee clearly support the case of the assessee that on mere estimate of income, penalty is not leviable. Hon'ble Allahabad High Court in the case of CIT vs. Arjun Prasad Ajit Kumar (supra) held that penalty could not be imposed on the basis of estimating sales and applying net profit for the purpose of making addition. All these decisions cited by the ld. counsel for the assessee clearly support the contention of the assessee that penalty is not leviable on estimate of income. Following the same decisions, we do not find it to be a fit case for levy of penalty. We, accordingly, set aside the orders of the authorities below and cancel the penalty. 5. In the result, the appeal of the assessee is allowed." 5. Considering the facts of the case in the light of the above decision, we are of the view that the penalty is not leviable in the matter. The ld. CIT(A) in the quant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the control of Excise Act. This submission of the assessee has not been disputed by the A.O. In our view also this submission could not have been disputed by the A.O. because in the liquor business the purchase are always made from the Excise Department and the business is always under control of Excise Department. Therefore, there should not have been any doubt regarding genuineness of the purchase made from the Excise Department. At the most, the sales would not have been verifiable, but in the liquor business the sales are generally made in cash, therefore, there is no question of verification of the cash sales made by the assessee. Therefore, the non-production of the purchase bills on expenses would not be much significant to prove that assessee has filed inaccurate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttled law that the addition made on the basis of estimate and not on concrete evidence of concealment of income or furnishing inaccurate particulars, therefore, no penalty is leviable. We rely upon the decisions of the Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Dhillon Rice Mills (2002) 256 ITR 447, CIT Vs. Ravail Singh and Co. (2002) 254 ITR 191 and Harigopal Singh Vs.CIT (2002) 258 ITR 85. Hon'ble Supreme Court in the case of M/s Rajasthan Spinning and Weaving Mills 2009-TIOL-63 held that on every default penalty is not automatic. The Hon'ble Madras High Court in the case of Commissioner of Income-Tax Vs. K.R. Chinni Krishna Chetty (2000) 246 ITR 121 held- "Held, that under section 271(1)(c) of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the Tribunal was right in holding that penalty under Section 271(1)(c) could not be imposed." 7.2 Hon'ble M.P. High Court in the case of CIT Vs. Beta Nepthol Ltd. (2005) 272 ITR 323 held- " Held, dismissing the appeal, that the assessee had surrendered the disputed items and paid tax thereon. In the opinion of both the authorities, i.e., the Commissioner (Appeals) and the Tribunal, no case whatsoever was made out to invoke the provisions of section 271(1)(c) of the Income-tax Act, 1961, and hence, the order of penalty passed by the Assessing Officer was not sustainable. This was correct and did not give rise to any substantial question of law." 7.3 I.T.A.T. Hyderabad Bench 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 Rs. 8,28,781 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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