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TMI Blog2016 (5) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, which has been filed on 31/10/2007 and disclosed the income at ₹ 15,19,443/- in it. The ld AR of the assessee also contended that there was no satisfaction of the Assessing Officer at the time of initiation of penalty proceedings of the Assessing Officer for specifically concealed the particulars of income or furnished inaccurate particulars of income. It is a fact that the ld Assessing Officer initiated the penalty proceedings “penalty notice U/s 271(1)(c) is being issued separately” but he has not mentioned whether this penalty is for concealment of income or furnishing inaccurate particulars of income. However, in the penalty order under the various heads, he held this penalty for concealed income. After considering the totality of all facts and legal position, we find that the ld CIT(A) was not right in confirming the penalty U/s 271(1)(c) of the Act even on remaining additions. Accordingly, we delete the penalty confirmed by the ld CIT(A) and dismiss the revenue’s appeal against the order of the ld CIT(A). - Decided in favour of assessee. - ITA No. 834/JP/2013, ITA No. 770/JP/2013 - - - Dated:- 12-4-2016 - SHRI T.R.MEENA, AM SHRI LALIET KUMAR, JM For The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the appellate proceedings that the penalty proceedings may be kept in abeyance till disposal of the M.A. and appeal filed before the Hon ble High Court but the ld Assessing Officer held that penalty cannot be kept in abeyance as ld CIT(A) as well as Hon ble ITAT has decided the issue and matter has got its finality and penalty proceedings were time barring. He further observed that there was a survey U/s 133A on 21/3/2004 of the Act and the assessee was not maintaining any books of account. Even the assessee has not produced any books of account at the time of assessment U/s 143(3) of the Act. The discrepancy found at the time of survey which has been confirmed by the appellate authority on the basis of which the penalty U/s 271(1)(c) of the Act has been levied. The ld Assessing Officer observed in penalty order as under:- (i) Excess cash found: - During the course of survey on physical verification, cash was found at ₹ 5,09,000/- out of which the assessee surrendered ₹ 3,09,000/-. The assessee has shown cash balance as on 31/3/2006 in balance sheet at ₹ 23,396/-. Thus, remaining cash of ₹ 4,85,604/- out of which surrendered cash of ₹ 3,09,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 27,00,000/- was made upto 21.03.2007. It is further observed that during the course of survey, the assessee had admitted that his wife did not have any source of income nor any pan, as such payments made from her account of ₹ 5 lacs was his own undisclosed money. Similarly the cheques of ₹ 5,00,000/- issued form his son s savings account were also out of his own undisclosed income. Besides, the remaining ₹ 17,00,000/- were also paid out of own undisclosed income. Thus, he surrendered the income of ₹ 27,00,000/- for taxation. But later on, the assessee did not disclose the said surrendered income in his return filed. The assessee vide letter dated 16/12/2009 had explained that the investment of ₹ 17 lacs in the property was not shown in the return as the same was made by his wife and son. The cheque of ₹ 3 lacs was not presented by the seller and ₹ 3,20,000/- were given by his son and ₹ 1,76,800/- were given by his daughter in law. The daughter in law sold a car of ₹ 2,25,000/-, which was gifted by the parents at the time of her marriage. Thus, the assessee claimed for credit of ₹ 7,76,800/- and balance amount of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come tax return filed by him. Thus, he confirmed the penalty U/s 271(1)(c) and penalty levied on amount of ₹ 35,000/- under the head of repair of property has also been deleted. 4. Now both are in appeals before us. The assessee challenged part confirmation of penalty and revenue is against part deletion of penalty. The ld AR of the assessee has submitted that the additions confirmed by the appellate authority under the head cash is only matter of estimation. The survey was conducted on 21/3/2007 almost when a complete year was to end and by own admission of the Assessing Officer, transaction of purchase and sales were carried out this year and the result profit therefrom has been declared accepted. Therefore, availability of cash could not be denied. The ld CIT(A) also stated that there being purchase and sale availability of cash was to be estimated and such a finding not having been challenged by the revenue before the Hon ble ITAT had become final. Assuming no books of account were there, in any case, valid materials for making a fair estimation in the shape of the cash book prepared on day to day basis alongwith the audited balance sheet and an extract for the month o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atio. He has drawn our attention on page No. 23 of the paper book and tried to explain that average stock and average sales of three years are more or less matching. During the year under consideration, the total sales were 90.05 lacs whereas the stock was found during the survey at ₹ 52.87 lacs, thus no addition was warranted but Hon ble ITAT accepted the estimated stock of the assessee on the date of survey at ₹ 25 lacs and remaining has been confirmed. It is further argued that out of total stock found during the course of survey, ₹ 12,91,260/- was belonged to the client. He has drawn our attention on page No. 15 of the paper book, which was escaped kind attention at the time of even assessment and appellate proceedings. Further he argued that on the date of survey, the closing stock was valued on the basis of market rate, however, these stocks were coming from year to year in the closing stock. Therefore, closing stock has not been valued on cost price or market price whichever is less. This aspect if had been considered by the Assessing Officer then hardly any difference was in the stock found at the time of survey. He further argued that the assessee made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation of income added in the hands of the assessee. The Hon ble Delhi High Court in the case of CIT Vs. Aero Traders Pvt. Ltd. (2010) 322 ITR 316 (Delhi) has held that when the addition is made by the Assessing Officer on estimated profit, the same could not be subject matter of penalty for concealment of income. He further referred the decision in the case of CIT Vs S. Rahamat Khan Birbalkhan Badruddin party (1999) 240 ITR 887 (Raj) and Shiv Lal Tak Vs CIT 251 ITR 373 (Raj.). The ld AR further argued that the ld Assessing Officer has not recorded any satisfaction at the time of initiation of penalty proceedings whether the assessee committed default of furnishing of inaccurate particulars of income or concealed the income. Such as satisfaction of the Assessing Officer is a condition precedent is not at all discernable from the assessment order. Hence, it cannot be said that the Assessing Officer derived satisfaction as to charge of concealment/furnishing inaccurate particulars of income with reference to the impugned additions so made and partly sustained. Merely because even from the impugned penalty order, it is not clear whether the Assessing Officer had imposed penalty for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee prepared a cash flow fund and also audit report was filed, which has not been controverted by the ld Assessing Officer and ld CIT(A). Whatever discrepancy found, has been admitted by the assessee during the course of survey but later on he reconsidered the evidences found during the course of survey as well as bank entries of the family members and expenditure and sources of cash, investment made in the house purchased and also discrepancy found in the closing stock. It is also undisputed fact that the assessee s closing stock continuously has been shown more or less equal to sale of the respective years, which also supports the assessee s case that stock found during the course of survey was matching with the sale shown during the year under consideration. The investment made in the house purchased was withdrawn from the bank account of the son as well as wife of the assessee, which has also not been controverted by the lower authorities. The daughter in law of assessee also made payment for the purchase of house from the sale proceeds of her car. These explanations were made before the ld Assessing Officer during the course of assessment proceedings, but had not been accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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