9911796707
TMI Blog2016 (6) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... sfaction or initiation. Thus, on this preliminary ground itself, we are of the opinion that, contention raised by the Ld. Counsel appears to be correct and no penalty under section 271(1)(c) on addition of ₹ 3,20,870/- can be sustained. Accordingly, we direct the AO to delete the penalty of ₹ 73,774/-. Thus, the appeal for the assessment year 2003-04 is allowed. For the assessment year 2002-03 and 2001-02 this case there has been enhancement of contract receipts and estimate of net profit purely on ad-hoc basis without any relevant material on record. Here in this case, the contract receipts has been taken on the basis of entire credit appearing in the bank accounts which cannot be the basis for determining the turnover of contract receipts, at least while levying a penalty under section 271(1)(c), because consideration which arises in the penalty proceedings are separate and distinct from assessment proceedings. Here, in this case now the entire assessment and consequent addition rests upon pure estimation of income, therefore, neither the case of concealment of income nor for furnishing of inaccurate particulars. Thus, penalty levied by the AO and confirmed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d accordingly, proposal under section 263 was sent to CIT- 20, Mumbai so as to include the income of ₹ 35 lakhs declared by the assessee during the survey action carried. Thereafter, CIT-20 passed an order under section 263 directing the AO to reframe the assessment so as to include the said income. In pursuance thereof, assessment was made at an income of ₹ 38,20,870/-. The relevant facts about the total contract receipts declared by the assessee and net profit shown for various assessment years including AY 2003-04 as discussed in the assessment order is reproduced hereunder :- It is important to note that during the survey proceedings, an understatement of income was worked by the survey party, as shown below and accordingly the assessee had agreed to offer ₹ 35 lakhs being undisclosed income accrued out of income for various previous years. The survey party had gathered information on total contract receipt of the assessee for AY 1996-97 to AY 2001-02 on the basis of return of income filed and cross verified it with net profit actually declared by the assessee in these years, whereby it was evident that there was an omission of ₹ 40,98,041/- (as wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered in his order dated 03.03.2009 after giving detail reasoning and holding as under: I have carefully considered the assessment order and the arguments and submissions of the AR as discussed above for deciding this ground of appeal. It is noticed that the addition of ₹ 35 lakhs declared by the appellant during the survey proceedings is worked out on the basis of difference between the estimation of appellant s income @ 8% of the gross contract receipts found to be credited in his bank account, pertaining to the assessment years 1996-97 to 2001-02 and the net profit already disclosed by the appellant in his respective returns of income. This is evident from the relevant part of the assessment order reproduced above, wherein the AO has computed estimated income of the appellant @ 8% of gross contract receipt of ₹ 79,48,499/- and reduced there from the net profit as per return of income already disclosed in the respective assessment years of ₹ 38,50,556/- and, accordingly worked out the difference as under statement of income of ₹ 40,98,071/- of the appellant. The AO, therefore, taking into consideration, the declaration of the appellant made additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imated income computed for the A.Yrs. 1996-97 to 2001-02 and the net profit disclosed in the concerned assessment years as discussed above. There are no evidences or any incriminating material found in survey to suggest that the net profit shown in the current assessment years is understated by the appellant to the extent of ₹ 35 lakhs. The income pertaining to the current assessment year as discussed above in the para 3 of this order is separately worked out @ 8% of his gross contract receipts credited in his bank account, in the absence of proper books of account maintained by the appellant. Therefore, based on these facts and aforesaid discussion, I am of the considered opinion that the AO is not justified in making such an addition of ₹ 35 lakhs in the case of the appellant for the current assessment year. I also find that the declaration made by the appellant in the absence of supporting documentary evidences is of no use or help. If there is no evidence against the appellant to prove the above addition made, I am of the considered opinion that under the given circumstances, AO is not required to make the addition, just for the sake of making an addition. Nev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of these facts as well as considering to the fact that the appellant has consistently carried out or executed various civil contracts during the accounting years relevant to the assessment years 2001-02 to 2003-04; notices under section 148 of the Act for filing the returns of the income was issued which were properly served upon the appellant. However, these notices issued remained un-complied with inasmuch as no returns of income were filed by the appellant in response to the notices issued under section 148 of the Act. Besides, as per the facts brought on record by the AO in the assessment orders under appeal, the appellant has failed to attend the assessment proceedings before the AO and he has also failed to furnish the relevant details and its supporting evidences as called for the AO. Therefore, on account of these facts and circumstances, all the three assessment orders were completed ex parte under section 144 of the Act. These facts are not disputed or denied by the AR. However, as discussed above, the AR has submitted that this lapse on the part of the appellant is due to (i) non co-operation from his earlier chartered Accountant; and (ii) non-availability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt and records. The AR has also failed to substantiate the relevant submissions made inasmuch as no such details and evidences were furnished or placed on record. Nothing is brought on record to prove the non-cooperation on the part of his earlier Chartered Accountant as well as non-availability of the books of account and records. Moreover, the additions made and sustained in appeal are accepted or admitted by the appellant; therefore, it proves the findings of the AO that the appellant has concealed his taxable income and corresponding payment of taxes due to the Government by not filing its returns of income as well as not making payment of taxes to in all these assessment years under appeal. No proper explanation for the same is furnished by the appellant. Therefore, on account of these facts brought on record, I find that the AO is fully justified in holding that the demining provisions of Explanation (1) to section 271(1)(c) are clearly attracted in the case of the appellant and therefore, making him liable for the levy of penalty under section 271(1)(c) of the Act in all these assessment yeas under appeal . 3.3.2 x x x.. 3.3.3 x x x 3.3.4 In the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case as discussed above the AO is fully justified in the levy of penalty under section 271(1)(c) of the Act . The Ld. CIT(A) in the impugned order has failed to take note of quantum orders of the ITAT order, whereby, the whole premise of making the addition and the addition itself was deleted. The only income surviving was originally assessed income. This factum itself vitiates the finding of ld. CIT(A). 4. Before us, the Ld. Counsel for the assessee canvassed a very pertinent point that here in this case, original assessment was completed under section 144/148 whereby the income of the assessee was assessed after estimating at a net profit @ 8% on the lines of section 44AD at ₹ 3,20,870/-. In such an order, no penalty proceedings under section 271(1)(c) was initiated at all. Later on, the said assessment order was cancelled only to include income disclosed by the assessee during the survey action of ₹ 35 lakhs, which has been deleted by the CIT(A) and such a deletion has been confirmed by the Tribunal also. Thus, when the penalty was not initiated on the income assessed originally then same cannot be initiated again, because the second assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. Since the very basis for the initiation of penalty and satisfaction of the AO for the addition of ₹ 35 lakhs got vitiated, therefore, the entire proceedings for levy of penalty does not have any legs to stand. So far as the levy of penalty for the original assessed income of ₹ 3,20,870/- is concerned, there was no initiation at the time of original assessment, therefore, the same cannot be revived in the second assessment order sans any satisfaction or initiation. Thus, on this preliminary ground itself, we are of the opinion that, contention raised by the Ld. Counsel appears to be correct and no penalty under section 271(1)(c) on addition of ₹ 3,20,870/- can be sustained. Accordingly, we direct the AO to delete the penalty of ₹ 73,774/-. Thus, the appeal for the assessment year 2003-04 is allowed. 7. Now, we will take-up the penalty appeal for the assessment year 2002-03 and 2001-02, which have identical set of facts. From the perusal of the facts as discussed in the assessment order is that, a survey action was conducted in the case of the assessee s office premise on 12.08.2002 during the course of which assessee had declared an income of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income which fact has been specifically noted by the AO in the assessment order dated 15.11.2003 passed under section 143(3) r.w.s. 263. Though assessee may not have filed return in response to section 148 but otherwise the return of income was there on the record along with contract receipts as well as net profit shown. Thus, the very premise for levy of penalty does not stand. 9. On the other hand, Ld. DR strongly relied upon the order of the CIT(A) and submitted that, there is a categorical observation and finding of CIT(A) that assessee has not filed the return of income and hence a penalty confirmed by the CIT(A) is justified. 10. After considering the rival submissions and on perusal of the relevant material discussed in the impugned order we find that, the income has been assessed after estimating the net profit @ 8% on the gross contract receipts as per reconciled bank statement. The penalty has been levied by the AO on the ground that, assessee had not filed the return of income and has also not complied with the statutory notices issued to the assessee from time to time. Such an addition has also attained finality from the appellate stage. The Ld. CIT(A) too has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,249 Rs.79,48,499/- Profit offered by the assessee for These years Rs.38,50,458/- Difference is treated as Understatement of income Rs.40,98,014/- 11. Now, in wake of this information already on record, that return of income was filed and also cross verified by the Survey Party, can the finding of CIT(A) be sustained. Once the contract receipts has been shown in the return of income along with the net profit, then the whole premise on which penalty has been levied and confirmed gets vitiated. Only issue for the levy of penalty can be, firstly, the enhancement of contract receipts and secondly, the net profit estimated in the assessment proceedings initiated under section 148. The AO in the assessment order has neither given any credit for the contract receipts already disclosed as per the original return of income nor the relief of the net profit shown. Thus, this fact itself goes to show that, the entire assessment has been made purely on ad-hoc manner and without considering material already on record. Even though there has been non-cooperation by the assessee, which has le ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
