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TMI Blog2016 (6) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... d turnover and also made additions towards unexplained investments in building on estimation basis. The assessee has admitted the additional income during the course of survey proceedings and paid the taxes. The assessee also explained the reasons before the A.O. and requested for immunity from the penalty proceedings. Therefore, when the addition is made on estimation basis and assessee has admitted the additional income to buy peace and to cooperate with the department for smooth completion of the assessment proceedings, the A.O. was not correct in levy of penalty u/s 271(1)(c) of the Act. The CIT(A) without appreciating the facts, confirmed the penalty levied by the A.O. and also enhanced the penalty in respect of unexplained investments in the building. Therefore, we set aside the order passed by the CIT(A) and direct the A.O. to delete the penalty levied u/s 271(1)(c) of the Act. - Decided in favour of assessee - I.T.A.Nos.323&324/Vizag/2013, I.T.A.No.325/Vizag/2013 - - - Dated:- 29-4-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri G.V.N. Hari, AR For The Respondent : Shri K. Ravi, DR ORDER PE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion on 5.5.2011 and stated that as per the books of accounts maintained by him, the total turnover for the period is at ₹ 35,94,342/-. Since, the turnover as per the books of accounts is less than ₹ 40 lakhs, the requirement of audit u/s 44AB of the Act does not arise. The A.O. after considering the explanation furnished by the assessee, levied the penalty u/s 271B of the Act. The A.O. further held that the assessee turnover for the year under consideration is above ₹ 40 lakhs, which was confirmed by the assessee during the course of assessment proceedings, therefore, the contention of the assessee that the turnover for the year under consideration is less than ₹ 40 lakhs has not been accepted. Since, the assessee failed to get is accounts audited u/s 44AB of the Act, invoked the provisions of section 271B of the Act and levied penalty of ₹ 22,851/- being half percentage of the gross turnover. 4. Aggrieved by the penalty order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The assessee further submitted that as per the books of accounts, the total turnover for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We find force in the arguments of the assessee for the reason that the requirement of audit u/s 44AB of the Act applies, when the turnover as per the books of accounts exceeds ₹ 40 lakhs. In the present case on hand, on perusal of the facts available on record, we find that the total turnover as per books of accounts of the assessee is less than ₹ 40 lakhs. Therefore the A.O. was not correct in levying the penalty u/s 271B of the Act. The CIT(A) without appreciating the facts properly, confirmed the penalty levied by the A.O. Therefore, we set aside the order passed by the CIT(A) and direct the A.O. to delete the penalty levied u/s 271B of the Act. 7. In the result, the appeal filed by the assessee is allowed. ITA No.324/Vizag/2013: 8. The brief facts of the case are that the assessee Sri L. Chinasimhachalam is engaged in the business of trading in textiles. The assessee has filed his return of income for the assessment year 2008-09 on 7.9.2009 declaring total income of ₹ 93,890/-. A survey operation u/s 133A of the Act was conducted in the business premises of the assessee on 9.1.2008. During the course of survey operation, the assessee has admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had source from unaccounted sales which was invested in the construction of building and cash gift of ₹ 2 lakhs to his brother. Therefore, requested to telescope the source available for investment in construction of building and towards cash gift. The assessee further submitted that the additions made on account of estimation of turnover and estimated cost of construction does not amounts to concealment of income. Though he had admitted the lapses during the course of assessment proceedings, the same has been accepted with a request to not to levy penalty for concealment of income. Therefore, requested to delete the penalty levied by the assessing officer. 11. During the course of appellate proceedings, the CIT(A) noticed that the A.O. has initiated penalty proceedings in respect of all the 3 additions made during the course of assessment proceedings. However, the A.O. has levied penalty in respect of concealment of income on account of unaccounted turnover and cash gift and failed to levy penalty in respect of unexplained investments in construction of building. Therefore, issued a notice for enhancement of penalty u/s 271(1)(c) of the Act. In response to enhancement not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he has neither concealed the particulars of income nor furnished inaccurate particulars of income, as the A.O. has made additions on estimation basis. The assessee further submitted that he has admitted additional income during the course of survey operations towards deficit stock to buy peace and to cooperate to the department for smooth completion of proceedings. The assessee further submitted that when income is surrendered with a request to not to levy any penalty proceedings, the A.O. was not correct in levying the penalty for concealment of income. We find force in the arguments of the assessee for the reason that the A.O. has made additions in respect of unaccounted turnover on estimation basis. We further noticed that the A.O. had estimated the cost of construction and determined the unexplained investment. In respect of cash gift of ₹ 2 lakhs given to his brother, the assessee has explained the source for the cash gift before the A.O. The assessee explained that he had source from sale of deficit stock found during the course of search. Therefore, we are of the opinion that no penalty can be levied for concealment of income u/s 271(1)(c) of the Act when additio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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