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TMI Blog2017 (4) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order and deleted the penalty. After going through the order of the ld.CIT(A), we do not see any reason to interfere in it. Accordingly, the appeal of the Revenue is dismissed. - Decided in favour of assessee. - ITA No.105/Ahd/2014 - - - Dated:- 3-4-2017 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Revenue : Shri Prasoon Kabra, Sr.DR For The Assessee : Shri Prakash D. Shah, AR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Revenue is in appeal before the Tribunal against the order of the ld.CIT(A)-VIII, Ahmedabad dated 21.10.2013 passed for the Asstt.Year 1992-93. 2. Sole grievance of the Revenue is that the ld.CIT(A) has erred in deleting the penalty of ₹ 1,02,80,144/- which was imposed by the AO under section 271(1)(c) of the Income Tax Act, 1961. 3. Brief facts of the case are that the assessee is a private limited company. At the relevant time, it was engaged in manufacture of copper and copper alloys. It has filed its return of income on 31.12.1992 declaring total income at ₹ 1,14,126/- The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied with the penalty, the assessee carried the matter in appeal before the ld.CIT(A). The ld.CIT(A) has deleted the penalty by recording the following finding: I have carefully considered the facts of the case, the penalty order, the written submission of the appellant and the report submitted by the AO during the course of appellate proceedings. The AO has imposed the penalty under section 271(1)(c) on account of unrecorded production for the pre-search and post search period; and on account of additions made for bogus purchases. The additions were made as a result of seizure of certain documents during the course of search which was conducted at the premises of the company on 23/01/1992. For the sake of convenience and clarity both the issues are discussed separately here under. 1. The first issue on which the penalty has been imposed is the addition, on account of unrecorded production. The addition was made as a report of chemical analysis was seized during the search. The report contained an analysis in a standard proforma for copper and brass products/The details pertain to the period from 31/05/1991 to 06/01/1992, the pre-search period. On the basis of those repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted however the addition made was substantially reduced. The addition made for suppressed profit for eight months period from June 1991 to January 1992 was computed at ₹ 1939418/- as against ₹ 4023570/- computed by the AO/ The suppressed profit for the month of April and May 1991 was upheld at ₹ 2884854/- as against the addition of ₹ 681 1785/- made by the AO. The additions made for the suppress profit for the month of February and March 1992 were deleted. The AO has imposed a penalty of concealment on the above additions which has been confirmed by the ITAT. However, the facts show that the addition has been made on the basis of certain estimates which have been applied on the figures of production which were again estimated on the basis of certain evidences found during the course of search. There was no evidence of unrecorded production for the post search period. Whatever evidence was seized it was related to post search period. Therefore, the addition was basically made on the basis of, first of all estimating the production, and then applying an estimated profit rate on that production. The addition was deleted by CIT(A) and subsequently the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T that the evidence given by the transporter regarding issuing of bogus receipt was material and could not be ignored. It was held that the genuineness of the purchases had to be independently proved and not merely by inference. The AO has accordingly imposed penalty on this addition. On examination of entire facts, the order of CIT(A) and the order of honourable ITAT in the quantum proceedings it is seen that the facts regarding purchases from Bombay could not be proved except for the transportation bills. The addition was deleted by CIT(A) on the ground that the other evidences such as production, sale, the excise records and the facts that the purchases and sales have not been doubted by the AO clearly it indicate that the purchases were made by the appellant. The observation of honourable ITAT regarding the onus on the appellant to prove the transportation is very valid however the observation is sufficient to make the addition or disallowance of purchases but the penalty on these facts is not justified. The AO has not conclusively proved that the appellant had not purchased these goods but merely shown it by taking the bills. The purchases were evidenced by excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. 3. Whether the Tribunal committed substantial error of law in reversing the order of the CIT [Appeals] without any discussion of finding reached by the said authority and finding the same to be erroneous. 8. On the strength of this, he contended that the issue is quite debatable because the ld.CIT(A) has allowed the appeal of the assessee and deleted the addition. The order of the ld.CIT(A) has been reversed by the Tribunal on this issue, but again Hon ble High Court has admitted the appeal which suggests that question of law is involved. 9. In his next fold of submissions, he contended that the additions are made on account of estimation i.e. disbelieving the books of accounts and observing that the assessee must have produced more copper and brass alloy then the one reflected in the books. The AO has calculated such profit at ₹ 40,23,570/- with respect to pre-searcg period and ₹ 68,11,785/- with respect to post-search period. The ld.CIT(A) deleted both these additions. When the Tribunal affirmed these additions, then reduced the quantum to ₹ 19,39,418/- qua pre-search period as against ₹ 40,23,570/- and ₹ 28,84,8541/- qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income or such person as a result thereof shall, for the purposes of Clause (c) of this subsection, be deemed to represent the income in respect of which particulars have been concealed. 12. A bare perusal of this section would reveal that for visiting any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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