9911796707
TMI Blog2017 (4) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act was conducted in the case of the assessee, its associated concerns and at the residential premises of directors on 23.1.1992. One of the materials seized during the search was a file containing report of chemical analysis. The chemical analysis report was prepared after testing material in laboratory of the assessee's factory at Khadi. The report contained analysis in a standard pro forma for copper and brass products. The contained details for period from 31.5.1991 to 6.1.1992 for pre-search period. On the basis of these details, the AO worked out production of brass products at 332.9 MT and Copper item at 397.6 MT. The total came to 730.5 MT as against this, books of accounts showed production of brass items at 202.1 MTs and copper items at 137.1 MTs. After analysis of the record, the AO has made an addition of Rs. 40,23,570/- as undisclosed income for the pre-search period and Rs. 68,11,785 on account of unrecorded production for post-search period. 4. On appeal, both these additions were deleted by the ld.CIT(A). The Revenue came in appeal before the Tribunal, and the Tribunal vide order in ITA No.4097/Ahd/1995 allowed the appeal of the Revenue partly and confirmed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The production as per the books of accounts was 202.1 metric tons for brass and 137.1 metric tons for copper items. The difference was added as an unrecorded production. The AO also referred to the receipt and dispatch register for the period from December 1991 and January 1992 and compared the same with the excise challans maintained under the Central Excise Rule. Since there was discrepancy the AO rejected the book results under section 145(3) and computed the undisclosed profit earned on the unrecorded production pertaining to search period. For the post search period the AO worked out the unrecorded production of brass and copper items by taking the chemical analysis report, other papers pertaining to the period from June 1991 to January 1992, the average monthly production as shown by the seized material and the production recorded in the books of accounts. On that unrecorded production the AO estimated the profit for the post search period by applying the average monthly profit worked out on the basis of unrecorded production of the search period. The CIT(A) deleted the additions on the grounds that are discussed in detail in his order. However the main grounds on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the concealment of income has been established, could be pointed out in the concealment cannot be imposed as the issue is debatable and it has not been established beyond doubt that there was in fact any concealment of income. The CIT(A) in its order has pointed out that there was no evidence regarding sales made outside books of accounts found during the search. It has also been pointed out by the appellant that a question of law has been admitted by honourable Gujarat High Court against the addition and this fact also shows that the addition is debatable. He has also placed on record a copy of the order of honourable High Court admitting the question of law. Therefore, on the basis of above mentioned facts, circumstances and discussion I am of the considered opinion that no penalty of concealment under section 271(1)(c) is exigible on the appellant on this issue. The same is therefore, directed to be deleted. 2. The second issue on which the penalty has been imposed is regarding the addition made for bogus purchases. The facts in brief are that the AO noted that the appellant purchased brass tubes from one concern at Bombay and the goods were transported through several t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of transporter. On these facts the concealment of income is not conclusively established. As pointed out in the discussion on the first issue that a question of law has been admitted by honourable Gujarat High Court against this addition also and this fact also show that the addition is debatable. In view of the above mentioned facts .and circumstances and discussion I am of the considered opinion that the penalty of concealment under section 271 (1)(c) is not exigible on the appellant on this issue. The same is therefore, directed to be deleted. To conclude the AO is directed to delete the penalty of concealment on both the issues." 6. The ld.DR relied upon the order of the AO and contended that the AO has proved on record that the assessee has suppressed its profit, and therefore, rightly visited the assessee with penalty. He contended that the assessee failed to prove its purchases and therefore, expenditure claimed on account of purchases was disallowed to the assessee. 7. On the other hand, the ld.counsel for the assessee raised two fold submissions. In the first fold of contentions, he submitted that both additions made by the AO were deleted by the ld.CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e must have purchased raw-material. It could not substantiate the purchases of raw-material. In other words, if purchases came from "A" remained to be unproved, then quantity of raw-material could not be doubted and at the most profit element of should be added. It is a different matter that the Tribunal has disallowed the total claim of purchases. He further contended that in the case of sister concern viz. Mardia Copper Industries for Asstt.Year 1992-903, similar penalty as imposed which was deleted by the Tribunal vide its order dated 4.5.2012 passed in ITA No.2020/Ahd/2009. He placed on record copy of the Tribunal's s order. 11. We have duly considered rival contentions and gone through the record. Section 271(1)(c) of the Income Tax Act, 1961 has direct bearing on the controversy. Therefore, it is pertinent to take note of the section. "271. Failure to furnish returns, comply with notices, concealment of income, etc. (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) and (b)** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeal); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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