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TMI Blog2016 (4) TMI 1225X X X X Extracts X X X X X X X X Extracts X X X X ..... f accounts were rejected and net profit was applied. Therefore, we are of the view that facts of this case is similar to the facts of the Jurisdictional High Court. Therefore, the penalty cannot be imposed. - Decided in favour of assessee. - I.T.A. No. 799/Ind/2014 - - - Dated:- 5-4-2016 - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER Appellants by : Shri S.S.Deshpande, CA Respondent by : Shri R. A. Verma, DR ORDER Per D. T. Garasia, J.M. This appeal by the assessee is directed against the order of CIT(A), Ujjain, dated 08.09.2014 for the assessment year 2007-08. 2. The brief facts of the case are that the assessee is a partnership firm doing the business of transportation, loading unloading, handling and shifting of material. The assessee has filed the return of income declaring total income of ₹ 40,30,950/- and the same has been assessed at ₹ 3,77,22,570/-. During the course of assessment proceedings, the AO pointed out specific defects in the books of accounts. After taking into account the defects in the books of accounts the CIT(A) while deciding the quantum appeal adopted the net profit @ 4%. Therefore, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of transactions with no supporting vouchers were available. The assessee was given opportunity to give proper explanation. The assessee was given the books of accounts. The AO estimated net profit of 11% on gross receipts. The Tribunal reduced the estimate of gross profit from 11 % to 8%. Penalty was deleted by CIT(A) and it was confirmed by the Tribunal and High Court has held that the assessee was given number of opportunities to inspect the seized material and given the photocopies of desired documents. The mere fact that estimate was reduced to 8% would not take away any guilt of the assessee and or explain to failure to return the correct income did not arise from any fraud or gross or willful neglect on his part. The penalty was justified. The ld. Departmental Representative also submit the decision of Hon'ble M.P. High Court in the case of CIT (Additional ) vs. Smt. Chandrakanta and Others, 205 ITR 607, wherein the Hon'ble High Court has held that the assessee submitted his return and showed a loss of Rest. 50,000/- and then revised it and showed a profit of ₹ 7,500/-, he had unnecessarily suppressed the particulars of income and given an incorrect accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different months. The assessee has claimed payment of ₹ 16,26,48,836/- during the year as transportation, loading and unloading charges. The AO asked to produce all the persons with their proof of identity and bank account. The assessee was also asked to produce the labours which the assessee did not produce. Therefore, the books of accounts were rejected and income of the assessee was estimated and CIT(A) has confirmed the addition of net profit @ 4% and addition to the extent of ₹ 56,98,045/- were sustained by the ld. CIT(A) and it was confirmed in the Tribunal. We find that the similar issue had come up before the Jurisdicitonal High Court in the case of CIT vs. Shivnarayan Jamnalal, 312 ITR 311, wherein the Hon'ble High Court has held that the books of accounts maintained by the assessee were not properly maintained and if assessee has not concealed any material and not tried to defraud the authorities, the penalty cannot be levied, because the income was assessed on estimate basis. In that case, the assessee had nine liquor shops located in several places maintained a single cash book and ledger. The AO held that it was not possible to acquire daily account fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly cancelled the penalty. 8. We also get support from the decision of Hon'ble Punjab and Haryana High Court in the case of CIT vs. Sangrur Vanaspati Mills Limited, (2008) 303 ITR 53 ( P H ), wherein it is held as under :- In order to attract clause of Section 271(1) of the Income-tax Act, 1961, it is necessary that there must be concealment by the assessee of the particulars of his income or furnishing of inaccurate particulars of such income. The provisions of Section 271(1)(c) of the Act are not attracted to cases where the income of an assessee is assessed on estimate basis and additions are made therein. When the additions have been made on the basis of estimate and not on account of any concrete evidence of concealment, then the penalty is not leviable. 9. We also get support from the decision of Hon'ble Rajasthan High Court in the case of CIT vs. Mahendra Singh Khelda, (2012) 252 CTR (Raj) 453, wherein it is held as under :- The finding of the Tribunal makes it clear that additions made by the AO were based on estimation only. A fact or allegation based on estimation cannot be said to be correct only, it can be incorrect also. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of fact. 11. The ld. Departmental Representative further submitted that if the penalty is imposed on estimated income, the penalty can be imposed. The ld. Departmental Representative relied upon the order of Hon'ble Delhi High Court in the case of CIT vs. Kalindi Rail Nirman Engg. Limited, (2014) 365 ITR 304 (Del), wherein the Hon'ble High Court has held that in the case of one contractor, who was undertaking the project for Indian railways on turn-key basis and search was carried out in assessee s premises as well as the premises of Directors and trustee persons, the matter referred to Special Auditors in terms of Section 142(2A) of Income-tax Act, 1961, and the auditors reported that number of transactions with no supporting vouchers were available. The assessee was given opportunity to give proper explanation. The assessee was given the books of accounts. The AO estimated net profit of 11% on gross receipts. The Tribunal reduced the estimate of gross profit from 11 % to 8%. Penalty was deleted by CIT(A) and it was confirmed by the Tribunal and High Court has held that the assessee was given number of opportunities to inspect the seized material and given the photo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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