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TMI Blog2018 (5) TMI 1373X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. It is, therefore, a case where the NP rate has been estimated by both the authorities and the additions have been made in the hands of the assessee. Referring to case of COMMISSIONER OF INCOME-TAX VERSUS KRISHI TYRE RETREADING AND RUBBER INDUSTRIES [2014 (2) TMI 21 - RAJASTHAN HIGH COURT] as held that on such guess work or estimation, no penalty under section 271(1)(c) of the Act is leviable - For imposing penalty under section 271(1)(c) of the Act, the Assessing Officer has to clearly prove the conduct of the assessee - The assessee offered an explanation, which could not be termed as not bona fide - In the absence of any corroborative evidence, it cannot be said that there was concealment of income - Thus the levy of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer after making various observations has accepted the turnover as declared by the assessee amounting to ₹ 89,97,900/-, however has not accepted the NP declared by the assessee and has estimated the N.P. rate @ 20%. Further the Assessing Officer also estimated the income from job work amounting to ₹ 90,000/-. In the quantum proceedings, the N.P. rate was reduced by the ld. CIT(A) from 20% to 12% and the job work charges estimated at ₹ 90,000/- were sustained. Apparently, the assessee has not filed any further appeal against the order of ld. CIT(A),hence, quantum proceedings have seen attained finality. 4. During the course of penalty proceedings, the Assessing Officer issued fresh show cause notice and held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found during the course of survey and the Assessing Officer has not been able to refer to any single slip or loose paper to base his additions, which itself proves that there was no concrete basis for making of addition. It was further submitted that the entire addition made by the Assessing Officer and partly sustained by the ld. CIT(A) are based on estimation only without any positive material against the assessee. Regarding the reasons for non-maintenance of books of account, it was submitted that this fact is not an afterthought rather it was accepted in the survey proceedings as well as during the course of assessment proceedings. It was submitted that the assessee was not aware about the compulsory maintenance of books of account as n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon ble Gujarat High Court in the case of ITO Vs. Bombaywala Readymade Stores (2015) 230 Taxman 0313. 7. Per contra, the ld Sr. DR vehemently argued the matter and relied on the findings of the Assessing Officer as well as the ld. CIT(A) and supported the orders of the lower authorities. 8. We have heard the rival contentions of both the parties and perused the material available on record. Undisputedly, the turnover declared by the assessee in his return of income filed much prior to survey has been accepted by the Assessing Officer and thereafter the Assessing Officer has estimated the NP rate @ 20%. Subsequently, during the appellate proceedings, the NP rate has been reduced by the ld. CIT(A) to 12%. There is no finding recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t transpired that the addition has been sustained purely on estimate basis and, in our view, no positive fact or finding has been found so as to even make the said addition. It is, according to us, a pure guess work and, in our view, on such guess work or estimation, no penalty under section 271(1)(c) of the Act can be said to be leviable. For imposing penalty under section 271(1)(c) of the Act, the Assessing Officer has to clearly prove the conduct of the assessee, which in this case, has not been proved. Merely because the books of account of the assessee were rejected or estimated addition was made, in our view, no penalty is leviable. The assessee offered an explanation, which could not be termed as not bona fide. In the absence of any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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