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TMI Blog2019 (6) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition to the income is based on estimate of profit rate when the A.O. passed order vis a vis when we dispose the quantum appeal. In such estimated addition, no penalty is to be levied - thus we delete the penalty levied U/s 271(1)(c) of the Act for the assessment year 2010-11. - Decided in favour of assessee. Levy of penalty u/s 271AAA - assessee has submitted once the Tribunal has restricted the addition to 15% alleged /bogus purchases then the income of the assessee was estimated the addition to the income of the assessee is based on presumption and estimation - HELD THAT:- We note that the addition made by the AO is identical to the addition for the assessment year 2010-11. We already produced the order of this Tribunal as well as judgment of Hon ble Jurisdictional High Court in the quantum appeals. Accordingly, in view of our finding for the assessment year 2010-11 the penalty levied U/s 271AAA of the Act against the addition made to the income of the assessee based on estimation/presumption is not sustainable consequently the same is deleted. - Decided in favour of assessee. - ITA No. 1165 to 1167/JP/2018 - - - Dated:- 18-6-2019 - Shri Ramesh. C. Sharma, AM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not fulfilled in as much as the addition sustained by the Hon'ble ITAT does not represent the income based on any entry in books of account/documents or transactions. Therefore, the penalty of ₹ 1,30,000/- deserves to be deleted. 5. On the facts and in the circumstances of the case and in law, ld.CIT(A) has erred in ignoring the observations made by Hon'ble High Court while hearing the appeal on quantum additions filed by department where it was observed that the additions were on estimate basis, thus the consequent penalty deserves to be deleted. 6. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal. 2. The assessee is a public limited company and providing medical facilities by running a Hospital under the name and style as Jaipur Hospital . The assessee filed his return of income U/s 139(1) of the Act on 19.08.2010 declaring total income of ₹ 24,92,280/- subsequently, there was a search and seizure action U/s 132 of the Act on 08.06.2011 at the business premises of the assessee as well as at residence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) of the act is not sustainable. The ld. AR has further submitted that even the Hon ble High Court has also observed while dismissing the appeal of the assessee that the disallowance of 15% which has been restricted by the Tribunal is on the basis of presumption and consequently the case is not beyond a reasonable doubt. He has also relied upon the following decisions:- Shiv Laltak vs. CIT 251 ITR 373. CIT vs. Gotan Lime Khanij Udyog (2002) 256 ITR 243. N.L. Agarwal vs. ACIT in ITA No. 197/JP/2018 dated 10.05.2019. Shri Satya Prakash Mundra vs. ITO in ITA No. 754/JP/2016 dated 23.01.2019. Shri Naveen Agarwal vs. ITO in ITA No. 295/JP/2014 910/JP/2016 dated 08.04.2019. 4. On the other hand, the ld. DR has submitted that the addition was made by the AO based on the incriminating material clearly disclosing bogus purchase of the assessee without actual supply of goods. It was also found that the assessee was receiving back the money after the supplier deducting the VAT and other charges and therefore, the assessee has shown bogus purchase only by taking vouchers/bills fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id piece of evidence in this behalf. Assessee has endeavored to demonstrate that the copious consumption of cotton gauge, bandages etc. has not been disputed; Books of accounts are properly maintained and not rejected by lower authorities. As compared to AY 2009-10 assessee s gross receipts, GP and NP % have gone up and at the same time % consumption of cotton has gone down; this data also has not been disputed in any manner by revenue, assessee claims that no 20 cotton was purchased from SKS in 2009-10. In this circumstance an alternate plea is advanced that a suitable estimate of disallowance be adopted instead of total disallowance. Reliance is placed on our consolidated order in the case of Anuj Kumar Varshney and ors (supra); in this case the addition qua unverifiable purchases of semi precious stones has been held to be at 15% of such unverifiable purchases. Looking at the entirety of facts and circumstances i.e. the books of accounts being not rejected consumption of cotton having comparatively decreased, we are inclined to follow our judgment in the case of Anuj Kumar Varshney (supra) and direct to restrict the disallowance to 15% of purchases from SKS. Thus assessee s ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interference is called for. 9. Therefore, the issue is required to be answered in favour of the department against the assessee. 10. We observe that on the basis of this assessment order, no prosecution will be launched and if it is launched, it will be open for the present appellant to take defence that he has succeeded before the Tribunal which has been confirmed by this Court. 11. Om that view of the matter, if discharge application is preferred, the same will be considered in accordance with law. The 15% disallowance which has been restricted by the tribunal is on the basis of presumption, in that view of the matter, the case against the present appellant is not beyond reasonable doubt. 12. The appeals stand dismissed. A combined reading of the order of the Tribunal in quantum appeal and further the judgment of the Hon ble jurisdictional High Court reveals the addition sustained by the Tribunal is on the basis of considering the assess GP NP for the preceding assessment year as well as assessment years under consideration accordingly, the addition was restricted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from assessment proceedings and, howsoever relevant and good, the findings in assessment proceedings may be, they are not conclusive so far as the penalty proceedings are concerned. 11. From the above discussion, it can be seen that the opinion of the Tribunal with respect to the deletion is based on appreciation of evidence on record. 12. The hon'ble apex court in the case of Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/161 Taxman 218 has held that if there is no evidence on material to show that the assessee had deliberately furnished inaccurate particulars and there was any mala fide intention on his part so as to make him liable for penalty. A mere omission or negligence would not constitute deliberate act of concealing particulars of income or suppressed or furnished inaccurate particulars of income. 13. The Patna High Court in the case of CIT v. Kailash Crockery House [1999] 235 ITR 544/107 Taxman 386, had an occasion to consider the issue of penalty under section 271(1)(c) on the basis of the fact that the gross profit rate shown by the assessee was found to be low and trading addition was made on estimate basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistant Commissioner under section 271(1)(c) of the Act was not justified. 17. The Punjab and Haryana High court in the case of Harigopal Singh v. CIT [2002] 258 ITR 85/125 Taxman 242, has held as under (page 86) : In order to attract clause (c) of section 271(1) of the Act, it is necessary that there must be concealment by the assessee of the particulars of his income or if he furnishes inaccurate particulars of such income. What is to be seen is whether the assessee in the present case had concealed his income as held by the Assessing Officer and the Tribunal. He had not maintained any accounts and he filed his return of income on estimate basis. The Assessing Officer did not agree with the estimate of the assessee and brought his income to tax by increasing it to ₹ 2,07,500. This, too, was on estimate basis. The Tribunal agreed that the income of the assessee had to be assessed on an estimate of the turnover but was of the view that the estimate as made by the Assessing Officer was highly excessive and it fixed the total income of the assessee at ₹ 1,50,000 for the year under appeal. It is, thus, clear that there was a differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty appears to be justified and we answer both these questions against the Revenue and in favour of the assessee. 19. The Allahabad High Court in the case of CIT v. Raj Bans Singh [2005] 276 ITR 351 has held that On appeal, the Tribunal came to the conclusion that it was a case of an estimate against an estimate and there was no concealment and accordingly it was held that no penalty was imposable . 20. This court in the case of CIT v. Chaturbhuj Bhanwarlal [1987] 166 ITR 659/31 Taxman 363 (Raj.) observed as under (page 682) : Having given our anxious consideration to the rival contentions advanced before us and to the law cited by both the sides, we are of the view that the Tribunal proceeded to take into account various circumstances referred to above and had reached the finding after considering those circumstances. It cannot be said that the finding reached by the Tribunal was based on no evidence. All material facts and circumstances positive and negative, constitute evidence and on consideration of the positive and negative circumstances, the finding can be arrived at after weighing the probabilities. Such a fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons relied upon the ld. AR of the assessee. We further note that this Tribunal in case of N.L. Agarwal v. ACIT vide dated 10.05.2019 in ITA No. 197/JP/2018 has also considered this issue in para 6 to 8 as under:- 6. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the trading addition has been upheld by the Tribunal by estimating the GP rate at 15% on the alleged unverifiable purchases. It is settled proposition of law that merely confirmation of the trading addition made on estimate basis does not lead to the conclusion that assessee has furnished inaccurate particulars of income or concealed any income. Further estimation is always on presumptions and assumptions and without proper and specific linking with any evidence in support of such estimation assessee cannot be fastened with liability of penalty. Accordingly, it is well settled that no penalty is leviable u/s 271(1)(c) on the basis of trading addition due to disturbance in the G.P. rate disclosed by the assessee. Therefore, additions were made in the assessment order not on the basis of any concealment being detected in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years 2011-12 and 2012-13 the assessee has raised common grounds except the quantum of penalty. The grounds raised for the assessment year 2011-12 are reproduce as under:- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in confirming penalty u/s 271AAA levied by ld. AO at ₹ 45,198/- arbitrarily, thus the order so passed deserves to be quashed. 2. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in ignoring the facts that the appellant has duly complied with all the conditions laid down which allows exemption from levy of penalty u/s 271AAA, thus the penalty of ₹ 45,198/-, so levied deserves to be deleted. 3. without prejudice to above, on the facts and in the circumstances the Ld. CIT(A) has grossly erred in confirming the penalty levied by ld. AO u/s 271AAA on the addition of ₹ 4,51,976/- which was sustained by the Hon ble ITAt by disallowing at an estimated rate of 15% out of the allged unverifiable purchases without holding such expenses to be false and no penalty can be levied merely on account of an addition made/sustained on estimated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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