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TMI Blog2024 (10) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... rded in the books of accounts on the alleged suppressed turnover on the basis of SCN issued by Central Excise Authority and finally adoption of 1% net profit of the sales recorded in the regular books of accounts. Thereby the addition made towards undisclosed investments have been deleted. This order of the Tribunal was confirmed by Hon ble Gujarat High Court in Revenue s appeal. Thus there is no change not only in the profit estimated but also the alleged turnover from the fact that the addition on account of investments have been deleted. In view of different estimates having been adopted at different stages and consequently the income determined purely on estimate basis in such cases penalty could not be leviable for filing concealment of income or furnishing inaccurate particulars of income by the assessee. The above view of ours are supported by the Jurisdictional High Court Judgment in the case of CIT Vs. Valimkbhai H. Patel [ 2005 (7) TMI 35 - GUJARAT HIGH COURT] wherein it was held that penalty cannot be levied on an estimation of addition which was substituted by another estimation. Further Punjab and Haryana High Court in the case of CIT Vs Prem Dass [ 2000 (8) TMI 31 - P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation on various Ceramic Industries in general. The primary allegation was that in order to evade excise duty, there was suppression in the MRP of the sales conducted by the assessee company. Further AO observed that from the cash generated by suppressing the MRP, various expenses including the purchase of raw material, transportation, labour expenses, etc. were incurred. The inquiries conducted by DGCEI were referred in Para 5 and Page 8 to 58 of the assessment order. The A.O. has also referred various undisclosed investment made by the assessee group, the details were referred in Para 11.9 of the assessment order. Thereafter applying the Gross Profit as per the regular books of account maintained at 31.18%, as alleged suppressed sales as per SCN issued by DGCEI of Rs. 16,31,59,124/- and determined the undisclosed income of the assessee was estimated at Rs. 5,08,73,015/-. Comparing the same with the alleged undisclosed investment of Rs. 10 crores, the higher amount of undisclosed investments have been added to the total income of the assessee and demanded tax thereon. 3. On appeal against the quantum additions, Ld. CIT(A) deleted the addition of alleged unexplained investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stricted the addition to 1% of the turnover as per the audited accounts. Thus the entire basis of addition has undergone a sea change. Therefore, profit and turnover has also been altered while adjudicating by the appellate authorities. In the above circumstances, penalty for concealment of income cannot be levied. 7.1. Further Ld.Counsel submitted on identical issue for the Asst. Years 2005-06 and 2006-07, Ld. CIT(A) allowed the appeal of the assessee company and the copies are placed in the Paper Book at Page Nos. 6 to 12. Further in the case of Group concerns namely Asian Tiles Ltd. on similar grounds for the Asst. Years 2004-05 to 2008-09, the Ld. CIT(A) decided in favour of the assessee, which are placed at Page Nos. 13 to 18 of the Paper Book. In both the cases, the Revenue has not preferred further appeal before the Hon ble Tribunal and thus the appellate orders have attained finality. 7.2. The Ld. Counsel in support of his arguments relied upon various case laws: i. CIT v. Valimkbhai H. Patel (2006) 280 ITR 487 (Guj.) ii. CIT v. Prem Dass (No. 2) (2001) 248 ITR 237 (P H) iii. CIT v. Manjunath Cotton Genning 359 ITR 562 (Kar.) iv. CIT v. Aerotraders Pvt. Ltd. (2010) 322 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows: It was an admitted position that the assessee was carrying on business manufacturing salt and salt is stored in the open in heaps. Therefore, loss on account of cyclone and rain would be on an estimated basis, in fact that was what the Commissioner (Appeals) had found as a matter of fact that one estimate was substituted by another estimate. According to the Commissioner (Appeals) in the Circumstances, the assessee could not he visited with penalty merely because the assessee was not in a position to substantiate the claim in quantity. In the light of the said factual position, it was not possible to interfere with the final conclusion of the Tribunal Both the Commissioner (Appeals) and Tribunal had found and come to the conclusion that the penalty was not leviable in the instant case, though for different reasons. In the light of the peculiar facts of the case, the Tribunal's order required no interference in the light of the findings of fact recorded by the Commissioner (Appeals). 9.2. Similarly Jurisdictional High Court in the case of CIT Vs. Subhash Trading Co. (cited supra) deleted the penalty levied by observing as follows: Section 271(1)(c) of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls) and Tribunal, imposition of penalty for furnishing inaccurate particulars of income was not justified [In favour of assessee) Even in the case of the appellant company substantial relief has been granted by the Hon. ITAT and which has come to be accepted by the Hon. High Court also. Furthermore, the addition sustained is purely on estimate basis. 10. Respectfully following the above judicial precedents, we hereby delete the penalty levied u/s 271(1)(c) of the Act of Rs. 55,14,076/-. 11. In the result, the appeal filed by the Assessee is allowed. 12. ITA No. 620/Ahd/2023 for A.Y. 2008-09: Brief facts is for the Asst. Year 2008-09, assessee filed its Return of Income on 10.10.2008 declaring total income of Rs. 23,62,74,550/-. Regular assessment u/s. 143(3) was completed on 31.12.2009 determining the total income at Rs. 42,55,74,550/- by making an addition of Rs. 18,93,00,000/- on account of alleged undisclosed investments made by the assessee. 13. On appeal, Ld. CIT(A) scaled down the addition by adopting Net Profit as per the books of accounts @ 13.04% on the alleged suppressed sales. Whereas the Hon ble ITAT scaled down the addition by estimating the Net Profit @ 1% of the turn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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