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TMI Blog2000 (3) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income worked out on the basis of enhanced income. 2.1 On first appeal, ld. counsel objected to levy of penalty after detection of alleged concealment of income by CIT(A). He referred to the decisions of Allahabad High Court in CIT v. Shadiram Balmukand [1972] 84 ITR 183 and CIT v . Dwarka Prasad Subhash Chandra [1974] 94 ITR 154. CIT(A) observed that the ratio of the said. decision was that penalties could only be levied by the authority which had initiated penalty proceedings. Even though penalty proceedings were initiated by Assessing Officer, enhancement was made by CIT(A) and penalty would have to be levied by him. Ld. counsel also made submissions on merits and pointed out that there was survey on the business premises on 1-11-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of raw material of Rs. 6,44,322 only. He pointed out that variation in dyeing and finishing charges was because Rs. 62,119 on account of purchase of undyed yarn had wrongly been included under the said head, whereas the same should have been shown under raw material. During the year only undyed yarn was purchased as against purchases of dyed and undyed yam, which resulted in greater expenses on dyeing and finishing yarn and lesser expenses on raw material. Regarding expenses on wages and fabrication, he submitted that outside labour charges had decreased from Rs. 39,835 to Rs. 10,330 because more work was done in house. He, therefore, urged that there was no reason to levy penalty under section 271(1)(c). Ld. CIT(A) considered the submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that sales reflected in the three bill books found during search were not shown in regular books of account. He referred to order dated 19-9-1995, whereby the Tribunal has upheld addition of Rs. 2,63,586 by observing that the entire sales including unaccounted sales had to be estimated on the basis of comparable manufacturing expenses and, therefore, sales worked out by Assessing Officer had to be upheld. The enhancement made by CIT(A) was quashed by the aforesaid order. He pointed out that the Tribunal have also considered addition of Rs. 1,65,761 on account of various discrepancies in accounts of certain parties and have held in paragraph 11 that . . . 'It is correct that the assessee did make a surrender of income at Rs. 72,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to the proceedings pending before those respective authorities so far as the imposition of penalty is concerned; (ii) Dwarka Prasad Subhash Chandra's case, therein it was observed that nothing in the statute indicates that the IAC has any jurisdiction to impose penalty in a case where the AAC is satisfied in the course of proceedings before him that penalty proceedings should be taken; and (iii) IAC v. Prakash Wine Agency [1987] Taxation 86(4)-49 (Ahd.), in which IAC made asst. treating the assessee as registered firm and made additions and also initiated penalty proceedings. CIT(A) enhanced asst. and directed cancellation of registration. IAC imposed penalty treated the assessee as AOP. On the assessee's appeal, the Tribunal dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of account or the goods had been pilfered. In case sales were made outside the books, then the assessee could not maintain g.p. rate which was the same as in earlier year. He referred to explanation offered before CIT(A) at pages 13-16 of paper book and submitted that shortage was worked out on estimate basis. Sales shown to the Sales Tax authorities were higher and explanation in this behalf was furnished at page 20 of paper book. The department has not found that the explanation was incorrect. W.r.t. unaccounted sales as compared with entries in three bill books found during search, ld. counsel referred to explanation of the assessee before CIT(A) at page 12 of paperbook and submitted that somehow the same did not find favour. W.r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 19-9-1995 in ITA No. 1091/90 for assessment year 1988-89 that while the Tribunal has upheld addition of Rs. 2,63,580 made on account of estimation of unaccounted sales w.r.t. manufacturing expenses, it quashed the enhancement in income made by CIT(A). It is further observed that while dealing with issue of addition of Rs.1,65,761 on account of variation in accounts of certain parties, the Tribunal held that amounts of Rs. 45,304 and Rs. 17,000 were not includible in the said addition. Thus while addition of Rs. 2,63,560 has been confirmed w.r.t. estimation of unaccounted sales, the other addition of Rs. 1,65,761 has been substantially reduced. We feel that there is merit in the contentions of ld. counsel that Assessing Officer c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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