TMI Blog2011 (8) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... y u/s. 271(1)(c) cannot be levied and we delete the same. Orders of the lower authorities are reversed and appeal of assessee is allowed. - I.T.A Nos. 2172 & 2173/Kol/2010 - - - Dated:- 12-8-2011 - S. V. Mehrotra (Accountant Member) And Mahavir Singh (Judicial Member) For the Appellant : A. K. Chakraborty, P. S. Gupta, D. Saha For the Respondent : S. K. Roy ORDER Mahavir Singh (Judicial Member) These appeals by assessee are arising out of orders of CIT(A)-XXXVII, Kolkata in Appeal No.1087/Set aside/CIT(A)-XXXVI/Kol/Nadia/09-10 and 1086/Set aside/CIT(A)- XXXVI/Kol/37/Nadia/09-10 vide dated 15.09.2010. Assessment was framed by ACIT, Circle- Nadia u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for Assessment Year 2001-02 vide his order dated 31.03.2004. Penalty under dispute was levied by ACIT, Circle-Nadia u/s 271(1)(c) of the Act vide his order dated 29.09.2004. For the sake of brevity, we dispose of both these appeals by this consolidated order. 2. First we take up ITA No.2172/Kol/2010. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of Assessing Officer in estimating net inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business as under: i) Works contract business Rs.3,19,261.00 ii) brick mfg. business ₹ 2,536.37 iii) Retail distribution of LPG Rs.1,93,181.42 iv) P.C.C. Pole Mfg. business Rs.1,65,368.33 Total Rs.6,80,347.12 The Assessing Officer during the course of assessment proceeding considering the net profit of the assessee as low and to verify assessee s profit in the line of business and the correctness of claim regarding purchase of stone chips and other materials, he got enquiry made by ITO, Burdwan, Suri, District Birbhum in respect of purchase of stone chips from M/s. Bhagat Stone Works and Shri Shambhu Bhakat. Assessing Officer also issued summons u/s. 131 of the Act to M/s. Pinky Enterprises, Shri Bibhuti Saha and Sri Apu Lodh. Shri Raghunath Prasad, partner of Bhagat Stone Works and Shri Shambhu Bhagat before the Assessing Officer admitted that they have not entered into any transaction with the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,15,947/- Shri M. L. Bhowmik, A/R and Shri Sovan Roy, Director, accepted the addition of ₹ 16,15,947/- as income from undisclosed sources to net profit. 4. Aggrieved, assessee preferred appeal before CIT(A), who after considering remand report of Assessing Officer as well as submissions of assessee estimated net profit at 10% of gross contract receipts but deleted the other additions by holding as under: I have carefully considered the above. The previous year under consideration is 2000-01. In other words more than 10 years have elapsed. Therefore, allowing cross examination, now, in my view does not serve any purpose because the alleged suppliers may not be keeping old records with them now. I also find from the A/R s written submissions, extracted above, that all the necessary bills and vouchers for the purchases and other payments were admittedly not maintained by them and therefore they could not furnish the same before the A.O. for his scrutiny, at the time of assessment proceedings. In other words non-furnishing of all the details at the time of scrutiny proceedings made the scrutiny in effective. Considering all, particularly consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from such business is only a reasonable estimate can be made by applying reasonable rate of profit expected to be earned from such type of business. Ld. Counsel also stated that a fair estimate of 5% to net profit out of gross receipt will meet ends of justice. For this, he stated that payments were received from State Govt. Department for civil construction work done and admitted. He stated that purchases, labour payments and transport charges effected through aforesaid sundry creditors amounting to ₹ 16,15,000/- as held to be bogus will result into abnormally high profits i.e. @ 15.98% on a turnover of ₹ 1,40,59,952/-. Ld. Counsel for applying a reasonable rate of net profit of gross contract receipt relied on the decision of Hon ble Orissa High Court decision in the case of CIT Vs. Nandaram Hundatram (1976) 103 ITR 433 wherein it is held that if the assesee failed to produce acceptable accounts, revenue would be justified in estimating real income at certain percentage of gross receipts. Ld. Counsel also relied on the decision of Royal Medical Hall Vs. CIT (1962) 46 ITR 748 (AP), wherein it is held that estimate of income on the basis of materials available and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant and the Director of the appellant society accepted the addition of ₹ 16,15,947.00 and he ought to have observed that the humble appellant did not get any opportunity to cross examine all the sundry creditors who gave their witnesses before another Income Tax Officer of another District. 7) For the both the Ld. C.I.T.(Appeal) and the Ld. Assessing Officer eared both in points of law and on facts. 8. We have heard rival contentions and gone through facts and circumstances of the case. We find that Assessing Officer has levied penalty on the basis of addition made by Assessing Officer in respect of following sundry creditors: 1) Pinky Enterprises ₹ 58,215/- 2) Sambhu Bhagat ₹ 9,42,061/- 3) Bhagat Stone Works ₹ 2,640/- 4) Bibhuti Saha ₹ 4,43,800/- 5) Apu Lodh ₹ 1,69,231/- ₹ 16,15,947/- We find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has occurred and it is wholly unnecessary to ascertain whether such a violation was intentional or not. The breach of a civil obligation which attracts a penalty under the provisions of an Act would immediately attract the levy of penalty irrespective of the fact whether the contravention was made by the defaulter with any guilty intention or not. In Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519, the Supreme Court, while considering the nature and applicability of section 271(1)(c) and Explanation 1 thereto, held that even if the statute says that one is liable for penalty if one furnishes inaccurate particulars, the same may not by itself be enough to hold that nothing more is needed if the particulars furnished are found to be inaccurate. An element of mens rea is needed before penalty can be imposed. Concealment and furnishing inaccurate particulars refer to a deliberate act or omission on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi. Another Division Bench of the Supreme Court, doubting the correctness of the above view expressed in Dilip N. Shroff referred the controversy involved i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. If we examine the facts of the present case in the light of the principles of law laid down by the Supreme Court in the aforesaid judgments, we find that the assessee furnished accurate particulars of the entire receipt of ₹ 21,76,274. After deduction towards expenditure and addition of net profit through other sources, taxable net income was shown at ₹ 70,818. However, since the assessee did not produce any evidence and books of account including the balance-sheet for the assessment year, net profit was estimated at the rate of 10 per cent. of the receipt from all sources and on difference of profit so estimated, additional tax was imposed and it was further directed that proceeding under section 271(1)(c) of the Act for imposition of penalty be separately drawn against the assessee for concealment of income by not producing proper evidence of expenditure. To impose penalty under section 271(1)(c), conditions stated therein must exist meaning thereby the assessee must have concealed the particulars of his income or furnished inaccurate part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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