2005 (2) TMI 475

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..... s. 133A carried out on 19th March, 1997. The details of additions, which are the subject-matter of penalty are as under: S. No. Addition made in assessment order Additions subject-matter of penalty 1. Trading addition on estimation Rs. 38,562 on account of estimating sales without any supporting material Nil 2. Unexplained investment of Rs. 37,394 invested in Sahara India Corporation, Sumerpur Branch, para 7, p. 6 of assessment order Rs. 37,394 3. Unexplained cash found, para 6 p. 6 of assessment order Rs. 10,858 4. Expenses disallowed Rs. 3,000 Nil 5. Income from sale of cloth Katran (Residual cutting of cloth) para 8, page Nos. 6 & 7 of assessment order. Rs. 7,200 6. Total Rs. 55,452 3. A penalty of Rs. 19,012 was im .....

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..... ord as Annex. 4. In the reply filed by the appellant in response to the show-cause notice under s. 271(1)(c), i.e., annex. 2, the appellant had submitted and objected to the proposition to levy the penalty on account of the facts that no penalty can lawfully be levied when the additions are made on estimation basis. It has been explained by the learned Authorised Representative that as a matter of law, when the books of account are rejected, then no disallowance or for that matter any addition emerging from the maintenance of books of account, etc., could be made. Accordingly, the cash, if in fact, was found excess from the book figure, that cannot be a subject-matter of addition even while framing the assessment order though in this case o .....

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..... he true position, it does not dispute certain disallowances but that does not absolve the Revenue from proving the mens rea of quasi-criminal offence." 8. Further learned Authorised Representative has submitted that the appellant had given reasonable explanation in respect of each and every addition but the learned AO had not accepted the same and had made these additions and treated the same as concealed income. The mere fact that during the course of survey proceedings the assessee had surrendered income, cannot be made a basis for levy of penalty. The learned Authorised Representative has placed reliance on various decisions including: (i) CIT vs. Tyaryamal Bal Chand (1987) 62 CTR (Raj) 216 : (1987) 165 ITR 453 (Raj) (ii) CIT vs. S. .....

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