TMI Blog2012 (4) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... 012 - CHANDRA POOJARI, SMT. ASHA VIJAYARAGHAVAN, JJ. G.V.V.S. Murthy for the Appellant. K. Vishwanatham for the Respondent. ORDER Chandra Poojari, Accountant Member The above two appeal by the assessee are directed against the common order of the CIT(A)-I, Hyderabad dated 8th October, 2009 for assessment years 2002-03 and 2003-04. Since common issue is involved both the appeals are clubbed together, heard together and are being disposed of by this common order for the sake of convenience. 2. Brief facts of the issue are that a search and seizure operation u/s. 132 of the Income-tax Act, 1961 was conducted in the NAREDI group of cases in the course of which the residential and business premises of the assessee were also covered. Consequent to the search, the assessee filed returns of income for A.Y. 2002-03 declaring income of Rs. 2,83,650 and for A.Y. 2003-04 at Rs. 3,44,700. After examining the books of account and seized materials the Assessing Officer completed the assessments determining income at Rs. 5,38,900 for A.Y. 2002-03 and Rs. 8,53,282 for A.Y. 2003-04. As the assessee had not disclosed the income from bill discounting correctly the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Ajay Hari Dalmia [1986] 157 ITR 145/[1985] 21 Taxman 40 (Delhi) ( d ) Hari Om Kumar Umesh Chand v. ITO [2002] 257 ITR (AT) 121 (Agra) ( e ) Addl. CIT v. Delhi Cloth and General Mills Co. Ltd. [1986] 157 ITR 822/[1984] 17 Taxman 194 (Delhi) ( f ) J.K. Jajoo v. CIT [1990] 181 ITR 410/[1989] 47 Taxman 11 (MP) 5. On the other hand, the learned DR submitted that the Assessing Officer has no doubt estimated the commission on cheque discounting but the said estimation is duly supported by seized materials found during the search and seizure operation. Thus it cannot be said that the estimation was without any basis or corroborative evidence. In fact the quantum addition made by the Assessing Officer was subjected to appeal and the first appellate authority after analysing the issue in detail and verifying the seized material has confirmed the percentage adopted by the Assessing Officer for commission on cheque discounting. During the appellate proceedings against the assessment orders the CIT(A) has categorically observed that the submission of the assessee that the commission earned was Rs. 10 per ten thousand or Rs. 5 per ten thousand was contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng inaccurate particulars of such income. It gives discretion to the Assessing Officer to exonerate the assessee from levy of penalty even in case where the assessee has concealed the income or furnish incorrect particulars of income. The expression in section 271(1)(c) reads as follows: "If the Assessing Officer is satisfied that in person ( c ) has concealed the particulars of his income or furnished inaccurate particulars of such income; He may direct .. " 8. That above provision shows that the Assessing Officer is vested with a discretionary power to levy or not to levy any penalty in a deserving case. In the case of Hindustan Steel Ltd v. State of Orissa [1972] 83 ITR 26 (SC), the Apex Court held that penalty should not be imposed merely because it is lawful to do so. The Assessing Officer has to exercise his discretion judiciously. If an assessee files the revised return though at a later stage or disclosed true income, penalty need not be levied. No doubt, merely offering additional income will not automatically protect the assessee from levy of penalty but in a given case where the assessee's case, came forward with additional income though after d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the accused can be held guilty. Therefore the Assessing Officer ought not have placed undue importance on the admission which was bereft of any documentary evidence found during the course of search. An oral evidence only supplements documentary evidence, cannot supplant the same. ( iv ) It is also a well accepted principle that an admission is not conclusive evidence as to the truth of the matter stated therein. It is only a piece of evidence, the relevancy of which is required to be judged basing on the material evidence and circumstances in which it is made. ( v ) A mere confessional statement without there being any documentary proof shall not be used as evidence against the appellant. In the following case before the Court, a statement of managing director was recorded in course of search wherein he admitted undisclosed income but later retracted from the said statement and accordingly the court held that without documentary proof, a statement alone cannot be utilized against the appellant. CIT v. Shri Ramdas Motor Transport [1999] 238 ITR 177/102 Taxman 300 AP. ( vi ) In the case of appellant, no sufficient evidence was found in course of search conclusivel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l [2009] 177 Taxman 398 Delhi; wherein it was held that where it was apparent that undisclosed income had been computed merely on the basis of the surrender made by the assessee in the course of the block assessment proceedings and De hors the surrender, there was no evidence which could have been said to have been found as a result of the search and, therefore, the 'computation' of undisclosed income by the Assessing Officer in the block assessment proceedings could not be construed as a 'determination' of undisclosed income contemplated under section 158BC(c), penalty could not be levied. 12. As already noted, whatever material was found during the course search was either insufficient or too skimpy to lead to enhancement of turnover. It is for this reason that in the case of the assessee the Department did not disturb the turnover/total amount of cheque discounted recorded in the books of account. Similarly as in the case of Harkaran Das Ved Pal ( Supra ), de hors the admission of the assessee, that too on estimated basis, there is no evidence available to compute or determine undisclosed income. Therefore, the ratio of the decision of the Delhi High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... freight receipts in respect of his own trucks on estimate basis and had shown income from commission at 7 per cent of the gross receipts in respect of the trucks owned by others. The AO had allowed expenditure at 80 per cent. The CIT(A) allowed expenditure at 84 per cent. Similarly, whereas the AO had estimated income from commission at 10 per cent, the CIT allowed it at 8 per cent. The Tribunal found that the difference between the returned and the assessed income was due to the difference of opinion about the estimated rates of income and expenditure. Income had been enhanced by the AO by adopting a lower estimate in respect of the expenditure and higher estimate with regard to the income from commission. The AO determined the income of the assessee on estimate basis. The Tribunal noticed that since the difference in estimates was based on a difference of opinion, there was no positive proof regarding concealment of income by the assessee. The assessee had shown expenditure as also the income from commission on estimate basis. The rates of estimate were varied by the AO. These were further varied by the CIT(A). The Tribunal, therefore, cancelled the penalty on the ground that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of provisions of the Act or which the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." 17. In the light of the above observations, we are of the opinion that it would be within the power of the Income-tax authorities not to levy penalty having regard to the nature of mistake or omission committed by the assessee and general conduct of the assessee in the course of assessment proceedings and such other relevant factors. 18. In the case of CIT v. Suresh Chandra Mittal [2001] 251 ITR 9/119 Taxman 435 (SC) the Hon'ble Supreme Court held that where the assessee claimed that he offered additional income only to buy peace and avoid litigation and the Department did not prove concealment but simply rested its conclusion on the voluntary surrender of income by assessee in good ..... X X X X Extracts X X X X X X X X Extracts X X X X
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