TMI Blog2014 (12) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the assessee and the onus to prove that was on the department – here, no such positive act of concealment on the part of the assessee has been brought on the record and the addition sustained is only on estimated basis - the basis for levying of penalty by the AO u/s 271(1)(c) that the assessee is guilty of furnishing of inaccurate particulars of her income by showing bogus purchases is not found to be correct after the assessment order passed in this regard. The books of account of the assessee were initially rejected and the AO has made the additions under different heads and in appeal, the CIT(A) has deleted the additions made under the head unexplained cash credit and u/s 40A(3) of the Act on account of cash payment - under the head unexplained receipt against bogus purchases, the addition was made by the AO, but in appeal the CIT(A) has restricted it to ₹ 10 lakhs only on estimate basis - therefore, no positive act of concealment of income chargeable to tax has been brought out on record - since the addition was made on estimate basis, the penalty u/s 271(1)(c) is not leviable – thus, CIT(A) rightly held that penalty cannot be levied on estimated addition – De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er due to the fact that in the opinion of the Ld. CIT(A)-II, Kanpur, the books of account, are not properly maintained and are not fit for working out the true and correct profit of the appellant from the business activity undertaken by her. As regards to this finding of the Ld. CIT(A)-II, Kanpur, it has been pointed out that the books of account of the appellant were duly audited by a chartered accountant (without any adverse remarks) and also accepted by the Sales Tax Authorities. It has also been pointed out by the Ld. AR during the hearing of appeal by referring to the order of the Ld, CIT(A)-II, Kanpur A. No. CIT(A)-II/508/DCIT-1/09-10/273 dated 19.03.2010 that even CIT(A)-II, Kanpur has not agreed with the finding of the AO that the purchases shown by the assessee from the sister concern is bogus because in this order, in para no. 7.1, he has observed that inconsistencies observed by the AO are relevant but not adequate to totally disregard the entire purchases and he has held that the case of assessee is fit to reject the books of account and estimate 'the G.P.. Therefore, the Ld. AR has argued that after examination of the case of the assessee during appeal proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales and the declared sales. For a ready reference, the decision of the CIT(A)-II, Kanpur in this regard as given in para no. 7.2 of the said order is reproduced as under:- 7.2 Under these facts and circumstances of the case, I am of the considered view that the books of accounts maintained by the appellant do not reflect true and correct picture of the affairs and therefore, the correct profit cannot be deduced. Accordingly, I reject the books of accounts of the appellant and I estimate sales at ₹ 7,27,00,639/- instead of reported sales of ₹ 7,17,00,639/- (on account of mismatch and under invoicing both in terms of quantity and value). Accordingly, the gross profit would increase by ₹ 10 lakh which would be the quantum of addition sustained as against ₹ 79,94,642/- made by the AO. This addition comes to just about 1.3% increase in the G.P. rate as compared to what the appellant has declared in its books. 5.2 Looking to the above decision of the CIT(A), it is very much clear that the addition of ₹ 10,00,000/- is altogether on a different footing rather than being on account of the purchases shown by the assessee as bogus as held by the AO in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of such income. In the instant case, the Tribunal agreed that the income of the assessee had to be assessed on an estimate of the turnover but was of the view that the estimate as made by the Assessing Officer was highly excessive and it fixed the total income of the assessee at a lower figure. It was, thus, clear that there was a difference of opinion as regards the estimate of the income of the assessee. Since the Assessing Officer and the Tribunal adopted different estimates in assessing the income of the assessee, it could not be said that the assessee had concealed the particulars of his income so as to attract clause (c) of section 271(1). There was not even an iota of evidence on the record to show that the income of the assessee during the year under appeal was more than the income returned by him. Additions in his income were made, on estimate basis and that by itself did not lead to the conclusion that the assessee either concealed the particulars of his income or furnished inaccurate particulars of such income. There had to be a positive act of concealment on his part and the onus to prove that was on the department. Further, the Tribunal grossly erred in law in relyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come or furnishing of inaccurate particulars of income by the assessee either for the purchases shown by her or sale shown by her in the return of income. The Hon'bie Punjab Haryana High Court in the case of Harigopal Singh Vs. Commissioner of Income Tax (supra) has held that there had to be a positive act of concealment on the part of the assessee and the onus to prove that was on the department, however, in the instant case under appeal, no such positive act of concealment on the part of the assessee has been brought on the record and the addition sustained is only on estimated basis. Therefore, on the facts and the circumstances of the case as examined by me in this order so far discussed above, it is very clear that the basis for levying of penalty by the AO u/s 271(1)(c) that the assessee is guilty of furnishing of inaccurate particulars of her income by showing bogus purchases is not found to be correct after the assessment order passed in this regard, has been adjudicated upon by the Ld. CITCA)-II Kan.pur and hence, no penalty u/s 271(1)(c) can be levied for the addition of ₹ 10,00,000/- sustained by the CIT(A) on a estimate basis giving a finding different than ..... X X X X Extracts X X X X X X X X Extracts X X X X
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