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TMI Blog2015 (5) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of income. 3. The brief facts of the case are that assessee has filed its return of income on 30th December, 2006 declaring total income at Rs. 3,99,48,424/-. The case of the assessee was selected for scrutiny assessment and a notice u/s. 143(2) was issued and served upon the assesse. On scrutiny of the accounts, it revealed to the Assessing Officer that GP shown by the assessee during the year is at 9.04/- whereas GP shown in the preceding year was at 8.37/-. Though GP in this year is better but the yield of polished diamond shown by the assesee is lower than the earlier year. The yield of polished diamonds shown by the assessee in this year is at 30.90% whereas in the preceding year, it was 33.20%. The Assessing Officer has rejected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details under different heads ought to have been made namely; according to the Assessing Officer, it was not possible to ascertain which rough diamond was finally converted into polished diamonds, which quality and size was ultimately achieved out of a particular rough diamonds. Similarly, the assesse could not produce primary records in connection with various processes involved in the manufacturing of diamonds like assortment, rejection, boiling, sawing ghat etc. He was of the opinion, that on the basis of these details, yield cannot be worked out. Accordingly, Assessing Officer has imposed a penalty of Rs. 14,61,959/-. 5. On appeal, Ld. First Appellate Authority re-appreciated the facts and circumstances. It reproduced their detailed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to furnish returns, comply with notices, concealment of income, etc. (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the of course of any proceedings under this Act, is satisfied that any person (a) and (b)** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i)and (Income-tax Officer,) ** ** ** (iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT( Appeal); and, (b) where in respect of any fact, material to the computation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinent to take note of the explanation of assessee recorded by the CIT(A) in para 5 of the impugned order explaining the yield. It reads as under: "(3) Before proceeding with the aforementioned aspect, it would be necessary to understand what exactly is yield. A rough diamond taken out of mine becomes polished diamond after it undergoes several processes ad it is cut from several sides to bring out shapely diamond. Now, this cutting results in reduction of the weight of the diamond and what eventually emerges is called yield. Rough diamonds are obtained from mines. They are not homogenous. For each piece of rough diamond, the extent of cutting would vary o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t amounts to furnishing of inaccurate particulars of income. On the other hand, the stand of the assessee is that it has been maintaining the books of accounts as per the accounting standard notified by the income tax authorities u/s. 145(2) of the Income Tax Act. Assessing Officer has not pointed out any factual error in the details maintained by it. He might have felt handicapness from those details to deduce the result according to his understanding. But the accounts are audited accounts duly complying all the requirements, the addition is an estimated addition on the basis of estimated yield, therefore, there is an inherent difference of opinion between the result shown by the assessee vis-a-vis ultimately determined. In such situation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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