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2015 (6) TMI 925 - ITAT AHMEDABAD

2015 (6) TMI 925 - ITAT AHMEDABAD - TMI - Penalty u/s 271(1)(c) - whether penalty cannot be levied in respect of the addition made on estimate basis by applying the gross profit rate? - CIT(A) deleted penalty levy - Held that:- In the instant case, in pursuance to notice under section 148, revised return of income was filed in which entire income was surrendered with an explanation. The revised assessment was regularized by the revenue. AO had failed to take any objection that declaration of inc .....

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roceeds of shares to buy peace of mind and to avoid hazards of litigation and also to save himself from any penal action. CIT(A) rightly held that Assessing Officer was not justified in levying penalty u/s 271(1)(c) of the Act on the additional income of ₹ 20.00 lacs so disclosed in the return of income furnished in response to notice issued u/s 148 of the Act.

Without prejudice to above, CIT(A) observed that Assessing Officer vide para-5(3) of penalty order had observed that b .....

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es - Assessing Officer had made addition of ₹ 10,90,436/- by applying the profit rate of 8.5% on the unaccounted sales. In appeal, CIT(A) had restricted the profit rate at 6.5%. In appeal before the Tribunal, the profit rate of 6.5% was held reasonable by ITAT, Rajkot. Thus, addition made for ₹ 10,90,436/- by Assessing Officer came to ₹ 3,63,275/- after appellate order of CIT(A) and same had confirmed by Tribunal as stated above. In view of above, CIT(A) justified in deleting p .....

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)-IV, Ahmedabad, dated September 14, 2010 for A.Y. 1999-2000 on the following grounds. "1. The learned CIT(A) erred in law and on facts in deleting penalty of ₹ 16,54,292/- levied by the Assessing Officer by holding that penalty cannot be levied in respect of the addition made on estimate basis by applying the gross profit rate. 2. In doing so, the ld. CIT(A) failed to appreciate that where there is a justification for the admission of income, as in the instant case, the burden is on .....

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lacs in the return furnished in response to notice issue u/s. 148 of the Act and on the estimated addition of ₹ 3,63,275/-. The search and survey proceedings were carried out in case of assessee on 27.10.2006. During search, documents indicating unaccounted sales through its network of dealers were found and relevant documents were seized. Seized documents also gave a indication that unaccounted sales were going on over the years including A.Y. 1999-2000. Undisclosed sales pertaining to y .....

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ition of ₹ 10,90,436/- made for profit on suppressed sales was reduced to ₹ 3,63,275/- in second appeal. Penalty proceedings were initiated during the course of re-assessment proceedings. Assessee furnished detailed submission in response to show cause notice of penalty which is reproduced in para 4 of penalty order. The submission of assessee was claimed to be not considered satisfactory by Assessing Officer and he had imposed the penalty of ₹ 16,54,292/- u/s 271(1)(c) of the .....

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ubmitted that CIT(A) was not justified in deleting penalty of ₹ 16,54,292/- levied by Assessing Officer by holding that penalty cannot be levied in respect of the addition made on estimate basis by applying the gross profit rate. CIT(A) failed to appreciate that where there is justification for admission of income, as in the instant case, the burden is on assessee to prove that there was no concealment and where there is failure in that direction to discharge the burden, penalty is leviabl .....

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letter dated 30.11.2005 on adhoc basis which was later on revised to ₹ 440.00 lacs on adhoc basis for various years vide letter dated 30.01.2006 subject to condition that immunity from penalty proceedings is granted. Assessee specifically mentioned in aforesaid letter that detailed breakup as to yearwise income. Investment/expenses etc. shall be furnished along with returns to be filed in due course. The additional income of ₹ 20.00 lacs declared for the year under consideration was .....

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had received the intimation of suppressed sales from the Additional DIT (Investigation), Rajkot, vide his letter 24.03.2006 and on that basis the Assessing Officer had reopened the case for the AY. 1999-2000 vide notice u/s 148 dated 29.03.2006, which shows that Assessing Officer as only having the details of suppressed sales on the date of initiation of re-assessment proceedings. He was not having the details of undisclosed income embedded in the suppressed sales. Whereas, assessee had disclose .....

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those returns in toto but levied maximum penalty under section 271(1)(c) upon assessee. However, Commissioner (Appeals) as well as Tribunal deleted penalty by observing that search had merely led to undisclosed income and it would not have been possible for department to assess undisclosed income over all years without assessee's co-operation. This finding of the CIT(A) as well as of the Tribunal was restored by the Hon'ble Supreme Court by setting aside the order of the Hon'ble Karn .....

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endered the entire amount of sale proceeds of shares to buy peace of mind and to avoid hazards of litigation and also to save himself from any penal action. During course of assessment, the aforesaid explanation given by assessee was neither rejected nor it was held to be mala fide. The Tribunal had recorded a pure finding of fact to the effect that Assessing Officer had not placed on record any material or evidence to discharge his burden of proving concealment. In the assessment order, no such .....

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Madhya Pradesh High Court rendered in case of CIT vs. Suresh Chandra Mittal [2000] 241 ITR 124 wherein similar circumstances, it was held that initial burden lies on revenue to establish that assessee had concealed income and had furnished inaccurate particulars of such income. The burden shifts to assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by Assessing Officer. In the Instant case, in pursuance to notice unde .....

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aid decision of Hon'ble Punjab & Haryana High Court as referred to above. In view of discussion, in light of Sudarshan Silks & Sarees (supra) and CIT v. Suresh Chandra Mittal (supra) and CIT vs. Rajiv Garg (supra), CIT(A) rightly held that Assessing Officer was not justified in levying penalty u/s 271(1)(c) of the Act on the additional income of ₹ 20.00 lacs so disclosed in the return of income furnished in response to notice issued u/s 148 of the Act. Without prejudice to abov .....

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