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2015 (12) TMI 975 - PUNJAB AND HARYANA HIGH COURT

2015 (12) TMI 975 - PUNJAB AND HARYANA HIGH COURT - [2016] 388 ITR 300 - Levy of penalty under section 271(1)(c) on estimated brokerage income and qua non discharge of burden under section 271(1)(c) - Held that:- A perusal of the findings recorded by the Tribunal show that the assessee had not furnished his return of income for the year under consideration within the time allowed under section 139 of the Act. Survey operations were carried out under Section 133A of the Act at the office premises .....

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on 15.6.2004 admitted to have issued cheques/drafts for bogus profits in return of the cash provided to him by his clients. The appellant also disclosed the names of various concerns under which he was carrying on his business and also the bank accounts from where cheques/drafts were issued. The appellant after the conclusion of the survey vide letter dated 1.3.2005 made surrender of ₹ 27 lacs i.e. ₹ 15 lacs relating to the assessment year 2004-05 and ₹ 12 lacs relating to the .....

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the appellant's income relevant to the assessment year 2002-03 had escaped assessment within the meaning of section 147 of the Act and hence proceedings under Section 148 of the Act were initiated. The investments made by the assessee were not declared and thus there was clear cut case of concealment. - Penalty confirmed - Decided against assessee - ITA No. 386, 390 and 412 of 2014 - Dated:- 19-10-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ. For The Appellant : Mr. Divya Suri, Advocat .....

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ome Tax Appellate Tribunal, Chandigarh Bench 'B' in ITA No.1062/CHD/2012, for the assessment year 2002-03, claiming following substantial question of law:- Whether on the facts and circumstances of the case, the Tribunal order is unreasonable, while justifying the levy of penalty under section 271(1)(c) on estimated brokerage income and qua non discharge of burden under section 271(1)(c) Explanation 1 w.e.f 1.4.1976 in accordance with National Textiles vs. CIT (2001) ITR 125 (Gujarat)? 3 .....

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7.2004. The appellant made a surrender of ₹ 27,00,000/- in the assessment years 2004-05 and 2005-06 i.e ₹ 15,00,000/- and ₹ 12,00,000/- respectively. Thereafter, in response to the notice dated 6.7.2004 under section 148 of the Act, the appellant filed return of income on 30.3.2005 declaring an income of ₹ 45,000/- and the assessment under Section 147 read with section 143(3) of the Act was completed on 30.3.2006 at an amount of ₹ 1,16,94,211/-. Penalty proceedings .....

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ept in abeyance till the decision of the appeal in the Tribunal. Subsequently, again a show cause notice dated 26.2.2010 qua penalty under section 271(1)(c) of the Act was issued to the appellant on 3.3.2010 and in response to the notice, the appellant on 22.3.2010 prayed to keep the penalty proceedings pending till the decision of the Tribunal. On 31.3.2010, Annexure A.5, the Assessing Officer imposed penalty of ₹ 27,95,170/- under section 271(1)(c) of the Act for concealment and furnishi .....

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ed vide order dated 21.5.2014. Aggrieved by the penalty order dated 31.3.2010, the appellant filed appeal before the CIT(A) inter alia on various grounds like income of the appellant had been taken on estimation basis; no penalty could be levied on such estimation of income etc. The assessee filed written submissions. The CIT(A) dismissed the penalty appeal vide order dated 17.7.2012, Annexure A.8. The appellant filed appeal before the Tribunal which was also dismissed vide order dated 24.3.2014 .....

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nal Textiles vs. CIT, (2001) 249 ITR 125. 6. Learned counsel for the revenue while supporting the findings recorded by the Tribunal urged that there was concealment of income by the assessee and penalty under Section 271(1)(c) of the Act had been rightly imposed. 7. A perusal of the findings recorded by the Tribunal show that the assessee had not furnished his return of income for the year under consideration within the time allowed under section 139 of the Act. Survey operations were carried ou .....

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atement recorded during the course of survey operation on 15.6.2004 admitted to have issued cheques/drafts for bogus profits in return of the cash provided to him by his clients. The appellant also disclosed the names of various concerns under which he was carrying on his business and also the bank accounts from where cheques/drafts were issued. The appellant after the conclusion of the survey vide letter dated 1.3.2005 made surrender of ₹ 27 lacs i.e. ₹ 15 lacs relating to the asses .....

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d during the survey, the Assessing Officer found that the appellant's income relevant to the assessment year 2002-03 had escaped assessment within the meaning of section 147 of the Act and hence proceedings under Section 148 of the Act were initiated. The investments made by the assessee were not declared and thus there was clear cut case of concealment. The relevant findings recorded by the Tribunal read thus:- 17. Now only question which is required to be considered whether the penalty can .....

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t decision relied on is in case of Aggarwal Construction Co. vs. ACIT, ITA No.843/Chd/2009. In this case the assessee has declared net profit at 10% which was ultimately estimated at 12%. Penalty was levied under section 271(1)(c) and the matter travelled to the Tribunal which observed that it was mainly a case of substitution of one estimate by another, therefore penalty consequences were not attracted. Thus in this case purely estimate was made instead of 10% - 12%. ii)Second case relied on is .....

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(Bom.). Therefore, even if addition was made it was made on account of doubtful item and in any case the particulars have been disclosed by the assessee, therefore, penalty was correctly deleted. iii)Next case relied on is in case of Fine Line Construction Pvt. Limited vs. ACIT (supra) of Delhi Bench of the Tribunal. In that case the books of account were rejected and net profit rate of 5% was applied. Penalty was deleted as it was a case of simply estimate. iv)Next case relied on is in case of .....

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for various years. Ultimately profit was estimated at 1.5%. Ultimately even the Tribunal confirmed the penalty in respect of assessment year 1988-89 and 2001-02. However, penalty was deleted for assessment year 2003-04 to 2005-06 because the assessee still had not filed the return. Other decisions relied on by the learned counsel for the assessee are of similar pattern. 18. Now let us consider the decisions of various Hon'ble High Courts relied on by the learned counsel for the assessee. i) .....

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not automatically lead to the conclusion that there was a failure to return the correct income by means of fraud, gross or wilful income. This decision is totally distinguishable because later on Exp. (i) was inserted to Section 271(1)(c) which shifted the burden to the assessee to prove that there was no concealment. Moreover Full Bench of the Hon'ble Supreme Court in case of Union of India vs. Dharmendra Textiles (supra) has clearly held that there is no need to prove means rea in case of .....

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on. iii)Next case relied on is CIT vs.Dhillon Rice Mills (supra). In this case also the decision of CIT vs. Metal Products has been followed and it was observed that concealment was not proved, therefore penalty could not be imposed. iv)Next case relied on by the learned counsel for the assessee is that of CIT vs. Valimkbhai H.Patel (supra). In this case the assessee has filed return of income declaring loss of ₹ 337414/-. Income was assessed at ₹ 294480/-. The addition was mainly o .....

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