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B.K. Jain Versus Commissioner of Income Tax, Ludhiana (Punjab)

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

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 of the appellant who was engaged in giving accommodation/book entries on .....

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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 assessment year 2005-06. The income surrendered by the appellant was dis .....

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d 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, Advocate, Advocate For The Revenue : Mr. Rajesh Katoch, Advocate Ajay Kumar Mitt .....

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HD/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. A few facts relevant for the decision of the controversy involved as na .....

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ssment 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 were initiated and notice under Section 274 read with section 271 of the .....

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ntly, 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 furnishing inaccurate particulars of income. Vide quantum order dated 29.4.2010, .....

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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, Annexure A.9. Hence the instant appeals by the appellant-assessee. 4. W .....

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nue 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 out under Section 133A of the Act at the office premises of the appellant w .....

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ted 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 assessment year 20 .....

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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 be levied in cases where income has been estimated. We are of the opinio .....

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A 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 in case of Bharti Airtel Limited vs. CIT(supra). In that case the additi .....

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oubtful 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 Deepshikha Maheshwari vs. ITO(supra) where the addition was made on acco .....

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ven 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) CIT vs. Metal Products of India (supra). The assessee filed return of in .....

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rn 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 penalty leviable under different statutes. ii)Next case relied on is CIT .....

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s 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 on account of loss of salt for which a certificate from Deputy Commissione .....

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