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2016 (3) TMI 420

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..... irected the AO to assess the total undisclosed income of ₹ 65,78,933/- only (Rs. 6,76,393/- + ₹ 59,02,540/-) after the order of the Tribunal and as such the appeal of the assesse was rightly allowed. Keeping in view of the facts and circumstances of the case, we do find any infirmity in the order of the Ld. CIT(A), which in our opinion, does not need any interference - Decided against revenue Penalty order u/s. 158BFA(2) - Held that:- AO has levied the penalty on the estimated income and as such there is no proper justification for the levy of penalty on the estimated, hence, the Ld. CIT(A) has rightly cancelled the penalty, which in our considered opinion does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on this issue on which he cancelled the penalty in dispute and dismiss the ground raised by the Revenue - Decided against revenue - IT(SS)A Nos. 37 & 36/Del/2012 - - - Dated:- 10-3-2016 - Shri H. S. Sidhu, Judicial Member And Shri L. P. Sahu, Accountant Member For the Petitioner : Mrs. Sulekha Verma, CIT(DR) For the Respondent : Sh. K. Sampath, Adv ORDER Per H. S. Sidhu, J. M. The Department has filed .....

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..... ssessee filed a Return of income for the above mentioned block period declaring total undisclosed income at ₹ 21,36,111/-. The order u/s. 158BC dated 25.2.2005 was passed by the AO declaring the total undisclosed income at ₹ 2,92,43,457/- against the returned undisclosed income of ₹ 21,36,111/-. 4.1 Aggrieved with the Assessment order dated 25.2.2005, Assessee filed appeal before the Ld. CIT(A) who has held that the unaccounted cash balance with the assessee at any point of time was not more than 6,76,393/- and accordingly confirmed the addition of ₹ 6,76,393/- only and deleted the balance addition of ₹ 2,35,65,207/-. Against which the Assessee as well as the Department was in appeal before the Tribunal and the Tribunal has upheld the estimated GP rate @4.4% which was taken by the AO and as such has revered the order of the CIT(A) which had upheld the GP rate addition @2.39% which was taken on the basis of seized books and documents. Regarding the addition of ₹ 2,42,41,600/- made by the AO under the head peak confirmed the addition of ₹ 6,76,393/- only as against the addition of ₹ 2,42,41,600/- made by the AO. Thereafter the AO had .....

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..... AO and the then Ld. CITA(A) had held the AO could take the estimated GP @ 2.39% only which is on the basis of seized books and documents and the AO is not justified to take the estimated GP @ 4.4% which is on the basis of regular returns of income of the assessee. Regarding the addition of ₹ 2,42,41,600/- under the head peak credit of the capital investments, the Ld.CIT(A) held that the unaccounted cash balance with the assessee at any point of time was not more than ₹ 6,76,393/- and accordingly confirmed the addition of ₹ 6,76,393/- only and deleted the balance GP rate addition @ 2.39% which was taken on the basis of seized books and addition of ₹ 2,35,65,207/- (Rs.2,42,41,600/- (-) ₹ 6,76,393/-). Thereafter, the assessee as well as the Department was in appeal before the Tribunal and the Tribunal in the first round has upheld the estimated GP rate @ 4.4% which was taken by the AO and as such has reversed the order of the Ld.CIT(A) which had upheld the GP rate addition @2.39% which was taken on the basis of seized books and documents. Regarding the addition of ₹ 2,42,41,600/- made by the AO under the head peak credit the Tribunal has confirmed t .....

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..... al is ₹ 65,78,933/- which included the undisclosed block return income of ₹ 21,36,111/- and as such the AO should only assess the total income of ₹ 65,78,933/- only. The main submission of the assessee is that the assessee has filed the block return income of ₹ 21,36,111/- on the basis of seized books of documents etc and the AO has also made the additions on the basis of same seized books of documents etc and finally the Ld.CIT(A) and the Tribunal has confirmed the total addition of ₹ 65,78,933/- which includes the declared block return income of ₹ 21,36,111/- and as such the AO should not add the block return income of ₹ 21 ,36,111/- in addition to ₹ 65,78,933/-) It was submitted that the AO did not make any separate addition of ₹ 21,36,111/- in original order u/s 158BC dated 25/02/2005 in which the block return income of the assessee of ₹ 21,36,111/- had been merged with the total assessed income and as such the AO is not justified to make the separate addition of ₹ 21,36,111/- while giving the appeal effect to the order of the Tribunal. 7.2 We find that the AO was not justified to make the addition of ₹ .....

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..... and, Ld. Counsel of the assessee relied upon the order of the Ld. CIT(A) and stated that he has passed a well reasoned order which does not need any interference on our part, therefore, the same may be upheld. He further stated that the AO has levied the penalty on the estimated income and as such there is no proper justification for the levy of penalty on the estimated income, hence, the levy of penalty is not sustainable and accordingly be cancelled. In support of his contention he filed the copy of the following decisions wherein it was held that no penalty was leviable under section 158BFA where alleged undisclosed income was computed on the basis of estimation . - Rajasthan High Court Decision in the case of CIT vs. Dr. Giriraj Agarwal Giri reported in 346 ITR 152 (Rajasthan) - ITAT Jaipur Bench in the case of ACIT vs. Shanti Kumar Chabra reported in (2009) 32 SOT (JP) (URO). - ITAT, Jodhpur in the case of Anil Kumar Jain vs. ACIT reported in (2014) 49 Taxmann.com 139 (Jodhpur- Trib) 12. We have heard both the parties and perused the relevant records especially the orders of the revenue authorities and the case laws cited by both the parties. We find that .....

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..... the AO was not justified to levy any penalty as the entire addition has been made on the estimated basis. It is submitted that the assessee had estimated and filed block return income of ₹ 21,36,111/- on the basis of seized books of documents but the AO did not accept the block return income of the assessee and the AO estimated the unaccounted GP @ 4.4% of ₹ 50,01,857/- on the basis of GP of the regular returns of the assessee. But the Ld.CIT(A) had overturned the finding of the AO and had estimated the GP @2.39% which was on the basis of seized books and documents. The Tribunal has again reversed the finding of the Ld.CIT(A) and has estimated the GP @ 4.4%. It was submitted that the entire GP addition of ₹ 50,01,857/- is on the basis of estimate only and as such the AO is not justified to levy the penalty on the basis of estimated income. It was submitted that the other estimated addition of ₹ 2,42,41,600/- made by the AO in the original assessment under the head peak investment was overturned by the Ld.CIT(A) and the addition to the extent of ₹ 6,76,393/- was only confirmed and the balance additions were deleted and the same finding of the Ld.CIT(A) .....

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..... imated at every stage and the AO was not justified to levy of penalty on estimate basis. We also find considerable cogency in the case laws cited by the Ld. Counsel of the assessee, as aforesaid, are applicable to the issue in hand wherein it has been held that no penalty was leviable under section 158BFA where alleged undisclosed income was computed on the basis of estimation . However, we note that the case law cited by the Ld. DR is on the different facts and hence, is not applicable. 12.2 In the background of the aforesaid discussions and precedents relied upon, in the CIT(A) s as well as case laws cited before us by the Ld. Counsel of the assessee, we are of the view that AO has levied the penalty on the estimated income and as such there is no proper justification for the levy of penalty on the estimated, hence, the Ld. CIT(A) has rightly cancelled the penalty, which in our considered opinion does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on this issue on which he cancelled the penalty in dispute and dismiss the ground raised by the Revenue. As a result, the appeal filed by the Revenue stands dismissed. 13. In the result, both .....

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