TMI Blog2013 (8) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... es and records perused the findings of the authorities below. In ITA No. 545/Agra/2012, the A.O. passed the assessment order under Section 143(3) of the Act dated 27.12.2010. The A.O. noted in the assessment order that the assessee derives its income from business of liquor. The sales have been shown at ₹ 11,44,10,094/- on which net profit of ₹ 26,25,923/- has been disclosed giving net profit rate of 2.29%. Since the assessee has not produced any documentary evidence in support of purchase as well as all the expenses debited to profit and loss account. The genuineness of purchases, sales and expenses remained unverified. The A.O. asked the assessee as to why book results should not be rejected for the above defects and sales should not be estimated at ₹ 11,15,00,000/- as against the sales shown above and why the net profit rate of 3% should not be applied against the profit rate disclosed at 2.29%. The assessee s counsel submitted in the statement signed by Smt. Kalpana Shivhare in which she has surrendered ₹ 4,00,000/- for possible leakage of income for non maintenance of some documents and vouchers in proper manner. In respect of company, it was also submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be reasonable and acceptable. The income of the assessee was, therefore, computed after accepting surrender of ₹ 55.00 lakhs at ₹ 1,87,95,773. The A.O. levied penalty under Section 271(1)(c) of the Act for filing inaccurate particulars of income and ld.CIT(A) confirmed the levy of penalty and dismissed the appeal of the assessee. 4. Ld. Counsel for the assessee submitted that assessee agreed to the surrender for want of production of certain vouchers of purchase and expenses and ultimately income of the assessee would have been estimated by enhancing the sales and net profit rate. Therefore, assessee agreed to make surrender and surrender of the assessee has been accepted by the A.O., therefore, it is not a case of filing inaccurate particulars of income. He has submitted that A.O. has not brought any material on record to prove as to how it is a case of filing inaccurate particulars of income. He has submitted that for filing of inaccurate particulars, Explanation 1 to Section 271(1)(c) of the Act would not be attracted because it applies to the concealment of particulars of income. Ld. Counsel for the assessee, therefore, submitted that since it is a estimated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. We have considered the rival submissions and the material on record. It is not in dispute that the assessee did not produce the record/details before the AO. The assessee also did not produce books of account and vouchers. Therefore, the AO has to resort to estimate of income. The matter ultimately traveled to the Tribunal and higher profit rate was further reduced and ultimately addition was made to the extent of ₹ 9,38,907/-. The assessee has disclosed all the particulars of income in the return of income. Merely because supporting evidences could not be produced, higher income was estimated. Hon ble Chattisgarh High Court in the case of CIT vs. Vijay Kumar Jain (supra) held that non-production of books of account and estimate of higher net profit did not find it justified to levy the penalty. The other decisions cited by the ld. counsel for the assessee clearly support the case of the assessee that on mere estimate of income, penalty is not leviable. Hon ble Allahabad High Court in the case of CIT vs. Arjun Prasad Ajit Kumar (supra) held that penalty could not be imposed on the basis of estimating sales and applying net profit for the purpose of making addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the A.O. proposed to estimate the sales at the lesser turnover at 11.15 crores as against 11.44 crores disclosed by the assessee. The variation of N.P. rate declared by the assessee and proposed by the A.O. was also not significantly higher. Same is position in other appeal in ITA No. 547/Agr/2012. It is, therefore, clear that the A.O. wanted to make addition against the net profit of the assessee by estimating the income of the assessee. However, the assessee explained before A.O. that books of accounts of the assessee are audited and the purchases are made from the Excise Department and business is under the control of Excise Act. This submission of the assessee has not been disputed by the A.O. In our view also this submission could not have been disputed by the A.O. because in the liquor business the purchase are always made from the Excise Department and the business is always under control of Excise Department. Therefore, there should not have been any doubt regarding genuineness of the purchase made from the Excise Department. At the most, the sales would not have been verifiable, but in the liquor business the sales are generally made in cash, therefore, there is no ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n give finding against the assessee that assessee filed inaccurate particulars of income in the penalty order. The assessee has made surrender of the amount in question for possible leakage of income for non maintenance of some documents and vouchers in proper manner. Therefore, the assessee never accepted before A.O. that assessee has filed inaccurate particulars of income in the return of income. The A.O. did not state in assessment order as to how the particulars of income disclosed by the assessee in the return of income were inaccurate. Ultimately, the estimated income is computed by the A.O. in the assessment order. It is well settled law that the addition made on the basis of estimate and not on concrete evidence of concealment of income or furnishing inaccurate particulars, therefore, no penalty is leviable. We rely upon the decisions of the Hon ble Punjab and Haryana High Court in the case of CIT Vs. Dhillon Rice Mills (2002) 256 ITR 447, CIT Vs. Ravail Singh and Co. (2002) 254 ITR 191 and Harigopal Singh Vs.CIT (2002) 258 ITR 85. Hon ble Supreme Court in the case of M/s Rajasthan Spinning and Weaving Mills 2009-TIOL-63 held that on every default penalty is not automa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Assisant Commissioner upheld the decision of the Assessing Officer. On further appeal, the Tribunal held that merely because there was an agreement for assessment at a particular figure that did not per se bring in the concept of concealment. The Revenue did not prove concealment which would enable it to levy penalty under section 271(1)(c) of the Incometax Act, 1961. On a reference: Held, that the return was filed much earlier to April 1, 1964, and reassessment was completed on August 28, 1958, which again was set aside by the Appellate Assistant Commissioner on November 6, 1959. That being the position, the Revenue was required to prove concealment. Hence, the Tribunal was right in holding that penalty under Section 271(1)(c) could not be imposed. 7.2 Hon ble M.P. High Court in the case of CIT Vs. Beta Nepthol Ltd. (2005) 272 ITR 323 held- Held, dismissing the appeal, that the assessee had surrendered the disputed items and paid tax thereon. In the opinion of both the authorities, i.e., the Commissioner (Appeals) and the Tribunal, no case whatsoever was made out to invoke the provisions of section 271(1)(c) of the Income-tax Act, 1961, and hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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