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Harish Kumar Raimalani Versus I.T.O., Ward 1 (1) , Ajmer and Vica-Versa

2016 (5) TMI 763 - ITAT JAIPUR

Penalty U/s 271(1)(c) - Held that:- The investment made in the house purchased was withdrawn from the bank account of the son as well as wife of the assessee, which has also not been controverted by the lower authorities. The daughter in law of assessee also made payment for the purchase of house from the sale proceeds of her car. These explanations were made before the ld Assessing Officer during the course of assessment proceedings, but had not been accepted by him.

It is also undi .....

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on 21/3/2007, therefore, assessee for reason to file the return on or before 31st October, 2007, which has been filed on 31/10/2007 and disclosed the income at ₹ 15,19,443/- in it. The ld AR of the assessee also contended that there was no satisfaction of the Assessing Officer at the time of initiation of penalty proceedings of the Assessing Officer for specifically concealed the particulars of income or furnished inaccurate particulars of income. It is a fact that the ld Assessing Officer .....

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ccordingly, we delete the penalty confirmed by the ld CIT(A) and dismiss the revenue’s appeal against the order of the ld CIT(A). - Decided in favour of assessee. - ITA No. 834/JP/2013, ITA No. 770/JP/2013 - Dated:- 12-4-2016 - SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM For The Assessee : Shri Mahendra Gargieya (Adv) For The Revenue : Shri Kailash Mangal (JCIT) ORDER PER T.R. MEENA, A.M. These are cross appeals one by the assessee and the another by the revenue arise against the order dated .....

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ngly and the penalty showed be cancelled. Ground of revenue s appeal:- 1. Directing the A.O. to recomputed the penalty, after deleting the income by way of excess cash, undisclosed stock and investment in House Property, which was surrendered during the course of survey U/s 133A carried out at the business premises. 2. The assessee is in trading of gold and silver ornaments and pawning business. The return for A.Y. 2006-07 was filed on 31/10/2007 declaring total income of ₹ 15,19,443/-, wh .....

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lars of income or furnishing in accurate particulars of income). 2.1 Before imposing penalty U/s 271(1)(c), the Assessing Officer gave reasonable opportunity of being heard, which was availed by the assessee. Reply of the assessee has been reproduced by the Assessing Officer on page 2 and 3 of the penalty order. It has been submitted by the assessee before the Assessing Officer during the appellate proceedings that the penalty proceedings may be kept in abeyance till disposal of the M.A. and app .....

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ancy found at the time of survey which has been confirmed by the appellate authority on the basis of which the penalty U/s 271(1)(c) of the Act has been levied. The ld Assessing Officer observed in penalty order as under:- (i) Excess cash found: - During the course of survey on physical verification, cash was found at ₹ 5,09,000/- out of which the assessee surrendered ₹ 3,09,000/-. The assessee has shown cash balance as on 31/3/2006 in balance sheet at ₹ 23,396/-. Thus, remaini .....

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urvey, stock of ₹ 52,87,062/- was found out of which, the assessee surrendered ₹ 8.00 lacs. The assessee did not keep any record and he was not in a position to explain the stock of gold, silver and diamond jewellery available in his shop. He had no basis but keeping in mind the deficiency of his business, he surrendered ₹ 8.00 lacs. The ld Assessing Officer held that at the time of assessment, the assessee was required to explain the basis of surrender of income of ₹ 8.0 .....

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ble and requested that no addition is to be made under this head. The assessee s plea was not found acceptable to the Assessing Officer as the assessee already taken the value of gold @ 1175 per gm and silver @ 18,750/- per KG, which was already more than the rate requested to be adopted by the AR of the assessee. Therefore, addition of ₹ 27,79,970/- was made on account of excess stock found during the course of survey after giving the credit of stock of ₹ 15,07,092/- as per balance .....

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to 21.03.2007. It is further observed that during the course of survey, the assessee had admitted that his wife did not have any source of income nor any pan, as such payments made from her account of ₹ 5 lacs was his own undisclosed money. Similarly the cheques of ₹ 5,00,000/- issued form his son s savings account were also out of his own undisclosed income. Besides, the remaining ₹ 17,00,000/- were also paid out of own undisclosed income. Thus, he surrendered the income of &# .....

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of ₹ 2,25,000/-, which was gifted by the parents at the time of her marriage. Thus, the assessee claimed for credit of ₹ 7,76,800/- and balance amount of ₹ 9,03,200/- was surrendered. The Assessing Officer has not accepted the assessee s claim as the assessee in his statement during the course of survey admitted this undisclosed income. Thus, the ld Assessing Officer made addition of ₹ 25,23,200/-. However, the Hon ble ITAT has confirmed the addition of ₹ 19,98,200 .....

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t maintained books of account even his sales were at ₹ 94 lacs, is habitual offender of concealing income and infringement of provisions of Section 44AA and 44AB of the Act. The ld Assessing Officer further held that had there been no survey, this income might have concealed by the assessee for non-disclosing it in the regular return. Whatever admission made during the course of survey, has not been disclosed fully in the return as well as during the course of assessment proceedings. The a .....

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that the cash of ₹ 1,00,000/- was found undisclosed on which penalty is leviable. The assessee has surrendered income of ₹ 3,09,000/-, accordingly he cancelled the penalty on account of excess cash. Under the head excess stock, he cancelled the penalty on surrender made under this head at ₹ 8.00 lacs. Under the head unexplained investment in house property, he found unexplained investment in the house at ₹ 22,23,200/- as discussed by the Assessing Officer in the penalty .....

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ad cash is only matter of estimation. The survey was conducted on 21/3/2007 almost when a complete year was to end and by own admission of the Assessing Officer, transaction of purchase and sales were carried out this year and the result profit therefrom has been declared accepted. Therefore, availability of cash could not be denied. The ld CIT(A) also stated that there being purchase and sale availability of cash was to be estimated and such a finding not having been challenged by the revenue b .....

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ng the same. Accordingly on 31.03.2007, cash of ₹ 3,12,046/- was available. The admitted facts of the huge cash sales of ₹ 94,05,222/-. The existence of the sundry creditors of ₹ 41.53 lacs though noticed by the Hon ble ITAT that were completely ignored considering the while making the fair estimation as regard the availability of cash. By considering this, no addition was warranted. Thus, cash addition confirmed by the ld CIT(A) is on the basis of estimation only. The assessee .....

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77; 19,87,062/-. Thus, it was a case of mere estimation of income but estimation always remains estimation and cannot take place of the reality. Therefore, it cannot be said that even the addition sustained by the Hon ble ITAT up to ₹ 19,87,062/- was the excess stock found with a mathematical precision. It is undisputed fact that during the course of survey, no books of account were found as not been maintained. However, the same were prepared later and the same were also got audited. The .....

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increase in the turnover resulted in sharp decline in GP rate. He further argued that there was no abnormal stock was found during the course of survey to turnover ratio. He has drawn our attention on page No. 23 of the paper book and tried to explain that average stock and average sales of three years are more or less matching. During the year under consideration, the total sales were 90.05 lacs whereas the stock was found during the survey at ₹ 52.87 lacs, thus no addition was warranted .....

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asis of market rate, however, these stocks were coming from year to year in the closing stock. Therefore, closing stock has not been valued on cost price or market price whichever is less. This aspect if had been considered by the Assessing Officer then hardly any difference was in the stock found at the time of survey. He further argued that the assessee made investment in the house property at ₹ 27 lacs. Four cheques of 2.5 lacs each (total four cheques) were received from wife and son o .....

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n from the savings bank account No. 217841. He has drawn our attention on page No. 32 to 33 of the paper book, which shows that his son had withdrawn from the bank account cash on various dates, which was used in the investment of the house. ₹ 1,76,800/- was given by his daughter in law from the sale proceedings of car amount to ₹ 2.25 lacs, which was deposited in her bank account and after withdrawing the same was given to the assessee. It was a mere rejection of explanation has not .....

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) 247 ITR 742 (Ker) and Balaji Vegetable Products (P) Ltd.Vs. CIT (2007) 290 ITR 172 (Kar.) He further relied on the following decisions:- (i) CIT Vs Smt. Geeta Devi (2002) 75 TTJ 362 (Del) for surrender on account of discrepancy found in the closing stock. (ii) ITO Vs Bombaywala readymade Stores 271 ITR 1 ITAT Part 1 (TM) for not maintaining day to day stock register. (iii) ITO Vs Shree Balaji Industries (1991) 40 TTJ 222 (Pune) for differences found in the stock during the survey. (iv) ITO vs .....

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ld not be subject matter of penalty for concealment of income. He further referred the decision in the case of CIT Vs S. Rahamat Khan Birbalkhan Badruddin & party (1999) 240 ITR 887 (Raj) and Shiv Lal Tak Vs CIT 251 ITR 373 (Raj.). The ld AR further argued that the ld Assessing Officer has not recorded any satisfaction at the time of initiation of penalty proceedings whether the assessee committed default of furnishing of inaccurate particulars of income or concealed the income. Such as sati .....

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hing inaccurate particulars of income. In order words, neither from the assessment order nor from the penalty order, it is discernable that the satisfaction to impose penalty was derived with respect to subjective addition made/partly sustained. He has further drawn our attention on form NO. 35 where he has challenged the penalty order of the Assessing Officer on the ground of erroneous order of penalty in point of law and on fact, which has been summarily dismissed by the ld. CIT(A), but there .....

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ttention on decision in the case of ITO Vs Tolaram 38 taxworld 121 (JP), CIT Vs Suresh Chand Mittal (2001) 170 CTR 182 (SC) and CIT Vs Jagdish Saree Bhandan (1996) 84 Taxman 0092 (All). Thus, he prayed to delete the penalty confirmed by the ld CIT(A) and dismiss the appeal filed by the revenue against the order of the ld CIT(A). 5. At the outset, the ld DR has vehemently supported the order of the Assessing Officer and argued that the penalty order itself shows satisfaction of the Assessing Offi .....

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isputed fact that the assessee was not maintaining regular books of account but filing the return regularly and disclosing the closing cash balance as well as stock in the balance sheet, which has also been considered by the Assessing Officer while computing the concealed income but whatever evidence found during the course of survey, the assessee prepared a cash flow fund and also audit report was filed, which has not been controverted by the ld Assessing Officer and ld CIT(A). Whatever discrep .....

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se that stock found during the course of survey was matching with the sale shown during the year under consideration. The investment made in the house purchased was withdrawn from the bank account of the son as well as wife of the assessee, which has also not been controverted by the lower authorities. The daughter in law of assessee also made payment for the purchase of house from the sale proceeds of her car. These explanations were made before the ld Assessing Officer during the course of ass .....

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