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2016 (5) TMI 922 - ITAT DELHI

2016 (5) TMI 922 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - whether the penalty can be imposed on the basis of estimated addition by applying the gross profit on the basis of immediate preceding year’s gross profit on the estimated turnover? - Held that:- AO has proceeded to pass the assessment order with biased mind that the raid was conducted on the premises of the assessee on1 2.09.2004 and FIR was registered regarding seizure of three trucks of spurious cement. But, merely on the basis of .....

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e department wherein it was informed that the appellant had indulged in making sales and purchases outside the books. Such old habits seldom vanish and the same is indicated in terms of discrepancies pointed out by the AO in the books of accounts and the Excise Department has also reported evasion of tax.” These observations of the AO are based upon conjecture and surmises without having any cogent material on record which have been confirmed by the CIT (A) in mechanical manner and then the said .....

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. MEHROTRA, ACCOUNTANT MEMBER and SHRI KULDIP SINGH, JUDICIAL MEMBER For The Assessee : Shri Prem Prakash and Aasish Agarwal, Advocates For The Revenue : Shri V.R. Sonbhadra, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. Tayal Concast (P.) Ltd. (hereinafter referred to as the assessee ), by filing the present appeal sought to set aside the impugned order dated 01.12.2014 passed by the Commissioner of Income-tax, Muzaffarnagar qua the assessment year 2005-06 on the grounds i .....

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rious rulings cited by the appellant. 5. The Ld. CIT (A) was wrong in mentioning ….when these was no explanation regarding cash credit- although dispute was about penalty of concealment u/s 271(1)(c). 2. Briefly stated the facts of this case are : the assessee company is a private limited company engaged into the manufacturing and sale of cement, filed return of income qua assessment year 2005-06 showing loss at ₹ 13,64,000/-. During assessment, it was noticed that the assessee has .....

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ial relief to the assessee. Then the assessee filed an appeal before the Tribunal and its appeal has been allowed directing the AO to pass a speaking order. 3. During the second round of assessment proceedings completed u/s 143(3)/147 of the Income-tax Act, 1961 (hereinafter the Act ), the AO made the following addition :- (i) On account of G.P. on manufactured items Rs.15,50,757/- (ii) On account of N.P. on trading items ₹ 45,018/- (iii) Unsecured loans sundry creditors etc. unexplained & .....

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conclusion that assessee has furnished inaccurate particulars of income and thereby imposed a penalty of ₹ 6,00,000/- u/s 271(1)(c) of the Act. 4. The assessee carried the matter before the ld. CIT (A) who has affirmed the penalty order. Feeling aggrieved, the assessee has come up before the Tribunal. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the .....

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well as the CIT (A) have proceeded to make an addition on the basis of estimated gross profit; that no penalty can be imposed on the basis of estimated addition. However, on the other hand, ld. DR for the revenue relied upon the orders passed by the AO as well as the CIT (A). 7. Undisputedly, in the first round of litigation, the AO applied the GP rate at 37% on estimated turnover of ₹ 7,43,100/-, however ld. CIT (A) reduced the estimated turnover to ₹ 61,44,381/- and applied the GP .....

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irmed by the ld. CIT (A) vide impugned order is not sustainable in the eyes of law for the following reasons :- (i) that the entire exercise as to the assessment of the income on the basis of return of income qua the assessment year 2005-06, has been made on the estimation basis without perusing and rejecting the books of accounts; (ii) that in the first round of litigation, the AO estimated the turnover of the assessee at ₹ 74,31,000/- and GP rate at 37%, however the ld. CIT (A) reduced t .....

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484/- but proceeded to impose penalty of ₹ 6,00,000/- without any explanation; (v) that the AO as well as ld. CIT (A) are not clear enough as to whether the penalty has been imposed/ affirmed for furnishing inaccurate particulars of income or for having concealed the particulars of income, particularly when the entire exercise is on the basis of estimated turnover and estimated gross profit, that too without rejecting the books of accounts. One cannot be assumed to have furnished inaccurat .....

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d before AO who has simply found the discrepancies but he has not found sufficient reason to reject the books of accounts, the estimated turnover and estimate gross profit cannot be taken into consideration to impose the penalty; (viii) that the AO has not recorded his satisfaction to impose the penalty but merely recording the finding that, Since the evidence has already been proved in the assessment order and the additions have been confirmed by the ld. CIT (A), hence it is a fit case for impo .....

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ly served upon the assessee fixing the case for 17.5.2013. In compliance to the show cause notice, counsel of the assessee attended and sought adjournment. In the meantime counsel of the assessee filed reply which was received in this office on 23.5.2013 mentioning inter alia as under :- …..For the addition about G.P. no penalty is valid as has been held in various rulings…. I have gone through the reply and found no force. Considering all the facts, it is seen that it is a fit cas .....

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nover and estimated gross profit without looking into the fact if the AO has made himself satisfied to impose the penalty for furnishing the inaccurate particulars or have concealed the particulars of income; (xi) that AO as well as CIT (A) being quasi-judicial authorities are required to provide sufficient opportunity of being heard to the party before imposing penalty, which is missing in this case and as such, the impugned order is not sustainable; (xii) that when the penalty has been imposed .....

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blindly followed the assessment order passed by the AO; (xiv) that the AO has also proceeded to pass the assessment order with biased mind that the raid was conducted on the premises of the assessee on1 2.09.2004 and FIR was registered regarding seizure of three trucks of spurious cement. But, merely on the basis of registration of FIR, no order to the prejudice to the assessee can be passed that he had been making sales and purchases outside the books of accounts. Undisputedly, no such material .....

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