TMI Blog2016 (7) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... sment for A.Y. 2009-10 was completed under section 143(3) of the Act vide order dated 23.12.2011 wherein the income of the assessee was determined at ₹ 30,63,850/- as against the returned income of ₹ 5,05,851/- in view of the addition of ₹ 25,58,000/- @0.5% of turnover on account of low G.P. shown in the year under consideration vis-a-vis the immediately preceding year and also taking into account the low drawings of the assessee. Penalty proceedings under section 271(1)(c) of the Act was simultaneously initiated by issue of notice under section 274 r.w.s. 271(1)(c) dated 23.12.2011. On appeal, the learned CIT(A) disposed off the assessee s appeal vide order dated 12.07.2012 allowing the assessee partial relief wherein the addition on account of low G.P. was restricted to ₹ 5,11,785/- as against ₹ 25,58,000/- @0.1% of turnover. 2.2 Pursuant to the order of the CIT(A)-25, Mumbai dated 12.07.2012 in the quantum proceedings, the Assessing Officer (AO) took up the penalty proceedings under section 271(1)(c) of the Act in respect of the addition of ₹ 5,11,785/- by issue of letter dated 19.12.2012 to the assessee affording him opportunity to show ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee contends therein that in confirming the levy of penalty under section 271(1)(c) of the Act for A.Y. 2009-10, the learned CIT(A) had erred in not appreciating the fact that there was neither concealment of income nor filing of inaccurate particulars of income. It is further contended that the learned CIT(A) had wrongly taken the estimation of G.P. as concealment of income or filing of inaccurate particulars of income. 5.2 The learned D.R. emphatically supported the impugned order of the learned CIT(A) in confirming the levy of penalty of ₹ 1,73,954/- under section 271(1)(c) of the Act for A.Y. 2009-10. It was brought to the notice of the Bench that in quantum proceedings, a Coordinate Bench of this Tribunal had, in its order dated 05.11.2015, upheld the G.P. addition to the extent of 0.1% thereby confirming the order of the learned CIT(A) dated 12.07.2012 and thereby dismissed both the appeal by Revenue and the assessee s cross objection which challenged the learned CIT(A) s order in sustaining the addition 0.1% of turnover. According to the learned D.R. the learned CIT(A), in the impugned order, upholding the levy of maximum penalty of ₹ 1,73,954/- und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 436) Jp 13. Shiv Lal Tak vs. CIT (121 Taxman 99) Raj. 5. In contrast, the following relevant observations are made from the assessment order. 5.1 It appears that the AO was not satisfied with the stock register maintained by the assessee for the reason that it does not contain the details about the quality of diamonds. The AO has pointed out that the rate of diamond purchased by the assessee vary from ₹ 14,000/- per carat to ₹ 1,22,677/- per carat and there is no differential treatment given to these items in the stock register. There is no way to identify the item of which rate is being sold to which person. Thus there is enough scope for manipulation according to the AO. 5.2 The AO has pointed out that the assessee has failed to link the purchases with corresponding sales in the case of 3 given parties namely Crown Gallant Ltd., Rich Style Ltd. and Star Grace Ltd. He has only submitted that he has filed the copy of stock register and all the transactions are explained there. 5.3 The AO has pointed out in assessment order that the assessee has failed to produce all the jangads maintained. Perusal of some of the jangads produced before hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he additions made by the AO of 0.5% of turnover was further restricted to 0.1% of turnover by the appellate order dated 12.07.2012. Now, the question in appeal is whether or not such additions should attract penalty u/s 271(1)(c) of I.T. Act, 1961. 9. On going through various case laws relied upon by the appellant, it appears that the circumstances are distinguishable on facts of each case. For example: In the case CIT vs. Bombay Hardware Syndicate (supra), it was observed that mere estimate made, however well founded it may be, by itself would not normally constitute material for holding that income that has been added on basis of estimate was income that has been concealed, rather it is also necessary to establish the quantum of the income that had escaped assessment, on the basis of which alone it is possible to find the income-tax and super-tax which would have been avoided, had the return submitted by the assessee been accepted, and in this case it was observed that there is no such finding entered by the Tribunal regarding this. In the case of CIT vs. Sangrur Vanaspati Mills Ltd. (supra), it was held that when addition had been made on basis of estimate and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven an iota of evidence on the record to show that the income of the assessee during the year under appeal was more than the income returned by him. In the case of Sadhu Ram Goyal (supra), it was noted that on question of quantum of addition, all authorities including Tribunal were having difference of opinion and the assessee's appeal against quantum addition was admitted by High Court. In the case of Shiv Lal Tak (supra), it was observed that where books of accounts are rejected and income is assessed by applying gross profit rate which results in addition of income, though provisions of Explanation 1 to section 271(1)(c) may be attracted for purpose of initiating penalty proceedings by raising presumption under Explanation 1, same by itself cannot take place of conclusive proof so as to discard evidence and attending circumstances on that basis alone. 10. It can be deduced from aforesaid judgments relied upon by the appellant that mere addition on estimate basis is not sufficient to levy penalty u/s 271(1)(c) of the Act, instead the whole facts and intention of assessee need to be looked into on case to case basis. In the present case, the AO has sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X
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