TMI Blog2016 (10) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... y made on estimating the profit rate. The lower authorities has initiated the penalty for the reason that the assessee has incurred cash expenditure and for this, evidences were found during the search proceedings on Chartered Accountant firm of the assessee. We also find that the profit rate applied on cost of sale as per the working of sale adopted by the Department can at the best be the basis for quantum addition but it cannot attract penalty for furnishing of inaccurate particulars of income because the assessment is made not on the issue of unaccounted cash expenditure but on estimate of profit rate. Accordingly, in our view, as per rule of evidence there is distinction between set of facts not proved and facts disproved and facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis. The facts and circumstances in both the years are exactly identical, hence, we will take up the issue from the A.Y. 2006-07 and will decide both the appeals. Grounds raised in ITA No. 2857/Mum/2013 for A.Y. 2006-07, reads as under: 1. The Learned CIT(A) erred in confirming the penalty levied u/s. 271(1)(c) being 100% of the tax sought to be evaded on the undisclosed income being difference between assessed income and returned income. 2. The Learned CIT(A)failed to appreciate the fact that the penalty proceedings were initiated only on account of additions made on estimation basis. 3. The penalty u/s. 271(1)(c) being 100% of the tax sought to be evaded on the undisclosed income requires to be deleted. 3. Briefly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.Y. 2006-07, the A.O. on account of additional cost estimated the additional profit @ 26.52% and made addition to the return of income of the assessee. Similar additions were made in the A.Y. 2005-06. Finally, the tribunal in both the years directed the A.O.to reduce the estimate at 23% by observing in para 4 in Motta Construction (in ITA Nos. 4794, 4795, 4604 4065/Mum/2010 dated 06.06.2012): 4. Before us, Authorised Representative (AR) submitted that estimate made by the CIT(A) was on higher side, that no seizure was made from the assessee s premises, that during 153C proceedings, assessee had filed full details of his income. Departmental Representative (DR) supported the orders of the FAA. After hearing the rival submission a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is agreed that it is consequent to the search action that the details of cash expenditure, not accounted in the regular books, were discovered. It is also not disputed that in the profit and loss account accompanying the regular return, the said expenditure was not reflected, in t furnished. I am in agreement with the observation of the Assessing Officer that a search and seizure action, leading to issue of notice under s. 158BC, cannot be made use of by the assessee to his benefit to reduce his income for the impugned year. The said provision is to help the Revenue to collect tax due from undisclosed income and not for the benefit of the assessee. Further, the position taken by the Assessing Officer that profit corresponding to the unac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uce the profit rate at 23% of the cost of sales. The ld. Counsel for the assessee argued that once the estimation is made, there is no finding by the lower authorities that there is concealment of income or the assessee has furnished inaccurate particulars of income. According to the ld. Counsel once the estimation is made, the penalty u/s. 271(1)(c) of the Act cannot be levied. Hence, he requested for deletion of the same. On the other hand, the ld. Sr. DR supports the orders of the lower authorities. 7. We find that the authorities below have noticed that the assessee has incurred cash expenditure in both the assessment years, the basis for this finding was the documents recovered during the course of search by the Revenue from the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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