TMI Blog2017 (2) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... g the course of the original assessment proceedings had only referred to and acted upon a set of 4 documents which were obtained by the survey officials during the course of the survey proceedings for justifying the addition of ₹ 15 lac in A.Y. 1997-98 and ₹ 20 lac in A.Y. 1998-99, which too were undisputedly found to be relatable to the period relevant to A.Y. 1999-2000. We are unable to understand that despite specific directions by the Tribunal to the A.O to make additions on the basis of the ‘material’ gathered by the department during the course of the survey proceedings, what stopped him from so doing. We are of the considered view that such failure on the part of the lower authorities to make and support additions in the hands of the assessee by placing on record ‘material’ obtained during the course of the survey proceedings, can logically only be explained for the reason that there is no such incriminating material pertaining to the year under consideration lying available with the department. We are thus of the considered view that in the backdrop of the aforesaid facts, though on the basis of the conduct of the assessee an estimated addition was justifiably c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am. That though the partner of the assessee firm Sh. Rafique Charolia in his statement recorded during the course of the survey proceedings had offered an additional income of ₹ 15 lac for A.Y. 1997-98 and ₹ 20 lac for A.Y. 1998-99, however the same was thereafter not offered for tax by the assessee firm in its returns of income filed for the said respective years. 3. That the A.O during the course of the original assessment proceedings recorded the statement of the partner Sh. Rafique Charolia (supra) on 07.02.2001, who confirmed his confession made during the course of the survey proceedings, but on the very next date, viz. 08.02.2001 the said partner retracted from his statement recorded during the course of the survey proceedings. The A.O however going by the offer of additional income by the partner in his statement recorded during the course of the survey proceedings, therein assessed the income of the assessee firm at ₹ 15,35,110/-. The assessment framed by the A.O was upheld in appeal by the CIT(A)-15, vide his order dated. 29.11.2001. The assessee filed an appeal with the Tribunal, which vide its order dated. 24.12.2004 restored the matter to the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimate the income of the assessee firm on the basis of the material gathered during the course of survey proceedings, and that too after confronting the same to the assessee. The A.O in blatant violation of the principles of judicial discipline, therein acted in clear defiance of the aforesaid directions of the Tribunal and without relying upon and confronting any such material as was obtained during the course of the survey proceedings, once again, solely on the basis of the statement of the partner of the assessee firm, viz. Sh. Rafique Charolia (supra), therein made an addition of ₹ 15 lac and vide his assessment order dated. 26/12/2007 assessed the income at ₹ 15,35,110/-. That the A.O while framing the assessment also initiated penalty proceedings u/s 271(1)(C) for concealment of income and tax. 5. The assessee assailed the fresh assessment order before the CIT(A). The CIT(A) duly appreciating that the A.O had acted in complete defiance of the clear directions given by the Tribunal vide its order dated. 14.06.2006, therefore set aside the additions made by the A.O. The CIT(A) thereafter going by the directions of the Tribunal therein estimated the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A), dated 29.01.2010, passed in the quantum appeal of the assessee, therein submitted that while for the statement of the partner of the assessee firm, viz. Sh. Rafique Charolia (supra) recorded during the course of the survey proceedings had wrongly been acted upon by the A.O for making an addition of ₹ 15 lac in the hands of the assessee as the same was retracted by the partner as on 08.02.2001, while for the copies of the 4 pages which were obtained by the survey officials during the course of the survey proceedings, viz. Bill No. HCS/011/98, dated. 05.07.1998, Page titled as R-105/106 and Receipt No. 868, dated. 25.08.1998, and thereafter were taken support of by the A.O for justifying the addition of ₹ 15 lac in A.Y. 1997-98 and ₹ 20 lac in A.Y. 1998-99 in the hands of the assessee, therein glaringly revealed that they were relatable to the period relevant to A.Y. 1999-2000, and did not pertain to the year under consideration. It was thus averred by the Ld. A.R that in the backdrop of the very fact that no incriminating material pertaining to the year under consideration had emerged in the course of the survey proceedings, and the addition made by the A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh assessment had specifically issued directions on the following two counts:- (i). The A.O was directed that while framing the assessment he was not to be influenced by the declaration made by the partner of the assessee firm. (ii). The A.O was directed to estimate the income of the assessee firm on the basis of the material obtained during the course of survey proceedings, and that too after confronting the same to the assessee and affording him reasonable opportunity to put forth an explanation as regards the same, so that the correct income of the assessee could be ascertained. We find that the A.O in the course of the denovo assessment proceedings knowingly acted in defiance of the directions of the Tribunal, and rather proceeded with and again framed the assessment on the basis of the statement of the partner of the assessee firm, viz. Sh. Rafique Charolia. That still further no material gathered during the course of the assessment proceedings was ever acted upon by the A.O for making or even supporting the addition of ₹ 15 lac made by him in the course of the fresh assessment . Thereafter the CIT(A) finding that the A.O had clearly acted in defiance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) further duly appreciating that everything was not correct with the books of accounts and state of affairs of the assessee firm as was projected before the department, had thus determined the income of the assessee firm on the basis of an estimation, viz. @ 8% of the gross receipts of the assessee firm, therein leading to a consequential assessment of the income of the assessee firm at ₹ 2,43,488/- which thereafter had been upheld by the Tribunal while dismissing the appeal of the department vide its order dated. 27.04.2011. We though are of the considered view that in the backdrop of the totality of the facts of the present case, the estimation of the income of the assessee firm was duly justified, but then in light of the fact that the lower authorities till date had failed to place on record any such incriminating material gathered during the course of the survey proceedings, which could establish beyond any scope of doubt the concealment of income on the part of the assessee, and therein irrebutably prove that the financial statements of the assessee firm so filed with the department were far from the true state of affairs, the levy of penalty u/s 271(1)(c) can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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