TMI Blog2017 (3) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of which ₹ 1,68,605/- is on account of gross profit addition @ 10.11% of ₹ 16,69,457/- and an approx. amount of ₹ 2,00,000/- as seed capital invested by the assessee to effect the rotation of the alleged undisclosed sales. Accordingly, the appeal of assessee is partly allowed. Penalty u/s 271(1)(c) - Held that:- At the given facts and circumstances of the case that as the assessee has furnished inaccurate particulars of income and has also concealed particulars of income, penalty u/s 271(1)(c) of the Act has rightly been imposed. However, we direct the ld. Assessing Officer to recomputed the penalty u/s 271(1)(c) of the Act vis-à-vis our decision given in adjudicating quantum appeal of assessee wherein we have sustained addition of ₹ 3,68,605/-. Accordingly the ground raised by assessee is partly allowed. - ITA No.1094/Ahd/2012 AND ITA No.3256/Ahd/2015 - - - Dated:- 16-3-2017 - Shri S. S. Godara, JM and Shri Manish Borad, AM. For The Appellant : Shri M. K. Patel, AR For The Respondent : Shri Parveen Kumar, Sr.DR ORDER PER Manish Borad, Accountant Member . These two appeals of assessee for Asst. Year 2008-09 are directed again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deposit of ₹ 16,69,457/- in ICICI Bank Surat. During the course of assessment proceedings assessee stated that the alleged Savings Bank a/c No.62460150357 was opened by Bhupendra Maganlal Gantiwala (HUF) (karta as assessee) and that assessee s HUF is the sole and real owner of this account. However, uptill the completion of assessment proceedings assessee was unable to place any documentary evidence to prove that the a/c was held by his HUF nor could he substantiate his contentions with the copy of balance sheet and income-tax return of the HUF to depict that the impugned bank account has been duly shown with the source of deposits in the alleged bank account wherein normally cash has been deposited outside Surat and has been withdrawn in Surat. Accordingly after making addition of ₹ 16,69,457/- income of the assessee was assessed at ₹ 18,04,880/- u/s 143(3) of the Act and penalty proceedings were initiated. 4. Aggrieved, assessee went in appeal before ld. Commissioner of Income Tax(A) wherein ld. Commissioner of Income Tax(A) while adjudicating assessee s grounds for restricting the addition to the peak amount adjudicated the issue by sustaining the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative submitted that although in the ground of appeal assessee has agitated the addition of ₹ 5,85,530/- confirmed by ld. Commissioner of Income Tax(A) but at the present stage there is no objection to the gross profit addition confirmed after applying gross profit rate @ 10.11% at ₹ 1,68,605/- but strongly objected to the calculation of seed capital at ₹ 4,16,925/- which is alleged to be on a higher side. 7. On the other hand, ld. Departmental Representative vehemently argued supporting the orders of lower authorities and submitted that ld. Commissioner of Income Tax(A) has already given substantive relief by sustaining ₹ 5,85,530/- as against ₹ 16,69,457/- even when assessee could hardly produce any evidence to support the source of cash/cheque deposit amount of ₹ 16,69,457/- in the impugned bank account. 8. We have heard the rival contentions and perused the record placed before us. Assessee has raised three grounds of appeal out of which ground no.3 is of general nature and as regards ground nos. 1 2 assessee is mainly aggrieved with the addition confirmed by ld. Commissioner of Income Tax(A) on account of seed capital calculat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e regular books of account which further gets support with the admission of ld. Authorised Representative to the gross profit addition on the undisclosed cash/credit. But certainly no matter it is not an initial start of business but there is certainly a hidden element of capital which the assessee had invested for making unaccounted sales. We are, therefore, of the view that in the totality of facts it would be justified to estimate the seed capital at ₹ 2,00,000/- which the assessee might have invested from its undisclosed income to effect undisclosed sales. In the result, we sustain the addition of ₹ 3,68,605/- as against ₹ 5,85,530/- sustained by ld. Commissioner of Income Tax(A) out of which ₹ 1,68,605/- is on account of gross profit addition @ 10.11% of ₹ 16,69,457/- and an approx. amount of ₹ 2,00,000/- as seed capital invested by the assessee to effect the rotation of the alleged undisclosed sales. Accordingly, the appeal of assessee is partly allowed. 11. Now we take up ITA No.3256/Ahd/2015 relating to penalty u/s 271(1)(c) of the Act imposed on the addition sustained by ld. Commissioner of Income Tax(A). Assessee has raised following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 5,85,147/-. We do not find any necessity to discuss the facts of the case as they have been discussed by us while adjudicating the quantum appeal wherein we have sustained addition of ₹ 3,68,605/-. We also observe that ld. Commissioner of Income Tax(A) has confirmed the penalty u/s 271(1)(c) of the Act by observing as follows :- 5. The submission (SOF) Is duly considered inter alia the facts of the case. The Id. AR has reiterated the same contentions in SOF which were taken before the Id. AO. The case laws relied upon by the appellant have also been considered. I have noticed that facts of the cases cited are totally distinguishable because in none of the cases, the issue relating unexplained deposits in Bank A/c was involved. The Ratio of any decision can be applied if and only if the facts are similar. Hence, the case laws are of no help to the cause of the assessee. Further, the assessee has miserably failed to substantiate that funds deposited in ICICI Bank A/c were belonging to his HUF. In absence of any cogent material and evidence, such plea was rightly rejected by Id. AO .CIT(A). It is seen that the assessee could not explain the nature source of deposits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g assessment proceedings or during penalty proceedings regarding unexplained cash deposits. Without any material, the assessee had merely stated that the source of income was from the business run by his father and that was not und by the Hon'ble Court as bonafide explanation under Explanation-1 to Sec. 271(l)(c) of the Act. The facts of the present case are also akin to the above cited decision because in this case also the assessee has taken plea that money belonged to HUF. The contention of the appellant that penalty not leviable where profit was estimated based on the decision rendered in certain cases is duly considered. Here, the Id. CIT(A) has worked out the suppressed profit on unaccounted suppressed sales found recorded in the Bank A/c. In nutshell, the assessee failed to satisfactorily explain the source of deposits in his Bank A/c, thereby failed to discharge his onus. As per clause (B) to Explanation (1) to section 271(l)(c) of the Act, once the assessee failed to substantiate his explanation and failed to prove that such explanation is bona fide then amount added is to be treated as deemed to represent the income in respect of which particulars have been conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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