TaxTMI 
TaxTMI 
2016 (4) TMI 1225
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.... of Rs. 20,00,000/- u/s 271(1)(c) of the Income-tax Act, 1961. 3. The matter carried to the ld. CIT(A) and the ld. CIT(A) has dismissed the appeal. 4. The ld. Authorized Representative for the assessee submitted that the AO has disallowed a sum of Rs. . 15,00,153/- out of total payment of Rs. 1,57,01,538/- under the head labour and wages on estimated basis. Similarly, he has made addition on estimates of Rs. 83,55,153/- on account of transportation, loading and unloading charges which are to the tune of Rs. 16,71,03,072/-. The CIT(A) has upheld the rejection of books and applied net profit @4 % on total receipt of transportation charges of Rs. 24 crores, thereby he has confirmed the addition on the basis of application of net profit rate. The rejection of books of accounts and estimating the net profit on a particular percentage does not amount to any concealment. On a mere estimate basis, no penalty can be levied. He relied upon the following decisions :- 1. J.K. Jajoo vs. CIT,181 ITR 410. 2. CIT vs. Gaurishankar Sureshprasad (Pat.), 224 ITR 26. 3. ACIT vs. Reliance Petrochemicals Ltd., 322 ITR 158. 4. CIT vs. Chirag Ingots, 275 ITR 310. 5. Naresh Chandra vs. CIT, ....
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....e assessee's income was assessed on estimate basis, the assessee was not liable to any penalty, though the income was assessed on estimated basis. The ld. Departmental Representative relied upon the decision of Hon'ble Gujarat High Court in the case of CIT vs. Chandra Vilas Hotel, (2007) 291 ITR 202 ( Guj ), wherein it was held that the AO found from the manner in which the accounts were maintained the income could not be properly estimated and while doing so he also observed that the auditors of the assessee had clearly observed that for the check income or for the test income of the particular day the required slips were not produced before the auditors. The AO held that the income was not properly returned, and he accordingly applied Section 141 and he assessed the income at 20 % more to the returned income. The penalty was confirmed by the Hon'ble Gujarat High Court. 6. The ld. Departmental Representative further submitted that in the instant case, the search was conducted in the premises of Bharat Kothari Group and during the course of statement, Shri Mayur Kothari stated that they are issuing the bills without making delivery of iron and steels and they have received....
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....d the penalty and Hon'ble High Court has confirmed the order of the Tribunal. We find that in the instant case on hand in the year under consideration the books of accounts were rejected and net profit was applied. Therefore, we are of the view that facts of this case is similar to the facts of the Jurisdictional High Court. Therefore, the penalty cannot be imposed. We also get support from the decision of CIT vs. Whitelene Chemicals, (2014) 360 ITR 385 (Guj), wherein it is held as under :- "For the assessment year 2001-02, penalty u/s 271(1)(c) of the Income-tax Act, 1961, was imposed against the assessee on two counts (i)that additions were made in the income of the assessee after rejection of book results on the basis of fair gross profit rate, and (ii) that the assessee had estimated 3 per cent, of the sales tax with it. This was confirmed by the Commissioner (Apeals). With respect to the first aspect of the penalty, the Tribunal observed that no penalty could be imposed merely because the account books of the assessee were rejected and that the profit was estimated on the basis of the fair gross profit ratio. With respect to the retention of the portion of the sales tax,....
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....t finding of fact recorded by first appellate authority as well as the Tribunal both. The income-tax appeal can be admitted only on substantial question of law, but no substantial question of law is involved in present appeal so as to entertain it. The appellate authority as well as the Tribunal both have recorded a concurrent finding of fact that additions in the present case are based on estimation only. In these circumstances, no substantial question of law is involved in this appeal and the same is, accordingly, dismissed in limine." 10. We also get support from the decision of Hon'ble Delhi High Court in the case of CIT vs. Aero Traders P.Ltd., (2010) 322 ITR 316 (Del), wherein it is held as under :- "The assessee-company filed its return of income for the year 1997-98 on a notice u/s 148 of the Incometax Act, 1961, declaring a loss of Rs. 83,64,468/-. The assessee had, in the income-tax return filed by it, attached a note stating that it was impossible for it to substantiate its claim of loss by way of any evidence as the relevant records were seized and were with the police authorities. The AO after being unable to obtain copies of the seized documents, based his ....
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....rt. The penalty was justified. The ld. Departmental Representative also submitted the decision of Hon'ble M.P. High Court in the case of CIT (Additional ) vs. Smt. Chandrakanta and Others, 205 ITR 607, wherein the Hon'ble High Court has held that the assessee submitted his return and showed a loss of Rest. 50,000/- and then revised it and showed a profit of Rs. 7,500/-, he had unnecessarily suppressed the particulars of income and given an incorrect account of his income. The assessee did not maintain books of account. His income had ,therefore, to be assessed on estimate basis. The Tribunal committed an error in holding that since the assessee's income was assessed on estimate basis, the assessee was not liable to any penalty, though the income was assessed on estimated basis. The ld. Departmental Representative relied upon the decision of Hon'ble Gujarat High Court in the case of CIT vs. Chandra Vilas Hotel, (2007) 291 ITR 202 ( Guj ), wherein it was held that the AO found from the manner in which the accounts were maintained the income could not be properly estimated and while doing so he also observed that the auditors of the assessee had clearly observed that for t....