TMI Blog2018 (1) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... is also the product of estimation and the same is accepted by the AO/CIT(A)/ITSC. Therefore, it constitutes a reasonable presumption by the CIT(A). Therefore, the order of CIT(A) is fair and reasonable for the said reasons too. Accordingly, the grounds raised by the Revenue are dismissed. - ITA No.993/PUN/2015 - - - Dated:- 10-11-2017 - SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM Appellant by : Shri Ajay Modi Respondent by : Shri J.P. Bairagra ORDER PER D. KARUNAKARA RAO, AM : This appeal is filed by the Revenue against the order of CIT(A)-I, Aurangabad, dated 29-04-2015 for the A.Y. 2009-10 in connection with the penalty levied by the AO u/s.271(1)(c) of the Act vide order dated 14-03-2014. 2 Revenue raised the following grounds : 1. On the facts in the circumstances of the case, the Ld.CIT(A), Aurangabad has erred in deleting the penalty of ₹ 56,08,774/- imposed u/s.271(1)(c) of the Act. 2. On the facts in the circumstances of the case, the Ld.CIT(A), Aurangabad has erred in not following his own orders wherein he has confirmed the fact of suppressed production in the order of quantum appeal of the assessee for AY unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same and invoking the provisions of section 145(3) of the Act, AO also analysed the consumption of electricity qua the alleged unaccounted production and found certain discrepancies. Thus, the AO completed the assessment and made addition of ₹ 11,61,01,030/-. In the process, the AO rejected the assessee s estimated additional profit of ₹ 76,48,922/-. Being aggrieved, assessee filed an appeal before the CIT(A). The CIT(A), vide its order dated 30-04-2012, restricted the addition on suppressed production to 4% which works out to ₹ 1,73,51,470/-. Further, CIT(A) also confirmed the other addition on account of working capital at ₹ 8,00,000/-. The total addition, therefore, works out to ₹ 1,81,51,470/-. Thus, the CIT(A) gave relief of ₹ 9,79,49,560/- out of addition of ₹ 11,61,01,030/-. 4. The AO, vide his order dated 14-03-2014, levied the penalty of ₹ 56,08,774/- u/s.271(1)(c) of the Act on ₹ 1,81,51,470/-. Contents of Para 10 of penalty order dated 14-03-2014 being operational para is reproduced as under : 10. In view of the above discussion, it is established that, the assessee has clandestinely removed M.S. Billets/Ingots ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - which also includes the admitted component of ₹ 76,48,922/- stands deleted. Therefore, the Revenue is in appeal against the order of the CIT(A). Revenue desires that the penalty should be confirmed atleast to the extent of income of ₹ 76,48,922/- the admitted income in the said revised computation of income. 6. During the penalty proceedings before the income-tax authorities, assessee made written submissions and prayed for deletion of the entire penalty as the additions were eventually made on the basis of estimations. Assessee submitted that the addition is a debatable one in nature and there is a pigment of estimations in applying 4% to the said clandestinely removed goods. This apply to both electricity consumption based estimation as well as the DGCEI based estimations. As per the discussion given in Para 6.6 the CIT(A) deleted the entire penalty of ₹ 56,08,774/-. BEFORE THE TRIBUNAL : 7. The Revenue filed the present appeal against the said order of CIT(A) in deleting the penalty of ₹ 56,08,774/- levied u/s.271(1)(c) of the Act. Shri Ajay Modi, Ld. DR for the Revenue submitted that the CIT(A) has erred in presuming that the entire penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he estimation of electricity units on the basis of consumption of electricity units is not found to be justified. (Para 6.2 to 6.3) (b) He further held that the issue of estimation of production on the basis of consumption of electricity units is debatable and two views are possible. Further it is a settled law that in cases where addition is based on the issues which are debatable and where two views are possible, penalty u/s 271(1)(c) is not leviable (Para 6.3) (c) In para 6.4 he further held that in this case the additions confirmed are based on estimation and that no penalty is attracted where addition is made on estimate basis. 19. We further submit that in this case before the notice of hearing u/s.142(1) dated 10.8.2011 was issued the Appellant had voluntarily filed revised computation of income together with letter dated 4.7.2011 disclosing additional income of ₹ 76,48,922 and paid the taxes due and also enclosed copy of challan which is at page no 75 to 77 of the paperbook. 20. Since the Settlement Commission of Excise Department has passed the order on 23.11.2010 accepting the clandestine removal of the goods which took place after the filing of return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction was also the product of estimation by the DGCEI and eventually the same was accepted by the Settlement Commission. Absence of any incriminating material in support of the said clandestinely removed goods, its quantity and also earning of precise amount of income of the said goods, authorities resorted to estimations. Revenue is not privy to the relevant facts (1) precise quantity of such recorded sales and (2) precise income out of the sale of such goods and they merely relied on the figures given by the assessee. The quantity of unaccounted production is estimated by the Excise Department and the taxable income is estimated for the income-tax Department by the assessee applying the flat rate of 4%. Despite the absence of any discussion in the order of the CIT(A) on this part of the issue of argument, specially, the CIT(A) granted relief presuming that this segment of income is also arrived at by the estimation. In our view, the said presumption is fair and reasonable. In any case, nothing is brought to our notice by the Ld. DR to demonstrate the estimations are not involved both in arriving at the figure of unrecorded sales and the taxable income. For our mind, it appears t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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