TMI Blog2018 (3) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... or illegality in the orders of the authorities below levying the penalty against the said addition made by the AO. - Decided partly in favour of assessee. - ITA No. 682/JP/2014 - - - Dated:- 26-2-2018 - SHRI VIJAY PAL RAO, JM AND SHRI BHAGCHAND, AM For The Assessee : Shri Manish Agarwal (C.A.) And Shri O.P. Agarwal (C.A.) For The Revenue : Shri R. A. Verma (Addl.CIT) ORDER PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 24.07.2014 of CIT (A), Ajmer arising from penalty order passed u/s 271(1)(c) of the I.T. Act for the assessment year 2005-06. The assessee has raised the following grounds:- 1. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in upholding the order of Assessing officer of levying the penalty u/s 271(1)(c) of the Income Tax Act, 1961 without appreciating the facts and circumstances of case and in ignorance of the submissions made before him. Therefore, the said penalty order under section 211 (1)(c) deserves to be quashed and held bad in law. 2. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in upholding the lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition u/s 41(1)(a) 2,14,309.00 3. Interest income 1,913.00 Total 22,45,222.00 On appeal the ld. CIT(A) vide order dated 02.12.2010 restricted the addition in respect of the cash deposits in the bank account of ₹ 20,29,000/- by estimating the profit on the said turnover @ 10% and thereby sustained the addition of ₹ 2,02,900/-. The ld. CIT(A) has also allowed credit of ₹ 1,04,110/- being the additional income offered in the revised return. Thus, the net addition sustained by the ld. CIT(A) in respect of the deposits in the bank account of ₹ 98,790/-. The remaining two addition were sustained by the ld. CIT(A) though the assessee did not challenged the addition made on account of interest income. On further appeal this Tribunal sustained the additions which were confirmed by the ld. CIT(A) total amounting to ₹ 3,15,012/-. The AO initiated the penalty proceedings u/s 271(1)(c) of the Act in respect of the additions sustained by the ld. CIT(A) and levy of penalty of ₹ 1,17,818/- being 100% of the tax e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, while filing the original return of income, the aforesaid amount of ₹ 2,14,309/- was inadvertently shown as outstanding liability towards the said firm and the said mistake was rectified by the assessee when this pointed during the assessment proceedings. The AO made an addition of the said amount of ₹ 2,14,309/- u/s 41(1)(a) of the Act by treating the same as cessation of liability. The ld. AR of the assessee has submitted that though the addition was sustained by this Tribunal however, this liability was shown in the original return of income but not in revised return of income. The ld. AR has further contended that the said liability was inadvertently shown in the original return of income filed in response to notice u/s 148 of the Act but the mistake was rectified in the revised return and therefore, it cannot be held as concealment of income or furnishing of inaccurate particulars of income. The ld. AR has submitted that the penalty proceedings are distinct and separate from assessment proceedings and fresh enquiries must be made before arriving at the conclusion of the concealed income or furnishing of inaccurate particulars of income. He has asserted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ITR 588 A.M. Shah Co. vs. CIT 238 ITR 415 6. We have considered the rival submissions as well as relevant material on record. In the reassessment order passed u/s 143(3) r.w.s. 147 of the Act the AO made a total addition of ₹ 22,45,222/- on account of three issues. The ld. CIT(A) has granted relief to the assessee in respect of the addition made u/s 69A of the Act by restricting the same to the extent of 10% of the undisclosed sales treating the same as the profit on the said turnover. The rest of the additions made by the AO were sustained by the ld. CIT(A). Though the Revenue as well as assessee challenged the order of the ld. CIT(A) however, the Tribunal has confirmed the quantum appeal order passed by the ld. CIT(A). The details of the addition made by the AO and sustained by the ld. CIT(A) and then by this Tribunal are as under:- S.No. Particulars Addition disallowance made by AO Addition sustained by CIT(A) Addition sustained by ITAT 1. Additions u/s 69A 20,29,000.00 98,790.00 ( after allowing cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO has made an adhoc/estimated disallowance or a case where the assessee could not satisfied the AO about the claim and consequentially the AO assess the income of the assessee on the basis of estimation and such an addition made by the AO as estimated basis would not constitute concealment of particulars of income or furnishing inaccurate particulars of income so as to attract the provisions of section 271(1)(c) of the Act. In the case in hand the assessee has not disclosed the turnover either in the books of accounts or the in the return of income and the bank account in which the sales was deposited was also not disclosed therefore, the addition made due to non discloser of the sales cannot be equated with the case where all the particulars were disclosed by the assessee but because of failure on the part of the assessee to satisfy the AO the additions were made by the AO. Hence, we do not find any merit or substance in the contention of ld. AR of the assessee. The decision relied upon the ld. AR in case of CIT vs. Krishi Tyre Retreading Rubber Industries (supra) cannot be applied in the facts of the present case. 7. As regards the additions made u/s 41(1)(a) and consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation, penalty can be ITA No.672/JP/2011 Smt. Durga Devi Somani vs. ITO, Kishangarh 18 imposed not on the sole basis of alleged refused surrender. AO has a duty to consider the material and submission of the assessee and decide whether income on the basis of these pleas was assessable in the year in question. iii. AO has held that the surrender is not acceptable and chose to add it u/s 41(1) of the Act. Thus technically even the surrender is not accepted and unilateral cessation of liable is assumed ignoring the plea that in subsequent years trading liability amounts were paid. iv. The Mak data judgment relied by ld DR also holds that penalty cannot be deleted merely holding that assesses voluntarily surrendered the income. There is no such immunity and it is the explanation which should be considered for penalty. In that case assessee did not offer any explanation except a specious plea of voluntary surrender, which also on facts was found to be not voluntary. Thus in MAK DATA case also Hon ble supreme court did not dispense with the consideration of explanation of the assesse and dermination of imposition on merits. v. The details about trading liabilities a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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