TMI Blog2019 (9) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... ut going into the merits of calculations furnished by the assessee we deem it appropriate to restore this issue back to the file of Assessing Officer for re-computation of annual turnover in line with our aforesaid observations. Accordingly, ground Nos. 1 and 2 of the appeal by the assessee are allowed for statistical purpose. Unexplained expenditure u/s. 69C on account of unexplained expenditure - HELD THAT:- We are of considered view that once GP addition has been made by estimating unaccounted sales turnover, addition u/s. 69C is not warranted. The unaccounted expenditure could have been made by assessee from income generated from unaccounted sales. Our view is supported the judgment rendered in the case of Commissioner of Income Tax Vs. Jawanmal Gemaji Gandhi [ 1983 (10) TMI 17 - BOMBAY HIGH COURT] Addition u/s. 69B on account of unexplained initial investment - HELD THAT:- Assessee has given calculation on the basis of turnover computed after extrapolating sales of festival month to three calendar months and regular sales for remaining 9 months. Since, we have restored the issue of GP addition and computation of annual turnover back to the file of Assessing Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly indicate that the charge for levy of penalty are not in coherence. The penalty has been initiated for concealment, whereas it has been levied for both the charges of section 271(1)(c) i.e. concealment of income and furnishing inaccurate particulars of income. The Hon ble Bombay High Court in the case of Commissioner of Income Tax Vs. Samson Perinchery [ 2017 (1) TMI 1292 - BOMBAY HIGH COURT] has held that where satisfaction has been recorded for one breach u/s. 271(1)(c) and the penalty has been levied for another, such order levying penalty u/s. 271(1)(c) is not permissible. - Decided in favour of assessee - ITA Nos.2207 to 2212/PUN/2016, ITA Nos.383 to 385/PUN/2017 - - - Dated:- 3-9-2019 - Shri D. Karunakara Rao, AM And Shri Vikas Awasthy, JM For the Assessee : Shri Neelesh Khandelwal For the Revenue : Shri Shivanand H. Kalakari ORDER PER VIKAS AWASTHY, JM : The assessee in ITA Nos. 2207 to 2212/PUN/2016 has assailed the order of Commissioner of Income Tax (Appeals)-13, Pune dated 24-06-2016 common for the assessment years 1998-99 to 2002-03 and 2004-05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 -do- 1999-2000 30,000/- 10 -do- 2000-01 30,000/- 11 -do- 2001-02 30,000/- 12 -do- 2002-03 30,000/- 13 -do- 2003-04 30,000/- 14 -do- 2004-05 20,000/- 15 M/s. Danendrakumar Co. 1998-99 3,10,000/- 16 -do- 1999-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned assessment years on account of unexplained expenditure u/s. 69C, unexplained investments u/s. 69B and GP additions on undisclosed sales. 2.3 Aggrieved against the assessment orders for the respective assessment years, the assessee filed appeals before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) enhanced the additions. Hence, the present appeals by the assessee. 3. For the sake of convenience, we will take up the appeals of assessee for adjudication in seriatim of assessment years. ITA No. 2207/PUN/2016, (A.Y. 1998-99) 4. The assessee has raised following grounds assailing the findings of Commissioner of Income Tax (Appeals) : 1. On facts and circumstances prevailing in the case and as per provisions Scheme of the Act it be held that, the addition of ₹ 4,55,426/- on account of gross profit on unrecorded sales is not in accordance with the provisions of the law and scheme of the Act. The addition made by the AO and that enhanced by the first appellate authority be deleted. The appellant be granted just and proper relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that in the impugned assessment year the Assessing Officer made additions on following counts : i. GP addition on unrecorded sales ₹ 12,940/-. ii. Unexplained expenditure u/s. 69C ₹ 23,221/-. 5.1 The ld. AR submitted that in First Appellate proceedings the Commissioner of Income Tax (Appeals) enhanced GP addition on unaccounted sales by extrapolating sales for the month of October, 1997 to the entire year. The ld. AR submitted that extrapolating the sales for the month of October, 1997 to the entire year is unreasonable and unjustified as the turnover during the month of October was at peak owing to Diwali festival. During the non festival months/seasons the turnover of the firm is considerable low. The ld. AR submitted that maximum three months in the entire year can be considered as the months of festivals when the sale of dry fruits goes up. Therefore, the sale for the month of October, 1997 cannot be extrapolated to the entire year. The ld. AR furnished a table giving working of turnover and the GP calculated on the basis of aforesaid turnover. The same is reproduced here-in-below : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. AR further contended that the Commissioner of Income Tax (Appeals) during First Appellate proceedings made addition on account of unexplained investment u/s. 69B ₹ 3,84,207/-. The addition has been made on account of initial investment. The basis for calculation of initial investment by the Commissioner of Income Tax (Appeals) is extrapolation of turnover for the month of October, 1997 to the entire year. The ld. AR contended that after considering the earlier table wherein the total turnover of ₹ 30 lakhs was worked after extrapolating the sale of October, 1997 to three months. Addition on account of initial investments would work out to ₹ 2,62,360/-. The ld. AR gave the working of aforesaid calculation which is as under : 1 Turnover for First month i.e. April 1997 ( Nonfestive) 1,92,613 2 GP Percentage 7.99% 3 Gross Profit (1*2) 15,390 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales. The contention of the assessee is that the cash seized during search is generated from the business activities. A perusal of statement Shri Nanchand Bhogi Lal Shah recorded on 04-12- 2003 u/s. 131 reveal that while replying to Q. No. 7, he has categorically stated that Whatever profits the generated out of the transactions of purchases and sales are reflected in different pages in these four seized bundles formed also the part of total cash of ₹ 40/- lacs seized from my residence. Thus, unaccounted cash offered by the assessee was against undisclosed business transactions. 8. The Commissioner of Income Tax (Appeals) in First Appellate proceedings has enhanced GP addition by extrapolating sales for the month of October, 1997 to the entire year. The contentions of the assessee is that October being the month of Diwali festival the sales are at peak. Hence, sales during festival months/seasons cannot be extrapolated to the entire year. We find merit in the contentions of the assessee. Merely for the reason that there were high volume of sales in the month of October on account of festival, the sales cannot be extrapolated to the other mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. The unaccounted cash found during the search operation has been offered to tax by the assessee as part of undisclosed business income. The additions made during assessment proceedings are in respect of undisclosed business transactions. The GP addition is made on turnover determined by extrapolation of sales. We are of considered view that the assessee deserves the benefit of telescopic effect on GP additions against cash seized and offered to tax. Therefore, we find merit in the contentions of the assessee in seeking the benefit of telescopy of cash seized against addition on account of gross profits on unaccounted sales. In principle, we allow ground No. 6 of the appeal. However, we deem it appropriate to restore this issue back to the file of Assessing Officer for limited purpose of giving telescopic effect to the GP after re-computation. Accordingly, ground No. 6 of the appeal is allowed for statistical purpose. 12. The ground No. 7 is general in nature, hence, require no adjudication. 13. In the result, the appeal of assessee is partly allowed in the terms aforesaid. ITA No. 2208/PUN/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the unaccounted business activities of the appellant firm and the amount declared out of the cash found includes the profits earned out of the unaccounted business activities. The appellant be granted just and proper relief in this respect. 3. On the facts and circumstances prevailing in the case and as per the provisions of the Act, it be held that the addition of ₹ 1,06,665/- on account of unaccounted expenditure is unwarranted, unjust and against the provisions and scheme of the Act. The said addition be deleted and the appellant be granted just and proper relief in this regard. 4. Without prejudice to the above ground, on the facts and circumstances prevailing in the case and as per the provisions of the Act, it be held that the amount of ₹ 1,06,665/- on account of unaccounted expenditure has already been taxed in the hands of Mr.Nandchand Shah for A.Y.2001-02 and therefore no separate addition should be made in the hands of the appellant. The addition be deleted and the appellant be granted just and proper relief in this respect. 5. On the facts and circumstances prevailing in the case and as per the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of ₹ 82,735/- on account of unaccounted expenditure has already been taxed in the hands of Mr. Nanchand Shah for A.Y.2001-02 and therefore no separate addition should be made in the hands of the appellant. The addition be deleted and the appellant be granted just and proper relief in this respect. 4. Without prejudice to the above grounds on the facts and circumstances prevailing in the case and as per the provisions and scheme of the Act, it be held that the addition on account of unaccounted expenditure amounting to ₹ 82,735/- be deleted as the said amount has already been taxed in A.Y.2000-01. The appellant be granted just and proper relief in this regard. 5. On the facts and circumstances prevailing in the case and as per the provisions of the Act, it be held that the addition of ₹ 1,91,767/- on account of unaccounted initial investments is unwarranted, unjust and against the provisions and scheme of the Act. The addition be deleted and the appellant be granted just and proper relief in this regard. 6. Without prejudice to the grounds raised above, on facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 2211 /PUN/2016, (A.Y. 2002-03) 23. The assessee has taken following grounds : 1. On facts and circumstances prevailing in the case and as per provisions Scheme of the Act it be held that, the addition of ₹ 1,15,352/- on account of gross profit on unrecorded sales is not in accordance with the provisions of the law and scheme of the Act. The addition made by the first appellate authority be deleted. The appellant be granted just and proper relief in this respect. 2. Without prejudice to above ground, on facts and circumstances prevailing in the case and as per provisions Scheme of the Act, it be held that the cash found at the premises of the appellant was out of the unaccounted business activities of the appellant firm and the amount declared out of the cash found includes the profits earned out of the unaccounted business activities. The appellant be granted just and proper relief in this respect. 3. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of hearing. 24. In the impugned assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28. The ld. AR submitted at the outset that penalty levied u/s. 271(1)(c) is liable to set aside as the charge while recording satisfaction by the Commissioner of Income Tax (Appeals) for initiating penalty proceedings and the charge mentioned in order levying penalty are not coherent. The Commissioner of Income Tax (Appeals) while initiating penalty has observe that the penalty is levied for concealment of income. However, while passing order levying penalty u/s. 271(1)(c), the Commissioner of Income Tax (Appeals) levied penalty for concealment of income and furnishing inaccurate particulars of income. The manner in which penalty has been levied is against the law laid down by the Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Samson Perinchery reported as 392 ITR 4. 29. On the other hand the ld. DR vehemently defended the impugned order and submitted that the order of Commissioner of Income Tax (Appeals) levying penalty is in accordance with the provisions of the Act. 30. Both sides heard. Orders of the authorities below examined. A perusal of the order dated 24-06-2016 passed by the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the Assessee has no notice. 33. Thus, in view of the facts of the case and judgment of Hon ble Bombay High Court, the order levying penalty is liable to be set aside. Accordingly, the impugned order is set aside and the appeal of the assessee is allowed. ITA No.384/PUN/2017, (A.Y. 1999-2000) 34. The ld. AR submitted that the penalty has been levied by Commissioner of Income Tax (Appeals) for the impugned assessment year in respect of GP addition. The ld. AR submitted that in case the assessee s plea of allowing telescopic effect is accepted, there will not be any addition and hence the penalty would not be survive. 35. On the other hand ld. DR vehemently defended the impugned order and prayed for dismissing the appeal of assessee. 36. Both sides heard. Orders of the authorities below perused. The Commissioner of Income Tax (Appeals) has initiated and levied penalty u/s. 271(1)(c) of the Act for concealment o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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