TaxTMI 
TaxTMI 
2007 (4) TMI 308
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....et supari on wholesale basis. A search was conducted on 4th June, 2002 at the business and residential premises of family members and proprietors of M/s Mohini & Co. and M/s Richa Chemicals and M/s B.S. Sales Agency. During course of search, certain assets and records were seized. The assessee filed a return of undisclosed income on 10th Jan., 2003 showing undisclosed income at Rs. 12,50,000. The profit on sales covered by seized records was estimated by applying a net profit rate of 3.3 per cent approximately. However, the AO applied the net profit rate of 4.5 per cent. The AO has not disputed the total figures of sales as found undisclosed. On appeal, the CIT(A) reduced the net profit rate applied by the AO to 4 per cent. The CIT(A) was o....
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....earned Counsel for the assessee also submitted that the AO has levied penalty on the difference between the income returned and income assessed. It was also stated by learned Counsel for the assessee that the CIT(A) has confirmed levy of penalty holding that the provisions of Section 158BFA(2) are mandatory. Shri Rakesh Garg, learned Counsel for the assessee submitted that the provisions of Section 158BFA(2) are not mandatory and automatic since the word "may" has been used in Section 158BFA(2) in contrast to the word "shall" used for levy of interest under Section 158BFA(1) of the IT Act, 1961. Reliance was placed on the following cases: (i) Smt. Mala Dayanithi v. Dy. CIT (2005) 92 TTJ (Bang) 270. In the above case it has been held tha....
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....st in pari materia to Section 271(1)(c) of the IT Act, 1961 which relates to concealment of income. According to learned Counsel for the assessee, the various Courts and Benches of the Tribunal have held that if positive concealment is not found, no penalty is leviable on the addition made on estimate basis. Reliance was also placed on the following decisions: (i) CIT vs. Prem Das (2001) 167 CTR (P&H) 158 : (2001) 248 ITR 234 (P&H); (ii) ITO v. Smt. Purnima Devi Gupta (2004) 83 TTJ (Jd) 586 : (2004) 3 SOT 753 (Jd); (iii) Rajan H. Shinde v. Dy. CIT (2006) 104 TTJ (Pune)(TM) 445 : (2006) 103 ITD 360 (Pune)(TM). In view of the above decisions, Shri Rakesh Garg, learned Counsel for the assessee submitted that the addition of Rs. 1,43,353....
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....d that it was a case of estimate against an estimate and there was no concealment and accordingly it was held that no penalty was imposable. He, therefore, submitted that in view of the recent judgment of Hon'ble Allahabad High Court, unless any positive concealment is found, no penalty is leviable on the addition made on estimate basis. 8. We have carefully considered the rival submissions and have also perused the orders of the authorities below. The decisions relied upon by both the parties were also considered. In the instant case, the assessee had submitted block return showing an income of Rs. 12,50,000 which covered all the aspects of the search. The profit on sales was estimated by applying a net profit rate of 3.3 per cent app....
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.... on material found during search or material in possession of AO, but based on difference in valuation of property, as disclosed by the assessee and as estimated by the DVO, there was no concealment attracting penalty under Section 158BFA(2) of the IT Act, 1961. In the instant case there was an estimate at the level of the AO as well as at the level of CIT(A) in respect of net profit rate. From the entire facts of the present case, it would be clear that the income of the assessee was estimated and nothing has been brought on record by the AO that the assessee concealed any particulars of income. In our view, unless any positive concealment is found, no penalty is leviable on the addition made on estimate basis. While taking such a view, we....
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....ancelled the penalty on the ground that there was no positive evidence to prove suppression of income. On a consideration of the matter, it is noticed that the assessee had returned income on estimate basis. The AO and the CIT(A) adopted different estimates. It was, thus, a case of difference of opinion. 9. From the above judgment it is clear that the AO and the CIT(A) adopted different estimates, and it was a case of difference of opinion. The Hon'ble Punjab & Haryana High Court held that the Tribunal was justified in law in cancelling the penalty imposed under Section 271(1)(c) of the Act. In our opinion, the penalty under Section 158BFA(2) is almost in pari materia to Section 271(1)(c) of the IT Act, 1961, which relates to the con....