TaxTMI 
TaxTMI 
2012 (4) TMI 245
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....ng the books of account and seized materials the Assessing Officer completed the assessments determining income at Rs. 5,38,900 for A.Y. 2002-03 and Rs. 8,53,282 for A.Y. 2003-04. As the assessee had not disclosed the income from bill discounting correctly the Assessing Officer had made addition of Rs. 2,55,248 and Rs. 5,08,582 in the A.Ys. 2002-03 and 2003-04, respectively. Consequently penalty proceedings u/s. 271(1)(c) of the Act were also initiated both the years. In the course of the penalty proceedings the assessee submitted that the addition in the assessment was made on estimate basis and there is no justification of levy of penalty. The assessee claimed that there was no material evidence pointing out any concealment of income or furnishing inaccurate particulars of income. However, the explanation submitted by the assessee was not accepted by the Assessing Officer. He was of the view that the addition in the assessment order was made based on the concrete evidence as per the seized materials. Accordingly, he levied a penalty of Rs. 1,18,756 and Rs. 2,10,420 for A.Ys. 2002-03 and 2003-04, respectively. Being aggrieved, the assessee went in appeal before the CIT(A). On appe....
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....ommission on cheque discounting. During the appellate proceedings against the assessment orders the CIT(A) has categorically observed that the submission of the assessee that the commission earned was Rs. 10 per ten thousand or Rs. 5 per ten thousand was contrary to the facts on record. He also observed that the Assessing Officer has taken the average rate of commission based on the seized documents for which the assessee had no answer. Accordingly, the CIT(A) on proper appreciation of facts on record, confirmed the rate of commission adopted by the Assessing Officer. Further it is also to be noted that commission originally offered by the assessee prior to the search was much less than what was offered in response to the notices issued subsequent to the search. This indicates that though the assessee was well aware of its commission income had deliberately shown lesser income though all the relevant details were in his possession. It is only after the search operation that he came out with higher income. Thus after properly analysing the facts and circumstances of the case, the CIT(A) observed that there was a case of concealment of income. The assessee's contention that penalty i....
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....ugh at a later stage or disclosed true income, penalty need not be levied. No doubt, merely offering additional income will not automatically protect the assessee from levy of penalty but in a given case where the assessee's case, came forward with additional income though after detection and on account of that the assessee was not in a position to explain properly the seized material and express remorse, in his conduct un-hesitantly, the Assessing Officer might have to exercise the discretion in favour of such assessee as otherwise the expression 'may' in section 271(1)(c) of the Act remains redundant. If it is to be understood that in a case of admitted concealment penalty is not automatic. The discretion vested in the officer should be used not to levy the penalty. In our opinion, the case before us is most befitting case to exercise such discretion. It shows that there is no conclusive proof that the assessee concealed income or furnished inaccurate particulars of income. Further as seen from the facts of the case, to avoid litigation the assessee accepted the additions. The lower authorities relied on proceedings before assessing officer relating to the assessment for levying ....
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.... and accordingly the court held that without documentary proof, a statement alone cannot be utilized against the appellant. CIT v. Shri Ramdas Motor Transport [1999] 238 ITR 177/102 Taxman 300 AP. (vi) In the case of appellant, no sufficient evidence was found in course of search conclusively indicating receipt of exact amount of discount charges which is resulted in additions. (vii) It is settled principle that in case evidence is in the form of statement which is sought to be utilized against the appellant pertains to an ex-parte statement of witness, the same cannot be unilaterally utilized against the appellant without the witness being put to cross examination. In the case of Jaikisan R. Agarwal v. Asstt. CIT [2000] 66 TTJ 704 (Pune) it was held that in a case where no document was seized in course of a search showing payment of extra consideration for purchase of a property, whether additions can be made on the basis of statement recorded from third parties. It was held that any statement recorded at the back of the appellant has no evidentiary value and in the absence of any evidence seized in course of search indicating payment of extra consideration over ....
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.... of account. Similarly as in the case of Harkaran Das Ved Pal (Supra), de hors the admission of the assessee, that too on estimated basis, there is no evidence available to compute or determine undisclosed income. Therefore, the ratio of the decision of the Delhi High Court in the case of Harkaran Das Ved Pal (Supra) also applies with equal force to the amount included in the undisclosed income. 13. In our opinion, in the present case the penalty has been levied only on the basis of estimated income. The income of the assessee has been estimated in respect of various transactions carried on by the assessee as seen from the above facts. The other income is considered as undisclosed income is on account of admission by the assessee. Being on this count also penalty cannot be levied. In entirety, in this case the income of the assessee has been determined on estimate basis. There is no conclusive material to show that there is actual concealment of income. Though the addition is confirmed by the CIT(A), it does not prove that the Assessing Officer has the material to suggest that the assessee earned exact amount of profit as determined by the Assessing Officer out of these unaccoun....
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....ealment of income by the assessee. The assessee had shown expenditure as also the income from commission on estimate basis. The rates of estimate were varied by the AO. These were further varied by the CIT(A). The Tribunal, therefore, cancelled 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 adopted different estimates. It was, thus, a case of difference of opinion." 15. From the above judgement it is clear that when the Assessing Officer and the CIT(A) adopted figures of income on estimate basis and it is a case of difference of opinion between the assessee as well as the Department and that reason cannot be a basis for levy of penalty. Being so, whatever said by the Punjab & Haryana High Court in the case cited supra with regard to provisions of section 271(1)(c) of the Income-tax Act is applicable to the present case. Further as noted from the argument of the learned counsel for the assessee various Tribunals have held that unless any positive concealment is found, no penalty is leviable on the additions m....
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....n'ble Supreme Court held that where the assessee claimed that he offered additional income only to buy peace and avoid litigation and the Department did not prove concealment but simply rested its conclusion on the voluntary surrender of income by assessee in good faith, no penalty for concealment of income can be levied. In our opinion, the facts of the case before us are fully covered by this decision of the Hon'ble Apex Court. 19. In the case of CIT v. Khoday Eswarsa & Sons [1972] 83 ITR 369 (SC) Hon'ble Apex Court held that before levying penalty the Department must show that assessee had consciously concealed the particulars of his income and deliberately furnished inaccurate particulars of the same. In the present case, the Department is not able to establish either conscious or deliberate concealment of income or furnishing of inaccurate particulars of income by the assessee. The assessee undoubtedly offered the income in the assessment stage itself and not contested the addition and extended co-operation at the stage of assessment. The assessee deliberately has not concealed the particulars. 20. In our opinion, the explanation given in the present case for non-returni....