TaxTMI 
TaxTMI 
2013 (7) TMI 481
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or supplied any materials to the assessee. On the other hand, he had supplied only the bills. In view of the statement made of Chandrakant T. Shah and in view of the claim of the assessee that the purchases and sales are quantitatively verifiable, the books of account maintained by the assessee were rejected and assessment was completed on the basis of the difference in the gross profit ratio between the assessee and rate prevailing in the market. Finally, the Assessing Officer by two separate orders dated August 28, 2003, had levied penalty on the ground that the provisions of clause (B) of Explana- tion 1 to section 271(1)(c) of the Act are attracted since the assessee was not able to furnish particulars regarding the source of goods purchased and evidence in connection with the actual price paid. Aggrieved by the orders passed by the Assessing Officer, the assessee preferred appeals in I. T. A. Nos. 230 of 2003-04 and 231 of 2003-04 before the Commissioner of Income-tax (Appeals) (in short "the CIT(A"), who by a common order dated June 29, 2005, reversed the orders of the Assessing Officer thereby deleted the penalty holding that since the levy of penalty relates to addition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....deleted the penalty and the order does not require any interference from this court. Heard the learned counsel appearing for the parties and perused the materials on record. According to the Revenue, the assessee has produced various bills towards the purchases made from various proprietary concerns of Shri Chandrakanth T. Shah and his associates for the year 1999-2000. To test the veracity of the bills, the Revenue examined the said Shri Chandrakanth T. Shah, who in his sworn statement, stated that he had supplied only the bills and not made any sales of goods/materials to the assessee. Because of the inability on the part of the assessee to produce the confirmation from the suppliers concerned at the time of assessment proceedings and under the impression that the assesseecompany would have purchased the materials without bills elsewhere and utilised the bills supplied by Shri Chandrakanth T. Shah as a substitute and since the assessee has not chosen to cross-examine Shri Chandrakanth T.Shah, the Assessing Officer proceeded to levy penalty under section 271(1)(c) of the Act on the footing that there is concealment of income and non-furnishing of particulars by the assessee.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....akes it clear that if the Assessing Officer in the course of assessment proceedings, is satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income, he is empowered to levy penalty subject to the explanation given by the assessee found to be false or not bona fide. In the present case, admittedly, for the relevant assessment years, the assessee in his assessment has stated that purchases have been made from one Shri Chandrakanth T. Shah. In order to test the veracity of the statement made by the assessee and purely relying on the sales of the company, the Assessing Officer examined the proprietor of the concern, namely, Shri Chandrakanth T. Shah, who, not only denied the sale of goods but also admitted that he has furnished the bills and not the materials. In order to give an opportunity to the assessee, he was allowed to cross-examine Shri Chandrakanth T. Shah, but the assessee has not chosen to do the same. Therefore, the Assessing Officer has come to the conclusion that the action of the assessee comes within the meaning of concealment and that the explanation offered is inadequate and accordingly, passed the orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... simply confirmed the decision of the appellate authority. Areading of the impugned order would show that no cogent reason was given by the Tribunal to come to a conclusion that the Assessing Officer has failed to establish that the assessee has intentionally and deliberately concealed the income. In this context, the learned counsel for the respondent submitted that the Assessing Officer has erred in ignoring the facts and the legal position that the additions made on the grounds of reduction in the gross profit ratio, ought not to be taken for levy of penalty as the additions to income are eventually due to estimation of profit and the estimate made by the Assessing Officer without taking cognizance of composition of materials sold, volume of transactions for specified items, volume of wastage incurred and price competitiveness due to locational factors, etc., and the income estimated being much higher than that returned by the appellant, would not come under concealment on the part of the appellant. We are unable to accept this contention of the assessee. The rebuttal on the said of the assessee must be on materials relevant and cogent. It is for the fact finding body to j....