TaxTMI 
TaxTMI 
2014 (7) TMI 633
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.....12.2009 for all the three years. During search and seizure operations documentary evidence was found and seized according to which the actual turnover for certain months of the year was found to be much higher than the turnover shown by the assessee in its return of income. Accordingly, the assessing officer extrapolated the turnover for the entire year. During appeals before the CIT(A) and the Tribunal, it was held that the turnover has been correctly calculated. However, the net profit had been reduced by the CIT(A) and further reduced by the Tribunal. During penalty proceedings, the issue was examined and it was held by the assessing officer that the assessee has not only been concealing income, but had also been filing inaccurate particulars of income. Accordingly, following penalties were imposed in the three years: A.Y. 2008-09 Penalty Imposed @ 100% Rs. 14,18,852/- A.Y. 2007-08 Penalty imposed @ 100% Rs. 38,56,477/- A.Y. 2006-07 Penalty imposed @ 100% Rs. 35,56,130/- 4. On appeal the CIT(A) observed that the argument of the assessee that proper opportunity was not provided and that he did not know what charge to defend against is incorrect and not tenable. A mere look a....
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....tial evidence. The additions in question cannot be termed as agreed additions because there is nothing that the assessee had agreed to suo moto. 6. The CIT(A) observed that the conduct of the assessee has been such that it certainly calls for the levy of penalty. First of all, the assessee arranges its financial affairs in such a way as to write duplicate sets of account. Thereafter, portions of the duplicate accounts are seized during search operations. Even at this point of time, the assessee does not come clean. In the return of income filed consequent to the search operations, the assessee does not disclose either its true turnover or the true profit percentage. Even at this stage, additions have to be resorted to and the turnover is ultimately confirmed in appeal It is only when the assessee finds overwhelming evidence against that it admits to the turnover. The cases, therefore, clearly call for confirmation of penalties. The CIT(A) took support from the judgement of Hon'ble Delhi High Court in the case of CIT vs. HCIL Kalindee ARSSPL (Delhi High Court). The operational part of that order is quoted below:- "The assessees claimed deduction u/s 80IA on the ground that it has ....
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....ssessee has not shown any "tangible materiel" or basis as to why a clear statutory provision which excludes works contracts was ignored." 7. The CIT(A) observed that the above decision categorically placed the onus of tax compliance at tile doorstep of the assessee, holding that even statutory certifications do not prevent the levy of penalty. It is clear from above that the conduct of the assessee is far from bona fide and there was a clear-cut strategy to not only evade taxes, but also to file inaccurate particulars of income even after search operation. Therefore, the CIT(A) confirmed the penalty u/s 271(1)(c) of the Act. However, he directed the AO to determine the quantum of penalties after determining the concealed income accurately taking into account the reduction in profit percentage by the Tribunal. Against this the assessee is in appeal before us. 8. The learned AR submitted that while initiating penalty proceedings u/s 271(1)(c) the Assessing Officer has not said whether the same is for concealment of income or for furnishing of inaccurate particulars. In the case of CIT vs Manjunatha Cotton & Ginning Factory (2013) 053(1) ITCL 0002 it was held that the person who is ....
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....allowances have been made by the Assessing Officer at 15% and ultimately the same is reduced to 5% by the ITAT after reducing the payments made by cheque and also payments made to Government Authorities. In the process of making assessments the Assessing Officer has not estimated the profits on a comparative basis. In respect of turnover the estimate has been made by calculating the average monthly turnover and the same is multiplied by 12 to arrive at the annual turnover. 10. The AR submitted that the offer made by the assessee in respect of escapement of turnover on account of compulsion of payment to landlords and also to suppliers is not found false by the Assessing Officer. The AR submitted that the turnover is accepted to purchase peace with the Department, therefore, no presumption of concealment or furnishing of inaccurate particulars could be attributed to the assessee for the subject assessment year. In view of the facts and circumstances the Tribunal may cancel the penalty levied. The DR placed reliance on the decision of Hon'ble Karnataka High Court in the case of CIT vs Manjunatha Cotton & Ginning Factory (2013) 053(1) ITCL 0002. The AR also relied on the followin....
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.... 2 wherein held as under: "Penalty u/s. 271(1)(c) - Concealment Explanation not found false but bona fide though not proved conclusively - Penalty proceedings were initiated by assessing authority on basis of agreed addition on account of unexplained investment in stock. There was no evidence or material on record to suggest that the assessee has deliberately acted in defiance of law to conceal its income in the form of excess stock. Since its explanation has been accepted to a great extent, the appellate authority held that there could be no presumption of concealment or furnishing of inaccurate particulars since there was no mala fide intention on the part of the assessee. The Tribunal also upheld the order of the first appellate authority deleting the penalty. "Held, when two fact finding authorities were satisfied that the explanation offered by the assessee is not false and it is a bona-fide one, though the assessee has failed to conclusively prove the explanation offered, there is no justification to interfere with the well considered order passed by the Tribunal." 13. On the other hand, the learned DR relied on the order of the CIT(A). 14. We have heard both the parties ....