TaxTMI 
TaxTMI 
2015 (12) TMI 975
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....s unreasonable, while justifying the levy of penalty under section 271(1)(c) on estimated brokerage income and qua non discharge of burden under section 271(1)(c) Explanation 1 w.e.f 1.4.1976 in accordance with National Textiles vs. CIT (2001) ITR 125 (Gujarat)?" 3. A few facts relevant for the decision of the controversy involved as narrated in ITA No.386 of 2014 may be noticed. The appellantassessee is a Fellow Chartered Accountant by profession and operating from his office cum residence at 94-D, BRS Nagar, Ludhiana. A survey was conducted under Section 133A of the Act at the premises of the appellant. The statement of the appellant was recorded on 15.6.2004. Thereafter on 6.7.2004, notice under section 148 of the Act was issued to the appellant on 13.7.2004. The appellant made a surrender of Rs. 27,00,000/- in the assessment years 2004-05 and 2005-06 i.e Rs. 15,00,000/- and Rs. 12,00,000/- respectively. Thereafter, in response to the notice dated 6.7.2004 under section 148 of the Act, the appellant filed return of income on 30.3.2005 declaring an income of Rs. 45,000/- and the assessment under Section 147 read with section 143(3) of the Act was completed on 30.3.2006 at an a....
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....for. The Tribunal was thus in error in maintaining the levy of penalty on the assessee. Reliance was placed on judgment of Gujarat High Court in National Textiles vs. CIT, (2001) 249 ITR 125. 6. Learned counsel for the revenue while supporting the findings recorded by the Tribunal urged that there was concealment of income by the assessee and penalty under Section 271(1)(c) of the Act had been rightly imposed. 7. A perusal of the findings recorded by the Tribunal show that the assessee had not furnished his return of income for the year under consideration within the time allowed under section 139 of the Act. Survey operations were carried out under Section 133A of the Act at the office premises of the appellant who was engaged in giving accommodation/book entries on account of long/short term capital gains/gifts/loans by charging commission. The modus operandi was that cash received from different beneficiaries was deposited in various bank accounts of the appellant, his family members and other share brokers from where cheques were issued in favour of clients for bogus capital gains/share profits/gifts etc. The appellant in his statement recorded during the course of survey....
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....timate was made instead of 10% - 12%. ii)Second case relied on is in case of Bharti Airtel Limited vs. CIT(supra). In that case the addition was made on account of disallowances under Section 14A read with Rule 8D. The Tribunal observed that applicability of rule 8D itself was doubtful in assessment year 2007-08 and therefore penalty was deleted particularly because the assessee had made all the disclosure. We find rule 8D was held not to be applicable in assessment year 2007-08 by Hon'ble Bombay High Court in case of Godrej and Boycee vs. DCIT 328 ITR 81 (Bom.). Therefore, even if addition was made it was made on account of doubtful item and in any case the particulars have been disclosed by the assessee, therefore, penalty was correctly deleted. iii)Next case relied on is in case of Fine Line Construction Pvt. Limited vs. ACIT (supra) of Delhi Bench of the Tribunal. In that case the books of account were rejected and net profit rate of 5% was applied. Penalty was deleted as it was a case of simply estimate. iv)Next case relied on is in case of Deepshikha Maheshwari vs. ITO(supra) where the addition was made on account of undisclosed investment in co....
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....n. iii)Next case relied on is CIT vs.Dhillon Rice Mills (supra). In this case also the decision of CIT vs. Metal Products has been followed and it was observed that concealment was not proved, therefore penalty could not be imposed. iv)Next case relied on by the learned counsel for the assessee is that of CIT vs. Valimkbhai H.Patel (supra). In this case the assessee has filed return of income declaring loss of Rs. 337414/-. Income was assessed at Rs. 294480/-. The addition was mainly on account of loss of salt for which a certificate from Deputy Commissioner was filed. However, the Assessing Officer accepted the loss but reduced the value of the salt from Rs. 118 to Rs. 80. Penalty was deleted mainly by following the earlier decision of Hon'ble Punjab and Haryana High Court in case of CIT vs. Prithipal Singh and co. 183 ITR 69 wherein it was observed that mere reduction in loss would not lead penal consequences. .......... In case before us also the surrender was not made voluntarily and the documents were found in this assessment year, still the assessee had not bothered to file any return. Even in assessment year 2004- 05 and 2005-06, only part of i....