AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 763
X X X X Extracts X X X X
X X X X Extracts X X X X
....e penalty, after deleting the income by way of excess cash, undisclosed stock and investment in House Property, which was surrendered during the course of survey U/s 133A carried out at the business premises." 2. The assessee is in trading of gold and silver ornaments and pawning business. The return for A.Y. 2006-07 was filed on 31/10/2007 declaring total income of Rs. 15,19,443/-, which was assessed by the Assessing Officer at Rs. 76,65,136/-. The following additions were made by the Assessing Officer under the heads as under: i. Excess cash Rs. 1,76,604/- ii. Excess stock Rs. 29,79,970/- iii. House property Rs. 25,23,200/- iv. Pawning Rs. 4,65,919/- Thus, total addition of Rs. 61,45,693/- was made by the Assessing Officer. Penalty U/s 271(1)(c) was initiated by the Assessing Officer separately (not specified the penalty was for concealing of particulars of income or furnishing in accurate particulars of income). 2.1 Before imposing penalty U/s 271(1)(c), the Assessing Officer gave reasonable opportunity of being heard, which was availed by the assessee. Reply of the assessee has been reproduced by the Assessing Officer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....k of Rs. 52,87,062/- was justified. Moreover the stock of Rs. 52,87,062/- was valued on market price and the average rate of gold was to Rs. 11060/- and rate of silver was Rs. 19550/-. On that basis he had surrendered Rs. 8,00,000/- and claimed it reasonable and requested that no addition is to be made under this head. The assessee's plea was not found acceptable to the Assessing Officer as the assessee already taken the value of gold @ 1175 per gm and silver @ 18,750/- per KG, which was already more than the rate requested to be adopted by the AR of the assessee. Therefore, addition of Rs. 27,79,970/- was made on account of excess stock found during the course of survey after giving the credit of stock of Rs. 15,07,092/- as per balance sheet as on 31/3/2006 and the stock of Rs. 8.00 lacs already surrendered. The Hon'ble ITAT has sustained the addition of Rs. 19,87,062/- and he held concealed income of Rs. 27,87,062/- under this head. (iii) Unexplained investment in house property:- During the course of survey a copy of agreement was found. As per the said agreement, the assessee purchased a house property No. M-80, Rambal Road, Ajmer for Rs. 46,11,000/- and the advance payment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as well as during the course of assessment proceedings. The assessee challenged these additions before the appellate authority without any basis and cogent evidences. Therefore, there has been concealment of income, which was detected during the course of assessment. He relied upon the various case laws. Thus, he imposed minimum penalty i.e. 100% on tax sought to be evaded at Rs. 18,65,860/-. 3. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had partly allowed the appeal by observing that the cash of Rs. 1,00,000/- was found undisclosed on which penalty is leviable. The assessee has surrendered income of Rs. 3,09,000/-, accordingly he cancelled the penalty on account of excess cash. Under the head excess stock, he cancelled the penalty on surrender made under this head at Rs. 8.00 lacs. Under the head unexplained investment in house property, he found unexplained investment in the house at Rs. 22,23,200/- as discussed by the Assessing Officer in the penalty order. The assessee has not offered any amount on this account in income tax return filed by him. Thus, he confirmed the penalty U/s 271(1)(c) and penalty l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion always remains estimation and cannot take place of the reality. Therefore, it cannot be said that even the addition sustained by the Hon'ble ITAT up to Rs. 19,87,062/- was the excess stock found with a mathematical precision. It is undisputed fact that during the course of survey, no books of account were found as not been maintained. However, the same were prepared later and the same were also got audited. The assessee submitted tax audit report at all stages including the Hon'ble ITAT. However, the same was completely ignored. The ld Assessing Officer accepted the sale, purchase, opening and closing balance figure even not disturbed the GP rate disclosed by the assessee. In the preceding year, the assessee has meagre sale of Rs. 14.83 lacs on which the GP has been declared @ 26.62% whereas during the year under consideration, total sales were 94.05 lacs on which GP @ 7.23% disclosed. Due to huge increase in the turnover resulted in sharp decline in GP rate. He further argued that there was no abnormal stock was found during the course of survey to turnover ratio. He has drawn our attention on page No. 23 of the paper book and tried to explain that average stock and average sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Merely because, the revenue refused to accept the claim, it cannot be said that the assessee had concealed its income for which he relied on the decision of Hon'ble Gujarat High Court in the case of National Textiles Vs. CIT (2001) 249 ITR 125 (Guj), Cit Vs Santosh Financiers (2001) 247 ITR 742 (Ker) and Balaji Vegetable Products (P) Ltd.Vs. CIT (2007) 290 ITR 172 (Kar.) He further relied on the following decisions:- (i) CIT Vs Smt. Geeta Devi (2002) 75 TTJ 362 (Del) for surrender on account of discrepancy found in the closing stock. (ii) ITO Vs Bombaywala readymade Stores 271 ITR 1 ITAT Part 1 (TM) for not maintaining day to day stock register. (iii) ITO Vs Shree Balaji Industries (1991) 40 TTJ 222 (Pune) for differences found in the stock during the survey. (iv) ITO vs Dr. Anand Chhabra (2007) 107 TTJ (Jd) 831 for addition based on statement recorded during the survey. (v) K.L. Kathuria Vs. ITO (1981) 11 TTJ (Del) 85 for discrepancy found in the stock. He further argued that no penalty can be levied on mere estimation of income added in the hands of the assessee. The Hon'ble Delhi High Court in the case of CIT Vs. Aero Traders Pvt. Ltd. (2010) 322 ITR 316 (Delh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the order of the ld CIT(A). 5. At the outset, the ld DR has vehemently supported the order of the Assessing Officer and argued that the penalty order itself shows satisfaction of the Assessing Officer, item wise additions made by the Assessing Officer and during the course of survey all incriminating documents have been considered for assessing the income of the assessee head wise. The ld Assessing Officer in penalty proceedings also has concluded that the assessee had concealed income under the various heads. Therefore, order of the Assessing Officer may please be confirmed. 6. We have heard the rival contentions of both the parties and perused the material available on record. It is undisputed fact that the assessee was not maintaining regular books of account but filing the return regularly and disclosing the closing cash balance as well as stock in the balance sheet, which has also been considered by the Assessing Officer while computing the concealed income but whatever evidence found during the course of survey, the assessee prepared a cash flow fund and also audit report was filed, which has not been controverted by the ld Assessing Officer and ld CIT(A). Whatever disc....