2016 (10) TMI 690

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....C of the Income Tax Act, 1961 ('the Act' hereinafter) for the assessment year (A.Y.) 2005-06 and 2006-07 vide his order of common date 04.5.2007. The penalties under dispute were levied by DCIT, Central Circle - 15 & 16, Mumbai u/s. 271(1)(c) of the Act vide his order of common date 24.3.2011. 2. In both the years, the only common issue is against the orders of CIT(A) confirming the levies of penalties u/s. 271(1)(c) of the Act on additions made by A.O. on estimate basis. The facts and circumstances in both the years are exactly identical, hence, we will take up the issue from the A.Y. 2006-07 and will decide both the appeals. Grounds raised in ITA No. 2857/Mum/2013 for A.Y. 2006-07, reads as under: 1. The Learned CIT(A) erred in conf....

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....f Rs. 30,65,633/- in the A.Y. 2005-06 and Rs. 31,15,633/- in the A.Y. 2006-07, the A.O. on account of additional cost estimated the additional profit @ 26.52% and made addition to the return of income of the assessee. Similar additions were made in the A.Y. 2005-06. Finally, the tribunal in both the years directed the A.O.to reduce the estimate at 23% by observing in para 4 in Motta Construction (in ITA Nos. 4794, 4795, 4604 & 4065/Mum/2010 dated 06.06.2012): '4. Before us, Authorised Representative (AR) submitted that estimate made by the CIT(A) was on higher side, that no seizure was made from the assessee's premises, that during 153C proceedings, assessee had filed full details of his income. Departmental Representative (DR) supported....

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....the case and the legal aspects of the matter. It is agreed that it is consequent to the search action that the details of cash expenditure, not accounted in the regular books, were discovered. It is also not disputed that in the profit and loss account accompanying the regular return, the said expenditure was not reflected, in t furnished. I am in agreement with the observation of the Assessing Officer that a search and seizure action, leading to issue of notice under s. 158BC, cannot be made use of by the assessee to his benefit to reduce his income for the impugned year. The said provision is to help the Revenue to collect tax due from undisclosed income and not for the benefit of the assessee. Further, the position taken by the Assessing....

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....dopted by lower authorities directing to reduce the profit rate at 23% of the cost of sales. The ld. Counsel for the assessee argued that once the estimation is made, there is no finding by the lower authorities that there is concealment of income or the assessee has furnished inaccurate particulars of income. According to the ld. Counsel once the estimation is made, the penalty u/s. 271(1)(c) of the Act cannot be levied. Hence, he requested for deletion of the same. On the other hand, the ld. Sr. DR supports the orders of the lower authorities. 7. We find that the authorities below have noticed that the assessee has incurred cash expenditure in both the assessment years, the basis for this finding was the documents recovered during the ....