TaxTMI 
TaxTMI 
2011 (8) TMI 1265
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....of CIT(A) confirming the action of Assessing Officer in estimating net income from work contract of the assessee @ 10% on gross contract receipts. For this, the assessee raised following grounds: "1) For that on the facts and in the circumstances of the case, the order of the 1d. C.I.T.(Appeals) was not fair and proper and on the other hand it was made contrary to law, sound and adequate principles. 2) For that the Ld. C.I.T.(Appeals) was not at all justified in determining the net income of the works contract business of the appellant @ 10% of the gross contract receipts of Rs. 1,40,59,952.00 as per which the profit was determined at Rs. 14,05,995.00. 3) For that the Ld. C.I.T.(Appeals) failed to consider the rate of net profit of the works contract business of the appellant for the previous Assessment Years before estimating and determining the net profit @ 10% for the year under appeal. 4) For that both the Ld. C.I.T.(Appeals) was not at all justified in making the addition of Rs. 10,86,736.00 in respect of the works contract business of the appellant. 5) For that the Ld. C.I.T.(Appeals) ought to have considered the written submission....
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....s also clearly admitted that they have not entered into any transaction of purchase and sale with the assessee regarding stone chips. In view of these facts, Assessing Officer referred the matter back to assessee for its comments but assessee could not state anything and considering all Assessing Officer came to the conclusion that claim of the assessee that he has purchased stone chips and other materials from the above concerns is not genuine, therefore, the amount shown as outstanding is without any basis. Accordingly, he rejected the books of accounts and proceeded to assess the income by estimating the income. Assessing Officer made disallowance by observing as under: "So, from the above discussions and documents availed, it is clear that in the case of Pinky Enterprises, one of the creditors for transportation were paid Rs. 58,215/- during the F.Y.2000-01 which were not recorded in the cash book from undisclosed sources. And in the case of other loan creditors namely (1) Sambhu Bhagat ... Rs.9,21,061/- (2) Bhagat Stone Works ... Rs. 2,640/- (3) Bibhuti Saha ... Rs.4,43,800/- (4) Apu Lodh alias Arpan Lodh ... Rs.1,69,231/- ....
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....-. Considering the net profit admitted by the appellant in the return at 319261/- the addition in this regard would be Rs. 10,86,734/-. Accordingly the AO. is directed to restrict the addition to Rs..10,86,734/- in the place of Rs. 16,15,947/-." Aggrieved, assessee is now in appeal before us. 5. We have heard rival contentions and gone through facts and circumstances of the case. Before us, Ld. Counsel for the assessee fairly stated that a reasonable estimate to net profit can be made and for this he referred net profit percentage for earlier three years ranging 1.41% to 1.92%, as may be seen from the following table: Assessment years Gross bill received Net Profit Rate of Net Profit 1998-1999 71,03,860.00 1,00,425.40 1.41% accepted 1999-2000 1,21,37,121.00 9,17,448.00 1.08% do 2000-2001 1,21,76,378.00 2,34,873.00 1.92% do 2001-2002 1,40,59,952.00 3,19,261.00 2.27% On enquiry from the bench, the Ld. Counsel fairly stated that these were accepted u/s. 143(1) of the Act and no scrutiny assessment was made. But Ld. Counsel stated that in view of very specific nature of work contr....
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....of the case, the order of the Ld. C.I.T.(Appeal) confirming the penalty order passed by the Ld. A.C.I.T., Circle- Nadia was not fair & proper and on the other hand it was made contrary to law, sound and adequate principles. 2) For that the Ld. C.I.T.(Appeal) was not at all proper and justified in confirming the penalty u/s. 271(1)(c ) of the I.T. Act, 1961 and passing the order for re-computing the penalty @ 100% on estimated income of Rs. 10,86,734.00. 3) For that the reasons adduced by the Ld. C.I.T.(Appeal) in support of confirming the penalty order are not at all convincing and as such the penalty u/s. 271(1)(c ) is liable to be waived. 4) For that both the Ld. authorities below failed to establish any mensrea and/or evil motive of the humble appellant in his penalty order passed u/s. 271(1)(c) of the I.T. Act,1961. 5) For that on the facts and in the circumstances of the case both the Ld. C.I.T.(Appeal) and the Ld. Assessing Officer have failed to establish that the humble appellant had concealed the particulars of income or had deliberately furnished inaccurate particulars in respect of the purchases made by the appellant from the sundry cr....
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.... in cancelling the penalty under section 271(1)(c) of the Act imposed by the Assessing Officer in the admitted facts that the Assessing Officer after rejecting the book results estimated the net profit of the assessee at the rate of 10 per cent. of the total receipt in the return and on difference of profit so estimated, imposed additional tax ? In Chairman, SEBI [2006] 131 Comp Cas 591; [2006] 5 SCC 361, the question before the Supreme Court was whether once it is conclusively established that a mutual fund has violated the terms of certificate of registration and statutory regulations, the imposition of penalty becomes a sine qua non of the violation. Answering in the affirmative and allowing the appeals, the Supreme Court held that mens rea is not an essential ingredient for contravention of the provisions of a civil Act. Unless the language of the statute indicates the need to establish the element of mens rea, it is generally sufficient to prove that a default in complying with the statute has occurred and it is wholly unnecessary to ascertain whether such a violation was intentional or not. The breach of a civil obligation which attracts a penalty under the provision....
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....e cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. If we examine the facts of the p....