TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 1237
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....t the assessee is a company engaged in Kattha business. A search under section 132 of the Income Tax Act, 1961 (the Act) was conducted at the residence as well as business premises of Mahesh Mehta Group of Companies on 30th June, 2009. The assessee is a concern of Shri Mahesh Mehta group of companies. In response to notice under section 153A of the Act the assessee stated that the return already filed on 30th September, 2008 may be treated as return in response to notice issued under section 153A of the Act. On the basis of various details filed by the assessee from time to time and on the basis of material seized during the course of search, the AO completed the assessment on a total income of Rs. 15,88,012/-. In the said order the AO made....
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.... of these transactions, and the profit thereon, should alone be brought to tax and not the entire purchases as such purchases are followed by undisclosed sales resulting in rotation of money. 4.4. I have considered the rival claims. There is no evidence to specifically link these purchases to the sales effected in the subsequent FY. Therefore, these purchases cannot be treated as transactions related to Assessment Year 2009-10. These amounts have to be brought to tax in this Assessment Year 2008-09. However, it is undeniable that in unaccounted transactions purchases are followed by sales and the cycle generates unaccounted income. What can be taxed in such situations is the peak transaction and the profit generated on the gross transact....
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....(c ) of the Act is leviable. Further when the addition has been made on estimate basis which has been substantially reduced by the Ld. CIT(A) in the appellate proceedings, therefore, levy of penalty u/s 271(1)(c ) of the Act in the instant case is also not justified. For the above proposition he relied on the decision of Hon'ble Delhi High Court in the case of Principal CIT vs. Fortune Technocomps P. Ltd. vide ITA 313/2016 dated 13th May, 2016. Referring to the said decision he submitted that the Hon'ble Delhi High Court has held that once the assessment order of the AO in the quantum proceedings was altered by the Ld. CIT(A), in a significant way, the very basis of initiation of penalty proceedings was nonexistent. Further the AO has recor....
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....he conditions prescribed u/s 271AAA of the Act, therefore, no penalty is leviable u/s 271(1)(c ) of the Act. 8. I have considered the rival arguments made by both sides, perused the orders of the authorities below and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find in response to notice u/s 153A of the Act the assessee had submitted that the original return filed on 30th September, 2008 may be treated as return in response to notice u/s 153A of the Act. The AO completed assessment on a total income of Rs. 15,88,012/- after allowing unabsorbed depreciation of Rs. 16,84,255/-. Out of the two additions made by the AO the major addition of Rs. 20,27,478/- has been deleted by ....
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....e order in the quantum proceedings has been altered by the Ld.CIT(A) in a significant way. Therefore, in view of the decision of Hon'ble Delhi High Court in the case of Principal CIT vs. Fortune Technocomps P.Ltd.(supra), the very basis of initiation of penalty proceedings has been rendered as nonexistent. The relevant observation of the Hon'ble High Court at para 7 reads as under. "7. Having examined the impugned order of the ITAT and having considered the submissions of the Ld.Counsel for the Revenue, the Court is unable to discern any legal infirmity in the analysis or conclusion reached by the ITAT. Once the assessment order of the AO in the quantum proceedings was altered by the CIT(A) in a significant way, the very basis of initiati....