TaxTMI 
TaxTMI 
2017 (9) TMI 574
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....the ld CIT(A) of even date ie, dated 28.04.2015 & for AY 2008-09 against the order of ld CIT(A) dated 29.04.2016. In case of Mamta Haldia, the appeal relates to A.Y.2003-04, 2004-05, 2005-06 & 2007-08 against the order of the ld CIT(A) of even date ie, dated 23.04.2015. Given the similarity of facts and common ground of appeal involved in all these cases, all these appeals were heard together and are being disposed off by this consolidated order. 3. At the outset, the ld Counsel for the assessee submitted that the case of Ravi Haldia may be taken as a lead case. With the consent of both the parties, for the purpose of discussion, the facts in case of Ravi Haldia as the lead case have been considered and the respective ground of appeal taken and contentions advanced by both the parties are considered. ITA No. 211/JP/2017 4. Briefly the facts of the case are that survey and search operations were carried at the residential and business premises of the assessee. Thereafter assessment proceedings were completed u/s 153A read with section 153B/143(3) determining total income at Rs. 1,30,67,878/-. In the assessment order, the AO after rejection of books of accounts u/s 145(3) of....
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....udited. However, there are certain discrepancies and we have already upheld the application of provisions of section 145(3). 77.1 Therefore, we are of the view that for the year under consideration if GP rate at 15% is applied against GP rate shown by assessee at 11.60% and against GP rate of 30% applied by the AO and ld. CIT(A), then it will meet the ends of justice. We order accordingly. 78. Ground No. 5 and 6 are against applying 25% of cash and URD purchases and enhancement on account of unverifiable purchases from some of registered dealers and thereby making addition @ 25%. 79. Similar issues were involved in assessment year 2007-08. We have already disposed off these grounds and have allowed the issue in favour of the assessee. For the same reasoning, these grounds of the assessee are allowed for the year under consideration also." 6. Pursuant to the order of the Coordinate Bench in the quantum proceedings, where the trading additions of Rs. 6,96,990 applying G.P rate of 15% was sustained as against G.P rate of 13.60% offered by the assessee in its return of income, the AO imposed a penalty of Rs. 2,34,607 u/s 271(1)(c) of the Act. The reasoning adopted by the AO....
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....nce can be place on ratio of facts in case of CIT Vs. Kalindi Rail Nirman Engg. Ltd. (2014 51 Taxmann.com 523/365 ITR 304 (Delhi), (following the decision of Apex Court in case of Mak Data Pvt Ltd) where assessee could not explain the discrepancies and AO has to resort to estimation of profit by adopting 11% on gross contract receipt and initiated penalty proceeding. 3.3.6 Very recently, Hon'ble ITAT, Jaipur Bench in case of M/s Antiquariat Vs DCIT (ITA No. 13&14/JP/2013 dated 27/03/2015 has followed the decision of Mak Data Pvt Ltd and Kalindi Rail Norman Engg. Ltd and confirmed the imposition of penalty on estimate. In view of these facts, AO's action for levying penalty u/s 271(1)(c) of the Act, is hereby sustained. Assessee,s appeal stands dismissed." 8. During the course of hearing, ld. AR submitted that the assessee has maintained regular books of accounts consisting of cash book, ledger, stock register, purchase and sale bills and vouchers and the same were produced before the A.O from time to time. There is neither change nor variation in the system of accounting maintained by the assessee in the year under appeal as compared to preceding years. The learned A.O has....
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....nt of income or filing of inaccurate particulars of income and that certain disallowance/addition could legally be made in the assessment proceeding on the preponderance of probabilities, but no penalty could be imposed u/s 271(1)(c) on the preponderance of probabilities and revenue has to prove the guilty mind of the assessee. But in this case it is lacking on the part of the revenue. 8.1 It was further submitted that the learned CIT(A) has also relied upon the judgment of Hon'ble Tribunal Jaipur Bench Jaipur in ITA No. 13 and 14/JP/2013 for AY 2004-05 and 2005-06 in the case of Antiquariat Vs. DCIT, CC-2 Jaipur. The facts of this case i.e. Antiquariat case are wholly different from the facts of the appellant assessee's case. In Antiquariat case are wholly different from the facts of the appellant assessee's case. In Antiquariat case additions were made and confirmed on the basis of bogus purchase detected by the department in search/investigation made by the various authorities including assessing officer. But the present appeal is simply a case of additions made by the application of higher GP rate which too was reduced from 30% to 15% by the Hon'ble Tribunal in quantum appea....
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.... Commercial's case and held that mensrea is necessary ingredient for imposition of penalty under the section. This position was revisited in Reliance Petro Products' case reported in CIT vs. Reliance Petro Products Pvt. Ltd 322 ITR 158 (SC) when the Hon'ble Supreme Court held that the law laid down in Dilip N Shroff's case as to the meanings of the words "conceal" and "inaccurate" continues to be good law. 17. In the cases of HB Leasing & Finance Co Ltd 334 ITR 367 (Del); and Raj Overseas 336 ITR 261 (P&H) it was held that no penalty leviable where addition/disallowance is in regard to debatable issue. In this regard it is respectfully submitted that in the case of present assessee, the AO applied GP rate of 30% but the Hon'ble Tribunal reduced it 15%. 18. The assessee craves leave to refer to and rely upon the decision of Hon'ble Tribunal Jaipur Bench in the case of Kamlesh Dangayach Prop of Green Fire Vs. ACIT, Circle 1 Jaipur in ITA No. 18-19/JP/2012 dated 16-5- 2012. In this case the AO applied GP rate of 11% keeping in view of the past history of GP at 14% the worthy CIT(A) reduced such GP addition. The Hon'ble Tribunal has accordingly held that sustaining of high GP rat....
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.... penalty could be imposed u/s 271 (1)(c) on the preponderance of probabilities and revenue has to prove the guilty mind of the assessee. But in this case it is lacking on the part of the revenue. 22. The ld DR is heard who has vehemently argued the matter and supported the order of the AO in levy of penalty and the order of the ld CIT(A) in confirming the same. 23. The Rajasthan High Court in the case of CIT vs. Krishi Tyre Retreading & Rubber Industries (supra) has held as under: "8. On a perusal of facts, it is apparent that the Tribunal in the regular proceedings had upheld the addition by observing that the Assessing Officer, though justified in making some addition, however, it observed that even the Assessing Officer had made an estimated addition for he was not sure as to exact amount of addition, to be made and considering the peculiar facts of the case, the Tribunal modified the order by observing that "we find justification in the order of the lower authorities who have rightly made the addition on estimate basis. But the same is looking on higher side due to the peculiar facts and circumstances of the case. By modifying both the orders of the lower authorities, ....
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....There is no dispute that trading addition was made on the basis of estimation because the results shown by the assessee was not found satisfactory by the AO. Where an estimated addition was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee to the extent of amount in difference shown by the assessee and estimated by the department depends upon the facts and circumstances of the case. .............. Under these circumstances when in the present case there was no positive evidence beyond doubt regarding estimated trading addition that the amount in difference between the result shown by the assessee and that estimated by the AO was resultant of concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee, penalty under section 271 (1) (c) of the Act cannot be levied. The AO had rejected the books of account and estimated the trading addition on the basis that the assessee had not maintained site-wise account, no head-wise details of claimed purchases were furnished, no separate head of expenses was maintained, work in progress was not declared, some wages were shown outstand....
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....levy of penalty. There is no positive act or finding recorded by the authorities which proves the act of concealment of income or furnishing inaccurate particulars of income on part of the assessee. Further, there is no finding that bogus purchases have been detected during the course of search operations and even the additions of Rs. 15,903/- made by the AO on this account has also been deleted by the Coordinate Bench in the quantum proceedings. Even looking at the quantum of bogus purchases of Rs. 15,703 vis-à-vis trading addition of Rs. 6,96,990 so sustained, there is a fundamental fallacy in the very basis for levy of penalty by the AO where he says that penalty has been levied on account of unverifiable purchases whereby the assessee has failed to prove the genuineness thereof. It is thus a case for levy of penalty purely on trading addition on an estimate basis which cannot be sustained. 26. As we have held above, the basis for levy of penalty was trading addition as sustained by the Coordinate Bench in the quantum proceedings. The ld CIT(A) has however confirmed the levy of penalty holding that excess stock and valuation thereof has been confirmed by the Coordinate....
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.... assessment was completed u/s 143(3) for the above assessment year on 24.11.2006 at a total income of Rs. 1,27,98,787/- by applying a GP rate of 35% as against declared GP rate of 28.70%. The Tribunal reduced the GP rate from 35% to 30% and thereby sustained trading addition of Rs. 6,25,112/- on which penalty of Rs. 2,06,287 was levied by the AO u/s 271(1)(c) of the Act. 31. In the context of quantum proceedings, the relevant finding of the Coordinate Bench in ITA No. 321/JP/2008 dated 31.07.2008 reads as under:- "10. Likewise in the case of Dinesh Haldia Prop. M/s D.H. Exports, the assessee could not be produce even one of the 24 suppliers before the A.O. from whom the assessee claimed to have made purchases of the goods exported nor any one of them was found on the given address. The A.O. had thus invoked the provisions of S. 145(3) of the Act and had estimated the income by applying a G.P. rate of 35% on the declared sales against 28% shown by the assessee resulting into trading addition of Rs. 30,17,684/-. In the present case, during the A.Y. 2002-03 the assessee has shown G.P. rate of 62.86%. The reason for declining in G.P. rate this year was explained that there was....
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.... its appeal for AY 2007-08, Dinesh Haldia, the assessee has taken the following ground of appeal: "That the learned CIT(Appeals) erred in sustaining penalty of Rs. 29,434/- levied by the AO u/s 271(1)(c) of the I.T. Act, which sustaining of levy of penalty of Rs. 29,434/- u/s 271(1)(c) of the I.T. Act is most arbitrary, unjust and untenable in fact and in law and in the alternative excessive w.r.t. facts and circumstances of the case." 36. Briefly the facts of the case are that the assessment u/s 143(3) r/w sec. 153A/153B was completed on 30.11.2009 wherein addition of Rs. 13,00,000/- was made by the AO for unverifiable purchases and a trading addition of Rs. 1,95,137/- on protective basis by way of applying 30% GP rate against the declared GP rate of 11.8% was also made. In first appeal, the learned CIT(A) sustained additions of Rs. 3,25,000/- being 25% of unverifiable purchases of Rs. 13,00,000/-. The learned CIT(A) also sustained trading addition of Rs. 1,95,137/- on protective basis made by the AO by way of applying 30% GP rate against the declared GP rate of 11.88%. In second appeal before the Tribunal, the Tribunal deleted the addition of Rs. 3,25,000/- sustained by lea....
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.... trading additions have been sustained on estimate basis and penalty has been levied thereon. Similar arguments have been canvassed by both the parties and for the purposes of brevity, we are not reproducing the same. Our findings and directions contained in ITA No. 211/JP/2017 and ITA No. 210/JP/17 shall apply mutatis mutandis to these appeals as well. In the result, the penalty is deleted and the appeals of the assessee for the impunged assessment years are allowed. ITA No. 219/JP/2017 40. In its appeal for AY 2003-04, Mamta Haldia, the assessee has taken the following ground of appeal: "That the learned CIT(Appeals) erred in sustaining penalty of Rs. 13,757/- levied by the AO u/s 271(1)(c) of the I.T. Act, which sustaining of levy of penalty of Rs. 13,757/- u/s 271(1)(c) of the I.T. Act is most arbitrary, unjust and untenable in fact and in law and in the alternative excessive w.r.t. facts and circumstances of the case." 41. Briefly the facts of the case are that the assessment u/s 143(3) r/w sec. 153A/153B was completed on 30.11.2009 wherein addition of Rs. 11,84,063/- was made by the AO for unverifiable purchases of Rs. 11,84,063/- and simultaneously, a trading add....
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....lying G.P. rate of 30% against the declared G.P. rate of 10.11% which was upheld by the learned CIT(A). The Tribunal reduced the GP rate to 15% and consequently reduced trading addition from Rs. 4,50,545/- to Rs. 1,10,785/-. On the trading additions so sustained, the AO levied the penalty of Rs. 37,291 u/s 271(1)(C) of the Act. ITA No. 222/JP/2017 46. In its appeal for AY 2007-08, Mamta Haldia, the assessee has taken the following ground of appeal: "That the learned CIT(Appeals) erred in sustaining penalty of Rs. 14,830/- levied by the AO u/s 271(1)(c) of the I.T. Act, which sustaining of levy of penalty of Rs. 14,830/- u/s 271(1)(c) of the I.T. Act is most arbitrary, unjust and untenable in fact and in law and in the alternative excessive w.r.t. facts and circumstances of the case." 47. Briefly the facts of the case are that the assessment u/s 143(3) r/w sec. 153A/153B was completed on 30.11.2009 wherein addition of Rs. 7,50,000/- was made by the AO for unverifiable purchases of Rs. 7,50,000/- and simultaneously a trading addition of Rs. 1,76,838/- on protective basis by way of applying 30% GP rate against the declared GP rate of 10.02% was also made by the AO. In firs....