2018 (1) TMI 1073

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....profit @4% of the estimated sale value of suppressed production which was nothing but concealed income. Under such circumstances, he should have confirmed the penalty. 4. On the facts & in the circumstances of the case, the Ld.CIT(A), Aurangabad should have confirmed the penalty atleast to the extent of Rs. 76,48,922/-, the income offered by the assessee during the assessment proceedings which was nothing but concealed income. 5. On the facts & in the circumstances of the case, the order of the Ld.CIT(A), Aurangabad be quashed and that the order of the AO be restored. 6. The appellant prays leave to adduce such further evidence to substantiate its case as the occasion may demand." 3. Briefly stated relevant facts of the case include that assessee is a company engaged in the manufacturing of TMT bars and MS round bars. Assessee filed the return of income on 30-09-2009 declaring total income of Rs. 2,28,22,000/-. Consequent to enquiry/investigation conducted by the Directorate General of Central Excise Intelligence (DGCEI) on the assessee, it is found that the assessee is engaged in removal of the goods clandestinely and outside the books. Eventually, the assessee submitted a ....

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....(DGCEI). Further, the assessee has also admitted the said clandestine removal of goods in the statement recorded in investigation by DGCEI and also before the Settlement Commission of Customs and Excise Department. The assessee has paid the Excise Duty and the Settlement Commission has levied token penalty in respect of the said clandestine sale out of the books. In addition to this the suppressed production in assessee's case is also established and also correctly rejected the books of account by application of provisions of section 145 of the Income-tax Act,1961. In view of this position, the modus operandi of the assessee's unaccounted production has not only been proved by the Income-tax Department but also other Departments like Excise and DGCEI. Therefore, I am satisfied that, the assessee concealed the particulars of income to the extent of Rs. 1,81,51,470/- on account of suppressed profit undisclosed turnover out of the books of accounts and committed a default under section 271(l)(c) of the Income-tax Act,l961. Accordingly, I levy a minimum penalty of Rs. 56,08,774/- being 100 % of tax sought to be evaded (Rupees fifty six lakhs eight thousand seven hundred and sev....

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....estinely removed goods produced and sold at the back of the Departments and therefore, this portion of income does not constitute estimated profits. Therefore, as per Ld. DR, the CIT(A) unfairly carried away by the figure of Rs. 1,81,51,470/-, i.e. 4% of the suppressed sales. It is the prayer of the Ld. DR that the penalty relatable to the income of Rs. 76,48,922/- offered by the assessee in the revised computation of income should be confirmed. However, Ld. DR fairly mentioned that the flat rate of 4% is applied while estimating the said income of Rs. 76,48,922/-. 8. Per Contra, referring to said income of Rs. 76,48,922/- in particular, Shri J.P. Bairagra, Ld. AR for the assessee submitted that the said amount of Rs. 76,48,922/- is arrived at by the assessee also by way of estimation applying the flat rate of 4% of the goods clandestinely removed by the assessee. The said estimations were accepted by the AO/CIT(A)/ITSC and in such case, the said income also constitutes the estimated profits of the assessee relatable to the clandestinely removed goods. Accordingly, the relatable penalty on the said income of Rs. 76,48,922/- also should be deleted as done by the CIT(A). Ld. AR for ....

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.... reported in 241 ITR 124." 9. Further, for deleting the penalty, the Ld. AR for the assessee relied on various judicial pronouncements viz., (1) Rajan H. Shinde Vs. DCIT 103 ITD 360 (Pune) (TM), (2) Harigopal Singh Vs. CIT 258 ITR 85 (Punj. & Har), (3) CIT Vs. Krishi Tyre Retreading & Rubber Industries 360 ITR 580 (Rajasthan) and (4) CIT Vs. Modi Industrial Corporation 195 Taxman 68 10. Relying on the Hon'ble Supreme Court judgment in the case of CIT Vs. Suresh Chandra Mittal 251 ITR 9 (SC), Ld. AR for the assessee submitted that the penalty should be cancelled when the Department failed to discharge its burden proving the concealment and when the Department merely rested its conclusion on the assessees act of voluntary surrender made in good faith. He also relied on the Third Member decision of the Pune Bench of the Tribunal in the case of Rajan H. Shinde Vs. DCIT which is relevant for the proposition that the penalty u/s.271(1)(c) of the Act need to be deleted in respect of the GP addition made on estimation basis. 11. We heard both the parties and perused the orders of the Revenue as well as the written submissions of the assessee. The deletion of penalty u/s.271(1)(c) of the....