TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 232
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....gross profit adopted at the time of search and at the time of assessment. The appellant pleads that the levy of penalty is on the basis of an estimate and is not justified. 3. The issue raised in the present appeal is against levy of penalty under section 158BFA(2) of the Act. 4. Briefly, in the facts of the case, search under section 132 of the Act was conducted on 27.02.1997 and 28.02.1997 on the business premises of all the partners of assessee, Shri Krishanlal B. Nagpal, Shri Kashmirilal B. Nagpal, Shri Devendra B. Nagpal. Certain papers / documents / books of account were seized. Notice under section 158BC of the Act was issued to the assessee and the assessee furnished return of income for the block period showing undisclosed income of Rs. 47 lakhs. The assessee had bifurcated the said additional income for different years of the block period. The Assessing Officer noted that the assessee was a dealer in Automobile parts and Maruti Parts. The business of assessee partnership firm was carried out from various places in Pune. Search and Survey operations were carried out at the business premises of assessee. The assessee paid self assessment tax under section 140A of the Act....
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....ssee was that variation in undisclosed income declared in the block return and as assessed, was due to the variation in gross profit percentage adopted by the Department at the time of search and in the block assessment. He stressed that the assessee had neither concealed nor furnished inaccurate particulars of income in the block return and since levy of penalty under section 158BFA(2) of the Act was discretionary and the same may be dropped. The JCIT held that variation in undisclosed income assessed was on account of undisclosed stock found at the time of search. The stock inventory was taken during the course of search and it worked out to Rs. 95,60,548/- as against book stock of Rs. 27,66,602/- determined on the basis of sales and applying the GP rate, excess undisclosed stock was worked out at Rs. 67,93,946/-. In the statement recorded under section 132(4) of the Act, Shri Kashmirilal B. Nagpal (the main partner) had categorically admitted the correctness of the inventory taken and the value of excess undisclosed stock determined on the date of search. He further referred to the return of income filed in response to notice under section 158BC of the Act, wherein undisclosed i....
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....estimation but was determined on the basis of recorded statements, seized documents and applying the accounting principles. 5. Another point which was noted was the recorded statement of the main partner of assessee, wherein he had admitted that business was carried on with GP rate varying 15% - 20% of the turnover and on the basis of GP rate as on the date of search stock should have been worked out by the assessee. However, it was not so worked out. Considering the facts and circumstances, the JCIT held that penalty was clearly attracted on the excess portion of undisclosed income of Rs. 15,79,140/- and he imposed penalty of Rs. 9,47,484/-. 6. The CIT(A) upheld the levy of penalty in turn, relying on the ratio laid down by the Hon'ble High Court of Gujarat in Kandoi Bhogilal Mulchand Vs. DCIT (2012) 341 ITR 271 (Guj). 7. The assessee is in appeal against the order of CIT(A). 8. The learned Authorized Representative for the assessee after taking us through the facts of case, pointed out that the Assessing Officer had made addition of Rs. 67 lakhs and had also taxed GP rate on undisclosed sales at 18%. However, the Tribunal had restricted the addition to Rs. 15,79,138/- by appl....
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....nce on the decision of the Hon'ble High Court of Rajasthan in CIT Vs. Dr. Giriraj Agarwal Giri (supra), he pointed out that it was purely on the basis of estimation and no evidence was found during the course of search. 10. We have heard the rival contentions and perused the record. The issue raised in the present appeal is against levy of penalty under section 158BFA(2) of the Act. After search and seizure operations on the premises of assessee firm and its partners, certain unaccounted stock was found and the assessee made declaration on account of undisclosed stock. The said declaration made by the assessee was honoured by way of including the same in the return of income filed for the block period. The taxes on the additional income were paid by the assessee. In addition to the value of undisclosed stock, linked addition was made on account of GP rate on the said stock to be applied. The Tribunal had directed that GP rate of 20% be applied in turn, confirming the net addition of Rs. 15,79,136/-. The Revenue authorities had initiated penalty proceedings under section 158BFA(2) of the Act. It may be pointed out herein itself that no penalty has been levied on account of value of....