TaxTMI 
TaxTMI 
2019 (2) TMI 1406
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....assessee is a proprietor of M/s. Gopal Lal Vinod Kumar and engaged in the business of wholesale dealer in Kirana and Grain items. The assessee filed his return of income on 25th September, 2013 declaring total income at Rs. 2,76,210/-. During the scrutiny assessment, the AO noted that the assessee has declared the bank accounts with State Bank of Bikaner & Jaipur and ICICI Bank, however, the assessee was also maintaining a savings bank account with Indusind Bank which was not disclosed by the assessee in his regular books of account and further the assessee has deposited a sum of Rs. 2,00,48,100/- in cash in his savings bank account held with Indusind Bank. The said deposit made by the assessee in the savings bank account was subsequently admitted by the assessee as unrecorded sales at Rs. 2,09,30,560/- though the assessee has offered the net profit out of the said sales at Rs. 1,85,251/-. The AO issued a show cause notice and asked the assessee as to why the net profit rate of 5% on unrecorded turnover should not be applied and consequently an addition of Rs. 10,46,528/- should not be made. The assessee objected to the addition proposed by the AO. However, the AO noted that for t....
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....,46,258/-. 5. That the appellant has submitted that the GP be taken at 4.21%. 5.4. I have considered the above mentioned facts of the case. In my considered view the A.O. has justifiably estimated the net profit at 5% and therefore the addition of Rs. 10,46,258/- is sustained and the appellant's ground of appeal on the issue is dismissed." Thus the ld. CIT (A) has considered the NP at 5% as reasonable for estimating the income of the assessee on the unaccounted sales which was applied for the assessment year 2011-12. The assessee has pleaded before the ld. CIT (A) that GP should be taken at 4.21% as against the NP at 5%. It is pertinent to note that the turnover in question was unaccounted sales of the assessee and, therefore, all other expenditures which are common and below the trading account are already booked by the assessee in the Profit & Loss account against the accounted sales and, therefore, for the purpose of estimating the income on the unaccounted sales the GP would be the income from such unaccounted sales. We find that even if we apply the average of GP for the earlier year including the NP @ 5% for the assessment year 2011-12, it will be around 4.21%. Thus we r....
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....ibunal in the case of Shri Chandmal Kumawat vs. ITO in ITA No. 441/JP/2017 dated 21.12.2017 and submitted that when the AO himself was not sure about the default committed by the assessee, then the initiation of proceedings under section 271(1)(c) are bad in law. 8. On the other hand, the ld. D/R has relied upon the orders of the authorities below and submitted that it is a clear case of concealment of particulars of income as the assessee has not disclosed the turnover which was found by the AO during the course of assessment proceedings. Even the assessee did not disclose the bank account wherein the cash deposit was found to be deposited being unaccounted turnover. Therefore, when the assessee has not disputed the fact of undisclosed income being unaccounted turnover, then there is no ambiguity about the limb for initiation of the penalty proceedings being concealment of particulars of fact. 9. We have considered the rival submissions as well as the relevant material on record. Though it may be a case of unaccounted turnover found by the AO during the course of assessment proceedings, however, once the addition was made by the AO based on estimation of income on such unaccount....
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.... AO states that penalty proceedings u/s 271(1)(c) read with section 274 have been initiated separately for concealment of income/furnishing of inaccurate particulars of income. This thus shows that the AO himself is unsure about the charge against the assessee during the course of assessment proceedings. Considering the observations of the AO in the assessment order alongside his action of non-striking off the irrelevant clause in the penalty notice shows that the charge being made against the assessee qua 271(1)(c) is not firm, shows non-application of mind on the part of the AO, and the vagueness and ambiguity in the notice has thus prejudiced the right of reasonable opportunity to the assessee in as much as the assessee is not made aware as to which of the two charges, he has to submit his defence. 16. Here, we refer to the decision of Hon'ble Supreme Court in case of Dilip N Shroff reported in 161 Taxman 218 where it was held as under: "83. It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been do....