TaxTMI 
TaxTMI 
2019 (6) TMI 928
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....(1)(c) the Income Tax Act, 1961 when the notice initiating the penalty was defective where the limb was specified on which penalty proceedings were initiated i.e. whether the assessee has concealed the income or furnished inaccurate particulars of his income, thus the penalty order so passed deserves to be hold bad in law and the consequence penalty levied u/s 271(1)(c) at Rs. 1,30,000/- deserves to be deleted. 3. On the facts and in the circumstances of the case the Ld. CIT(A) has further in imposing the penalty without appreciating the fact that the additions sustained by Hon'ble ITAT are on estimate basis by directing disallowance at rate of 15% out of the alleged unverifiable purchases which have been duly established by the assessee as verifiable and genuine by submitting complete evidences and there is nothing which has not been disclosed by the assessee or has not been reported and mere making of claim, which is not sustainable in the eyes of law, by itself will not amount to furnishing of inaccurate particular so as to hold the appellant guilty in terms of section 271(1)(c) of the Act. Hence the penalty so levied deserves to be deleted in toto. 4. That....
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....d bogus purchases. On further appeal before the Hon'ble Jurisdictional High Court the order of the Tribunal was confirmed. The AO has initiated the proceeding U/s 271(1)(c) of the act and levied of the penalty against the addition sustained by the Tribunal. The assessee challenged the order of the penalty before the ld. CIT(A) but could not succeed. 3. Before us, the ld. AR of the assessee has submitted that the AO has invoked the explanation 5A by holding that the assessee deemed to have concealed the income to the extent of the bogus purchases shown in the books of accounts. However, the Assessing Officer has completely ignoring the fact that the conditions contemplated under explanation 5A are not fulfilled as much as addition sustained by the Tribunal does not represent the income based on any entry in the books of accounts, documents or transactions claimed by the assessee as the income for the previous year relevant to the assessment year under consideration. He has further contended that when the addition was sustained by the Tribunal by estimating the income at 15% alleged bogus/unverifiable purchase then, in view of the decision of the Hon'ble Jurisdictional High Court ....
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.... heard the rival contentions and peruse the material available on record. First we shall take up the assessee's appeals which raise the sole issue of addition on account of unverifiable purchase. Authorities below have relied on the statements of MD, Accountant and prop. of SKS Shri Jayant Khandelwal. Statement of Shri Khandelwal was neither supplied nor the cross examination was given to the assessee, consequently the statement of Shri Khandelwal may not be held as reliable evidence against assessee. However the statements of the MD and accountant have neither been retracted nor effectively controverted, consequently they remain valid piece of evidence in this behalf. Assessee has endeavored to demonstrate that the copious consumption of cotton gauge, bandages etc. has not been disputed; Books of accounts are properly maintained and not rejected by lower authorities. As compared to AY 2009-10 assessee's gross receipts, GP and NP % have gone up and at the same time % consumption of cotton has gone down; this data also has not been disputed in any manner by revenue, assessee claims that no 20 cotton was purchased from SKS in 2009-10. In this circumstance an alternate plea is advance....
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....dition qua unverifiable purchases of semi precious stones has been held to be at 15% of such unverifiable purchases. Looking at the entirety of facts and circumstances i.e. the books of accounts being not rejected & consumption of cotton having comparatively decreased, we are inclined to follow our judgment in the case of Anuj Kumar Varshney (supra) and direct to restrict the disallowance to 15% of purchases from SKS. Thus assessee's appeals are partly allowed." 8. Taking into account, we are of the opinion that the 15% disallowance restricted by the Tribunal is just and proper. No interference is called for. 9. Therefore, the issue is required to be answered in favour of the department against the assessee. 10. We observe that on the basis of this assessment order, no prosecution will be launched and if it is launched, it will be open for the present appellant to take defence that he has succeeded before the Tribunal which has been confirmed by this Court. 11. Om that view of the matter, if discharge application is preferred, the same will be considered in accordance with law. The 15% disallowance which has been restricted by the tribun....
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.... prove the conduct of the assessee, which in this case, has not been proved. Merely because the books of account of the assessee were rejected or estimated addition was made, in our view, no penalty is leviable. The assessee offered an explanation, which could not be termed as not bona fide. In the absence of any corroborative evidence to prove the charge of concealment, in our view, the penalty could not be imposed. 10. Penalty proceedings are entirely distinct from assessment proceedings and, howsoever relevant and good, the findings in assessment proceedings may be, they are not conclusive so far as the penalty proceedings are concerned. 11. From the above discussion, it can be seen that the opinion of the Tribunal with respect to the deletion is based on appreciation of evidence on record. 12. The hon'ble apex court in the case of Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/161 Taxman 218 has held that if there is no evidence on material to show that the assessee had deliberately furnished inaccurate particulars and there was any mala fide intention on his part so as to make him liable for penalty. A mere omission or negligence would not constit....
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....conduct of the assessee about a deliberate attempt to maintain false books of account, on a preponderance of probabilities, no other conclusion could be reached than that the failure to return the correct income was not on account of any fraud or gross or willful neglect on the part of the assessee. The Tribunal was right in holding that penalty of Rs. 92,894 imposed by the Inspecting Assistant Commissioner under section 271(1)(c) of the Act was not justified." 17. The Punjab and Haryana High court in the case of Harigopal Singh v. CIT [2002] 258 ITR 85/125 Taxman 242, has held as under (page 86) : "In order to attract clause (c) of section 271(1) of the Act, it is necessary that there must be concealment by the assessee of the particulars of his income or if he furnishes inaccurate particulars of such income. What is to be seen is whether the assessee in the present case had concealed his income as held by the Assessing Officer and the Tribunal. He had not maintained any accounts and he filed his return of income on estimate basis. The Assessing Officer did not agree with the estimate of the assessee and brought his income to tax by increasing it to Rs. 2,07,500.....
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....withheld or concealed any material or made any deliberate attempt to defraud the authorities. The assessing authority has employed the flat rate for assessing the income of the assessee and on that basis, he has been taxed. Therefore, we are of the opinion that the view taken by the Tribunal in setting aside the penalty appears to be justified and we answer both these questions against the Revenue and in favour of the assessee." 19. The Allahabad High Court in the case of CIT v. Raj Bans Singh [2005] 276 ITR 351 has held that "On appeal, the Tribunal came to the conclusion that it was a case of an estimate against an estimate and there was no concealment and accordingly it was held that no penalty was imposable". 20. This court in the case of CIT v. Chaturbhuj Bhanwarlal [1987] 166 ITR 659/31 Taxman 363 (Raj.) observed as under (page 682) : "Having given our anxious consideration to the rival contentions advanced before us and to the law cited by both the sides, we are of the view that the Tribunal proceeded to take into account various circumstances referred to above and had reached the finding after considering those circumstances. It cannot be....
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....involved in the present appeal. This appeal has no force and accordingly, the same is dismissed. A similar view has been taken by the Hon'ble Jurisdictional High Court in case of Shiv Laltak vs. CIT (supra) as well as in other decisions relied upon the ld. AR of the assessee. We further note that this Tribunal in case of N.L. Agarwal v. ACIT vide dated 10.05.2019 in ITA No. 197/JP/2018 has also considered this issue in para 6 to 8 as under:- "6. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the trading addition has been upheld by the Tribunal by estimating the GP rate at 15% on the alleged unverifiable purchases. It is settled proposition of law that merely confirmation of the trading addition made on estimate basis does not lead to the conclusion that assessee has furnished inaccurate particulars of income or concealed any income. Further estimation is always on presumptions and assumptions and without proper and specific linking with any evidence in support of such estimation assessee cannot be fastened with liability of penalty. Accordingly, it is well settled that no penalty is ....
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....as various decisions on this issue, we delete the penalty levied U/s 271(1)(c) of the Act for the assessment year 2010-11. 6. For the assessment years 2011-12 and 2012-13 the assessee has raised common grounds except the quantum of penalty. The grounds raised for the assessment year 2011-12 are reproduce as under:- "1. On the facts and in the circumstances of the case, the Ld. CIT(A) has grossly erred in confirming penalty u/s 271AAA levied by ld. AO at Rs. 45,198/- arbitrarily, thus the order so passed deserves to be quashed. 2. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in ignoring the facts that the appellant has duly complied with all the conditions laid down which allows exemption from levy of penalty u/s 271AAA, thus the penalty of Rs. 45,198/-, so levied deserves to be deleted. 3. without prejudice to above, on the facts and in the circumstances the Ld. CIT(A) has grossly erred in confirming the penalty levied by ld. AO u/s 271AAA on the addition of Rs. 4,51,976/- which was sustained by the Hon'ble ITAt by disallowing at an estimated rate of 15% out of the allged unverifiable purchases without holding such expense....