TaxTMI 
TaxTMI 
2016 (3) TMI 1352
X X X X Extracts X X X X
X X X X Extracts X X X X
....as been upheld in the following case laws despite the fact that the addition made was based on estimate basis. 1. Addl. CIT vs. Chandrakantaha and another, 205 ITR 607 (All). 2. Addl. CIT vs. Lakshmi Industries and Cold Storatge Co. Ltd. 146 ITR 492 (All.) 3. Sushil Kumar Sharad Kumar vs. CIT 232 ITR 588 (All) 4. A.M. Shah & Co. vs. CIT, 238 ITR 415 (Guj.) 5. CIT vs. Swarup Cold Storage & General Mills, 136 ITR 435 (All.) 6. CIT vs. Chandra Vilas Hotel, 292 ITR 202 (Guj.)" 2. The facts are that the assessee, a Private Limited Company, filed return of income for the assessment year 2005-06, declaring a taxable income of Rs. 1,27,217/-. The AO assessed the income at Rs. 1,66,98,147/-, vide assessment order passed u/s 144 of the I.T. Act. The said assessment order was challenged by the assessee before the ld. CIT(A0, under section 164 of the Act. The order passed u/s 164 confirmed income at Rs. 39,22,515/-. In the penalty order, the AO reiterated that due to non-furnishing of details and books of account, he had estimated the income @ 10% of the turnover from contract receipt of Rs. 3,92,28,150/- and had arrived at an income of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Lai (1977) 166 ITR 720 (ALL). In the present case, the assessee has not furnished any material to the Assessing Officer who was forced to complete the assessment to the best of his judgment. It is not a case where best judgment was made because of the fact that assessee inspite of furnishing all the information available with him was unable to satisfy the A.O. regarding the quantum of the income. On the contrary it is a case where the assessee has deliberately concealed the material facts which were important for the assessment of the case. The assessee did not produce the books of accounts, did not furnish reply to the questionnaire, did not comply with the notices issued u/s 142(1) of the I.T. Act, 1961, did not furnish details regarding, purchase of material, and wages etc. All these were material information regarding the assessment of the income of the assessee. On the contrary, the assessee, during the assessment proceedings had quite deliberately not only avoided the furnishing of the information as called by the Assessing Officer and had avoided the production of books of accounts, but had also deliberately sought adjournments on one pretext or the other, in order to dodge....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eviable for artificial disallowances. The law that penalty would not be exigible merely because an addition is made on estimate^, basis was reiterated in CIT V. Raj Bans Singh [2005] 276 ITR 351(AII), where the issue related to estimate of income of truck operator on sale of a truck. Concealment of income is presumed in every case of difference between reported and assessed income under Explanation 1 to section 27l(l)(c). But such presumption is rebuttable. The Explanation itself provides for such rebuttal in cases, where the taxpayer has an explanation for the difference, produces all the materials available with him and such Explanation is not found to be mala fide. In case of estimated additions, penalties are continued to be levied in almost every case on wrong view that every addition should entail penalty. In CIT v. Dhillon Rice Mills 2002] 256 ITR 447(P & H), the High Court held that in a case of addition based upon estimated higher yield in manufacture and low gross profit, there can be no penalty unless the Income-tax department brings something on record to indicate that there has been concealment on the part of the assessee. In coming to this conclusion....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt in CIT v. Aero Traders P. Ltd. [2010] 322 ITR 316 (Delhi). The High Court found that the decision of the Tribunal in this case was purely one of fact, so that the appeal by revenue could be entertained. Merely because the Assessing Officer estimated assessee's profit at 10% of gross profits as against 6.3% disclosed by the assessee could not be taken as concealed income, the difference, couId not be taken so as to justify inference of concealment. In coming to the conclusion, the High Court adverted to the controversy generated by the decision in a central excise case in Union of India y. Dharmendra Textile Processor [2008] 306 ITR 277 (SC) pointing out that the finality has been reached on this controversy by the Supreme Court decision in CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC), so that the departmental appeal against deletion of penalty was found to have no merit in CIT v. Vijay Kumar Jain [2010] 325 ITR 378 (Chhattisgarh). Penalty in estimate cases should be exigible only where such estimate is consequent to finding of concealment leading to such estimate. 4.4. In view of above discussion, I find that while estimating of income there i....