TaxTMI 
TaxTMI 
2026 (7) TMI 1404
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.... had already preferred appeals against the quantum assessment. Hence, the assessees were under bonafide belief since appeals have been filed against quantum assessment on jurisdictional grounds, there was no need to file separate appeals against the penalty orders. Subsequently, the assessees counsel advised that independent appeals need to be filed challenging the penalty orders. After the advice of the counsel, the assessee promptly filed the present appeals with delay of 90 days. On perusal of the reasons stated, we are of the view that no latches can be attributed to the assessee as there is sufficient cause for belated filing of these appeals. Hence, we condone the delay and proceed to dispose off the appeals on merits. ITA Nos.450 to 453/CHNY/2026 (AYs 2017-18 to 2020-21) 3. At the outset, the Ld. AR for the assessee submitted that the Tribunal, vide its order dated 17.03.2026 in ITA Nos.3072 to 3075/CHNY/2025, had already quashed the quantum assessments. It was, therefore, contended that since the very basis for levy of penalty no longer survives, the orders of the CIT(A) confirming the penalty levied u/s. 270A of the Act are liable to be set aside and the penalty dele....
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....usiness, and that such voluntary offer could not be treated as an admission of misreporting, relying on the decision of the Hon'ble Supreme Court in Sir Shadilal Sugar and General Mills Ltd. v. CIT (168 ITR 705). The AO, however, rejected the explanation and held that the assessee had failed to record receipts arising from unaccounted sales in its books of account, thereby resulting in misreporting of income within the meaning of section 270A(9)(e) of the Act. The AO computed the gross profit attributable to such alleged unaccounted sales at Rs. 26,00,492/-, determined the tax thereon at Rs. 6,54,492/-, and levied penalty at 200% of the tax payable on the under-reported income, amounting to Rs. 13,08,984/-. 7. Aggrieved by the penalty levied u/s. 270A of the Act amounting to Rs. 13,08,984/-, the assessee preferred an appeal before the CIT(A). Besides reiterating the submissions made before the AO, the assessee contended that in certain transactions, M/s. Mohanlal Jewellers Pvt. Ltd. (MJPL) had not raised invoices for the entire value of the gold jewellery, as the assessee had supplied equivalent quantity of gold for conversion into jewellery and, therefore, invoices were rai....
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....eporting of income u/s. 270A(9). Accordingly, it was submitted that the penalty levied u/s. 270A deserves to be deleted. 9. The Ld.DR supported the findings of the AO and the CIT(A). 10. We have heard the rival submissions and perused the material available on record. Consequent to a search u/s. 132 of the Act conducted in the case of M/s. Mohanlal Jewellers Pvt. Ltd. ("MJPL"), certain data contained in the "J-Pack" software was found indicating transactions with the assessee. During the course of the assessment proceedings, the AO observed that jewellery purchases aggregating to 2340.210 grams were not fully supported by invoices. The assessee consistently denied having made any unaccounted purchases from MJPL and furnished detailed reconciliation statements, making charge invoices, metal issue vouchers and other supporting documents. Nevertheless, with a view to buy peace and avoid protracted litigation, the assessee voluntarily offered an additional income of Rs. 26,00,492/-, which was accepted by the AO while completing the assessment u/s. 143(3) of the Act on 28.03.2023. 11. The CIT(A) confirmed the addition primarily on the ground that the assessee had voluntarily ag....
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....ed 06.11.2024 [Page 3-29 of Paper Book]. The reliance placed by the CIT(A) on the voluntary disclosure is misplaced because the disclosure was conditional and without admission of concealment. It was made to avoid litigation, there is no estoppel against statute. Therefore, the assessee is entitled to contest the addition. 16. In view of the above, the addition of Rs. 26,00,492/- is not sustainable in full. The AO is directed to restrict the addition to 2% of the value of alleged unaccounted purchases (2340.210 grams). Accordingly, the appeal of the assessee is partly allowed." 12. In the instant case, the assessee had voluntarily offered an additional income of Rs. 26,00,492/- by estimating the gross profit at 23% on the alleged unaccounted purchases. It is an admitted position that, in the quantum proceedings, the Coordinate Bench of the Tribunal has held such estimation to be excessive and directed the AO to restrict the addition to 2% of the value of the alleged unaccounted purchases. The Tribunal has categorically recorded a finding that the disclosure made by the assessee was only to buy peace and avoid protracted litigation and that an admission, by itself, canno....
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....hich was maintained by M/s MJPL in J-pack, contains entries on the receipt side also. It is settled law that it cannot be considered that part of the seized material is correct and the remaining is incorrect. Since some of the entries on the "Issued" side of the said ledger in the earlier years had clearly matched with the transactions recorded in the books of account of the appellant, it is proved that the said ledger pertains to the appellant only and all the transactions recorded on 'Issued' as well as 'Receipt' side pertain to the appellant. Since the seized material clearly indicate some metal receipts, the same has to be taken into consideration for arriving at the unaccounted purchases by the appellant. Further, on test checking of the reconciliation submitted by the appellant, it is seen that for some transactions, the quantity of metal issued by the appellant, which is in the nature of job work, matches with the metal quantity entered in the receipts side of J-pack ledger. It is quite reasonable to consider that for such transactions are not in the nature of sales for which M/s MJPL would not have raised any sale invoice for these transactions and the invoi....
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....eace and avoid protracted litigation and that an admission, in the absence of supporting evidence, cannot by itself justify an addition. 14. In view of the aforesaid findings in the quantum proceedings and considering the facts of the present case, we are of the considered opinion that the case of the assessee does not fall within the ambit of under-reporting or misreporting of income contemplated u/s. 270A of the Act. The addition itself having been sustained only on an estimated basis, the levy of penalty u/s. 270A cannot be justified. Our above view is fortified by the decision of the Bangalore Bench of the Tribunal in DCIT v. L. Javerchand Jewellers Pvt. Ltd. (supra), wherein it has been held as follows:- "10.7 Therefore, it goes without saying that for the applicability of section 270A of the Act, the conditions stated therein must be strictly followed. A mere declaration of additional income which was estimated as being around 30% of regular turnover and even offered for taxation before the completion of assessment by itself will not amount to under reporting resulting in misreporting of income. We are of the opinion that penalty u/s 270A of the Act cannot be levi....