Shri Rajesh Gandhi, Indore v. THE ACIT-5(1), Indore

ITA 406/IND/2016 | 2006-2007
Pronouncement Date: 26-10-2016 | Result: Allowed

Appeal Details

RSA Number 40622714 RSA 2016
Assessee PAN ABKPG2820K
Bench Indore
Appeal Number ITA 406/IND/2016
Duration Of Justice 6 month(s) 3 day(s)
Appellant Shri Rajesh Gandhi, Indore
Respondent THE ACIT-5(1), Indore
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 26-10-2016
Date Of Final Hearing 15-09-2016
Next Hearing Date 15-09-2016
Assessment Year 2006-2007
Appeal Filed On 22-04-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE .. .. % BEFORE SHRI D.T. GARASIA JUDICIAL MEMBER AND SHRI O.P. MEENA ACCOUNTANT MEMBER SHRI RAJESH GANDHI PROP. M/S.SAGAR STEELS SUPPLIERS INDORE. .. ./ PAN: ABKPG2820K VS. ACIT 5(1) INDORE. / APPELLANT / RESPONDENT / APPELLANT BY SHRI MAHESH AGRAWAL ADV. / RESPONDENT BY SHRI K. G. GOYAL DR DATE OF HEARING 15.09.2016 DATE OF PRONOUNCEMENT 26.10.2016 / O R D E R PER O.P. MEENA ACCOUTANT MEMEBR. THESE FOUR APPEALS ARE FILED BY THE ASSESSEE AGAINS T THE SEPARATE ORDERS OF LD. COMMISSIONER OF INCOME-TAX ( APPEALS)-II .. . / I.T.A. NOS. 403 TO 406/IND/2016 %' ' / A.YS.: 2003-04 TO 2006-07 I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 2 OF 14 INDORE [HEREINAFTER REFERRED TO AS THE CIT(A)] ALL DATED 31.12.2015 CONFIRMING THE PENALTIES FOR THE ASSESSM ENT YEARS 2003-04 TO 2006-07. SINCE THE FACTS ARE COMMON IN ALL THESE APPEALS EXCEPT FIGURES WE DISPOSE OF THESE APPEALS BY THIS COMMON ORDER. 2. THE ASSESSEE HAS TAKEN COMMON GROUNDS OF APPEAL IN ALL THE YEARS EXCEPT THE FIGURES OF PENALTY. HOWEVE R WE ARE REPRODUCING THE GROUNDS IN I.T.A.NO. 403/IND/2016 FOR THE SAKE OF BREVITY. 1. THE CIT(A)-II HAS ERRED IN UPHOLDING THE PENALTY U/ S 271(1)(C) OF RS. 2 00 000/- IGNORING THE MATERIAL O N RECORD. 2. THAT LEVY PENALTY U/S 271(1)(C) ON ESTIMATED INCOM E AFTER REJECTING BOOKS OF ACCOUNTS IS BAD IN LAW HEN CE SUCH AN ORDER IS LIABLE TO BE QUASHED AND THE SAME MAY KINDLY BE QUASHED. 3. THAT EXISTENCE OF CONDITIONS STIPULATED IN SECTION 271(1)(C) IS A SINE QUA NON FOR INITIATION OF PENAL TY PROCEEDINGS U/S 271(1)(C) IS BAD IN LAW HENCE I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 3 OF 14 PENALTY SO IMPOSED IS REQUIRED TO BE DELETED AND MAY KINDLY BE DELETED IN TOTO. 4. THE ORDER PASSED BY THE CIT(A)-II IS AGAINST THE L AW OF NATURAL JUSTICE AS ASSESSEE WAS NOT GIVEN PROPER OPPORTUNITY. HENCE PENALTY SO IMPOSED IS REQUIRED TO BE DELETED AND MAY KINDLY BE DELETED IN TOTO. 3. WE ARE DISCUSSING FACTS IN I.T.A.NO. 403/IND/2016 THE DECISION OF WHICH SHALL BE BINDING ON OTHER APPEALS FOR RESPECTIVE ASSESSMENT YEARS. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME DECLARING INCOME AT RS. 1 29 850/- ON 30.11.2003. THERE WAS A SEARCH U/S 132 OF THE ACT CARRIED OUT ON 30.09.2008 IN THE CASE OF SH RI BHARAT KOTHARI GROUP OF CASES. DURING THE COURSE OF SEARCH A STATEMENT U/S 132(4) OF THE INCOME-TAX ACT 1961 WA S RECORDED FROM THE PROPRIETORS OF M/S. NIKITA STEELS M/S. BHARAT ENTERPRISES M/S. MAA ENTERPRISES M/S. HARS H ENTERPRISES M/S. SALUJA ENTERPRISES M/S. SONAM ST EELS AND I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 4 OF 14 M/S. PRATIK ENTERPRISES ( CALLED AS BILL PROVIDERS ). IN THE STATEMENT RECORDED THEY HAVE ADMITTED THAT THEY WER E INDULGED IN THE ACTIVITY OF RECEIVING BOGUS BILLS WITHOUT MAKING ACTUAL DELIVERY OF IRON AND STEEL. THEY HAD FURTHER CONFIRMED THIS FACT DULY IN SWORN AFFIDAVITS. THEY H AVE ALSO ADMITTED THAT THEY HAD RECEIVED CHEQUES FOR THE AMO UNT OF BILLS AND RETURNED THE ENTIRE AMOUNT TO THE PARTIES BY MAKING CASH WITHDRAWALS FROM THE BANK BY DEDUCTING NOMINAL COMMISSION RANGING FROM RS. 10/- TO RS. 40/- PER TO N IRON. DURING THE COURSE OF POST SEARCH ENQUIRIES IT WAS F OUND THAT THE ASSESSEE HAD DECLARED PURCHASE OF IRON AND STEE L FROM THE ABOVE PARTIES. IT IS FOUND THAT THE ASSESSEE HAD SH OWN PURCHASES FROM THE ABOVE ENTRY PROVIDERS FOR RS. 37 43 849/-. ACCORDINGLY THE CASE WAS REOPENED U/S 147 AND INCOM E WAS ASSESSED ON 28.12.2010 BY CONSIDERING THE ABOVE BIL LS AS NON- VERIFIABLE. ACCORDINGLY THE AO ESTIMATED 6% PROFIT ON THE SALE OF RS. 37 43 849/- AND ACCORDINGLY MADE AN ADDITI ON OF RS. 2 24 630/-. THE AO FURTHER NOTED THAT THE ASSESSEE HAS MADE CASH PURCHASES FOR WHICH CERTAINLY HE MADE INVESTMEN T FROM I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 5 OF 14 UNDISCLOSED SOURCES WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS. IT WAS SUBMITTED BY THE ASSESSEE THAT IF I T IS PRESUMED THAT INITIAL INVESTMENT IS MADE IN CASH FO R PURCHASE OF GOODS THEN THERE MAY BE NUMBER OF PRESUMPTIONS SUCH PAYMENTS HAVE BEEN MADE AS AND WHEN APPROPRIATED BY BHARAT KOTHARI GROUP. THUS IN ABSENCE OF ANY EVIDE NCE PRESUMPTION OF INITIAL INVESTMENT WILL NOT BE APPLI ED. HOWEVER THE AO DID NOT SATISFY WITH THE EXPLANATION OF THE A SSESSEE AND OBSERVED THAT THE ONUS IS ON THE ASSESSEE TO ESTABL ISH THAT THE CASH WAS FIRST ISSUED FROM KOTHARI GROUP OF CONCERNS AGAINST CHEQUES PAYMENT FOR BOGUS BILLS ISSUED AND SAME WAS UTILIZED FOR MAKING PAYMENT FOR CORRESPONDING UNRECORDED PUR CHASES. THEREFORE CONSIDERING THE NATURE OF BUSINESS OF TH E ASSESSEE THE AO NOTED THAT IT WOULD BE UNJUSTIFIABLE TO MAKE ADDITION OF THE ENTIRE PURCHASES AS THERE MAY BE POSSIBILITY OF AVAILABILITY OF CASH WHICH HAS BEEN RECEIVED AGAINST THE SALE. AS NUMBER OF THE PEAK CREDIT IS ALLOWED TO THE ASSESSEE THE ASSESSEE HAS SUBMITTED A STATEMENT ACCORDING TO WHICH THE PEAK INVESTMENT WAS WORKED OUT AT RS. 5 82 483/-. HENCE T HE SAID I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 6 OF 14 AMOUNT WAS TREATED AS INVESTED IN PURCHASES FROM UNDISCLOSED SOURCES. THE PENALTY PROCEEDINGS U/S 27 1(1)(C) OF THE ACT WERE INITIATED IN RESPECT OF ABOVE ADDITION. IN REPLY TO PENALTY SHOW CAUSE NOTICE THE AO NOTED THAT IT IS N OT THE CASE OF A REMISSION OF PROFIT AS THE ASSESSEE HAS SUBMIT TED INACCURATE PARTICULARS SHOWING THAT THE PURCHASES WER E MADE FROM BOGUS BILLS PROVIDERS WHILE PURCHASES WERE MAD E WITH ALTERNATIVE SOURCES. THE ADDITION IN PROFIT WAS MADE CONSIDERING THE SAVINGS OF THE ASSESSEE BY NOT PAYI NG SALES TAX AND ENTRY TAX. WHILE IN THE PRESENT CASE NO RELIEF REGARDING ADDITION FOR PROFIT WAS ALLOWED BY ANY APPELLATE AUT HORITY. THUS IT IS A CLEAR CUT CASE OF FURNISHING INACCURA TE PARTICULARS AS SUCH THE CASE LAWS RELIED UPON BY TH E ASSESSEE ARE ALSO NOT APPLICABLE. HON'BLE I.T.A.T. ALSO CONF IRMED THE ADDITION MADE BY THE AO. CONSIDERING THESE FACTS T HE AO LEVIED PENALTY OF RS. 2 LAKHS U/S 271(1)(C) OF THE INCOME-TAX ACT 1961 AS AGAINST MINIMUM PENALTY @ 100% AT RS. 1 84 399/-. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A). I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 7 OF 14 6. THE LD. CIT(A) NOTED THAT THE ASSESSEE HAS PREFERRE D AN APPEAL BEFORE THE CIT(A) WHEREIN THE ASSESSEE HAS G OT RELIEF ON ACCOUNT OF ADDITION U/S 40A(3) AMOUNTING TO RS. 7 4 8 770/- AND THE ADDITION ON ACCOUNT OF INVESTMENT AND PURCH ASES AMOUNTING TO RS. 5 82 483/- AND ADDITION OF RS. 2 2 4 630/- WAS CONFIRMED. THE ASSESSEE AS WELL AS DEPARTMENT FIL ED AN APPEAL BEFORE THE TRIBUNAL WHEREIN THE TRIBUNAL APP LIED THE DECISION IN THE CASE OF M/S. PRIYA STEELS DATED 26. 07.2012 BEING PARI MATERIA AND UPHELD THE ADDITION ON ACCOU NT OF PROFIT ON PURCHASES FROM ENTRY PROVIDERS AMOUNTING TO RS. 2 24 660/- AND DELETION OF ADDITION OF RS. 7 48 770 /- MADE U/S 40A(3) OF THE ACT. HOWEVER THE ADDITION ON AC COUNT OF INITIAL INVESTMENT AMOUNTING TO RS. 5 82 483/- WAS S ET-ASIDE AND THE ORDER OF THE AO WAS RESTORED. THUS IN NUT-S HELL THE TRIBUNAL HAS CONFIRMED THE ADDITION OF RS. 2 24 630 /- AND RS. 5 82 483/-. THE LD. CIT(A) NOTED THAT THE TRIBUNAL HAS OBSERVED THAT IT IS NOT THE CASE OF THE ASSESSEE TH AT THE ENTIRE ALTERNATIVE PURCHASES MADE BY THE ASSESSEE HAS BEEN ADDED BY THE AO. THE ADDITION HAS BEEN MADE ONLY UP TO TH E DATE OF I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 8 OF 14 WORKING OUT PEAK INVESTMENT. THE LD. CIT(A) HAS FURT HER OBSERVED THAT THE TRIBUNAL HAS CONCLUDED THE ORDER OF THE CIT(A) WAS NOT CORRECT TO THE EXTENT OF ALLOWING SETT ING OFF OF ENTIRE 6% PROFIT WHICH WAS ADDED IN RESPECT OF PURCH ASES MADE FROM THE KOTHARI GROUP AGAINST PEAK AND UNEXPL AINED INVESTMENT WORKED OUT ON A PARTICULAR DATE. THEREFOR E THE AO WAS DIRECTED TO RECOMPUTED THE ADDITION MADE ON ACCO UNT OF PURCHASES MADE FROM KOTHARI GROUPS UP TO THE DATE O F WORKING OUT UNEXPLAINED INVESTMENT ON SUCH PURCHASE. FURTHER IT WAS DIRECTED THAT TO THAT EXTENT THE SET -OFF SHALL BE ALLOWED. THEREFORE THE LD. CIT(A) OBSERVED THAT TH E AO SHOULD HAVE GIVEN EFFECT TO THE DIRECTION OF I.T.A.T. BEFO RE LEVYING AND DECIDING THE QUANTUM OF PENALTY AMOUNT IN VIEW OF TH E ABOVE. THE LD. CIT(A) DIRECTED THE AO TO RECOMPUTE THE QUA NTUM ADDITION WITH REFERENCE TO THE DIRECTION OF I.T.A.T. WITHIN REASONABLE TIME FRAMED AND THE QUANTUM OF PENALTY S HALL BE CONSIDERED AS MODIFIED TO THAT EXTENT OF DIFFERENCE WORKED OUT AFTER RECOMPUTATION. ACCORDINGLY THE ACTION OF THE AO WAS CONFIRMED WITH THESE DIRECTIONS. I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 9 OF 14 7. BEING AGGRIEVED THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 8. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). THE LD. CO UNSEL FOR THE ASSESSEE CONTENDED THAT THE PENALTY ORDER U/S 2 71(1)(C) HAS BEEN PASSED IN HASTE BASED ON WRONG FACTS. THE A O STATED IN PARA 3 OF HIS ORDER THAT THE REPLY OF THE ASSESS EE IS NOT ACCEPTABLE. IT IS NOT THE CASE OF ESTIMATION OF PRO FIT. WHEREAS THE SAME AO REJECTED THE BOOKS OF ACCOUNTS U/S 145 OF THE INCOME-TAX ACT 1961. AS PER PARA 5 OF THE ASSESSME NT ORDER AND FURTHER STATED BEFORE MAKING ADDITION THAT AS SUCH IT IS CLEAR THAT THE AMOUNT IN PURCHASE BILLS ARE MENTION ED AS PER SWEET WILL OF THE ASSESSEE AND THE SAME ARE NOT VERI FIABLE AS SUCH 6% PROFIT RATE ON SALE OF RS. 37 43 849/- IS A PPLIED AND ACCORDINGLY AN ADDITION OF RS. 2 24 630/- IS MADE TO THE INCOME OF THE ASSESSEE. IN THE INSTANT CASE THE AD DITION HAS BEEN MADE ON THE BASIS OF GUESS WORK HENCE THE SAME CANNOT BE SUBJECT MATTER OF PENALTY FOR CONCEALMENT OF INC OME. PENALTY BEING A QUASI CRIMINAL PROCEEDING IT IS THE DUTY OF THE I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 10 OF 14 AO TO ESTABLISH THE GUILT OF THE ASSESSEE IN CONCEA LING THE INCOME OR FURNISHING OF INACCURATE PARTICULARS OF S UCH INCOME. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE R ELIED UPON THE FOLLOWING DECISIONS :- 1. I.T.A.T. AGRA BENCH IN THE CASE OF M/S.JUGENDRA SINGH & CO. VS. DCIT I.T.A.NO. 420/AGRA/2012. 2. I.T.A.T. HYDERABAD BENCH IN THE CASE OF BALAKRISHNA ENGG. CONTRS. CORPN VS. DY. CIT (1996) 56 ITD 411. 3. CIT VS. K. R. CHINNY KRISHNA CHETTY (2000) 246 121 . 4. DY. CIT VS. MAHADIK BROS. (2003) 84 ITD 1. 5. VIJAY PROTEINS LTD. VS. CIT (2015 58 TAXMANN.COM 44. (GUJ) 6. CIT VS. SHIVLAL DESAI & SONS (1978) 114 ITR 388. 7. CIT VS. M. B. ENG. WORKS. PVT.LTD. (22 TAXMAN.173) 8. KANBAY SOFTWARE VS. DCIT 31 SOT 153 (TPUN) 9. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER RELIED UPON THE DECISION OF I.T.A.T. INDORE BENCH IN THE CASE OF PRIYA STEELS IN I.T.A.NO. 481/IND/2014 OF T HE SAME GROUP AND I.T.A.T. INDORE BENCH HAS ALSO CANCELLED THE PENALTY IN THE CASE OF PRIYA STEEL. THE INSTANT APPEALS AR E ALSO COVERED BY THE DECISION OF I.T.A.T. THE LD. AUTHORIZED REP RESENTATIVE OF THE ASSESSEE CONCLUDE THAT THERE IS NEITHER ANY CON CEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THE LD. AUTHORIZED REPRESENTATIVE OF THE I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 11 OF 14 ASSESSEE PRAYED THAT THE IMPUGNED PENALTY IN THE IN STANT CASE FOR ALL THE YEARS BE CANCELLED. 10. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 11. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. WE HAVE GONE THROUGH THE CASE LAWS RELIE D UPON THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE A ND ALSO THE DECISION OF I.T.A.T. INDORE BENCH. WE FIND THAT THE I.T.A.T. INDORE BENCH HELD AS UNDER :- 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE ASSESSEE IS A PARTNERSHIP F IRM DOING THE BUSINESS OF TRADING OF STEELS. THE BOOKS OF ACCOUNTS ARE AUDITED U/S 44AB AND QUANTITATIVE DETAILS HAVE BEEN MAINTAINED BY THE ASSESSEE. A SEARCH U/S 132 WAS CONDUCTED AT THE PREMISES OF BHARAT KOTHARI GROUP AND DURING THE COURSE OF STATEMENT SHRI MAYUR KOTHARI THAT THEY ARE ISSUING THE BILLS WITHOUT MAKING ANY DELIVERY OF IRON AND STEEL. THEY FURTHER STATED THAT THEY HAVE RECEIVED THE CONSIDERATION OF SUCH SHARE BY ACCOUNT PAYEE CHEQUES AND AFTER KEEPING THE COMMISSION AMOUNTS ARE RETURNED. ON THE BASIS OF THIS STATEMENT THE C ASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 AND THE AO HAS MADE THE ADDITION OF PROFIT ON SUCH BOGU S PURCHASE @ 6%. THE TRIBUNAL HAS UPHELD THE ACTION OF AO AND THE LD. CIT(A) FOR DISALLOWANCE OF 6% OF PURCHASE PRICE IN RESPECT OF ACCOMMODATION BILLS OF KOTHARI GROUPS. THE 6% PROFIT WAS ESTIMATED ON I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 12 OF 14 ESTIMATE BASIS. THE PROFIT FOR SUCH TRANSACTIONS HA VE ALREADY BEEN DISCLOSED BY THE ASSESSEE. THE ADDITIONS HAVE BEEN SUSTAINED BY THE LD. CIT(A) AN D TRIBUNAL BY ESTIMATING THE GROSS PROFIT AT 6% ON TH ESE PURCHASES AND DISALLOWANCE OF EXPENDITURE OF 6% ON THESE PURCHASES. THE ASSESSEE HAS PURCHASED THE GOODS WHICH IS UNDISPUTED FACT. THE KOTHARI GROUP MIGHT HAVE ARRANGED THE BILLS BUT PURCHASE CANNOT B E TREATED AS NON-GENUINE SINCE THE SAME QUANTITY OF GOODS HAVE BEEN SOLD BY THE ASSESSEE. WE FIND THAT IN THE ASSESSMENT ORDER THE AO HAS ESTIMATED THE PROFIT OF THE ASSESSEE ON THE GROUND THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS PRODUCED THE QUANTITATIVE TALLY WHICH SHOWS THAT T HE ASSESSEE HAS SOLD THE GOODS TO OTHER PARTIES AND ISSUED THE BILLS AND AMOUNTS RECEIVED FROM THEM THROUGH CHEQUES. AS SUCH IT APPEARS THAT THE SALES WERE ACTUALLY MADE. AS PURCHASES WERE NOT MADE FROM THE BILLS PROVIDERS AS IT IS AND EVIDENT THAT THE PURCHASES WERE MADE FROM THE THIRD PARTY. IT IS WEL L KNOWN FACT THAT THERE WAS LEVY OF COMMERCIAL TAX @ 4% ON BILLING PRICE WHICH WAS ONE TIME LEVY AT THE TIME OF IMPORT FROM OUT OF M.P. OR AT THE TIME OF F IRST SALE AFTER PRODUCTION WITHIN THE STATE. THE ASSESSE E HAS SAVED THE AMOUNT EQUIVALENT TO COMMERCIAL TAX BY PURCHASING THE GOODS WITHOUT BILLS AND OBTAINING THE BILLS FROM BILL PROVIDERS SHOWING M.A.C.T. PAID GOODS PURCHASES. THE SAME MODUS OPERANDI WAS ADOPTED BY SHRI PIYUSH GUPTA AND IN THAT CASE IT WAS FOUND THAT THERE WERE SOME BILLS WHICH WERE NOT ENTERED IN THE BOOKS BUT THE BILLS FROM THE BI LLS PROVIDE FOR THE SAME ADDED AND QUANTITIES WERE ENTERED INTO BOOKS AND IT WAS FOUND THAT AMOUNT OF BILLS OF ENTRY PROVIDER WAS HIGHER THAN THAT OF BIL LS FROM WHICH THE GOODS WERE ACTUALLY PURCHASED. THE PURCHASE AMOUNT WAS MENTIONED AS PER SWEET WILL OF THE ASSESSEE AND THE SAME ARE NOT VERIFIABLE AND AS SUCH 6% PROFIT RATE ON SALE WAS APPLIED. FROM THE I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 13 OF 14 ORDER OF THE AO WE FOUND THAT THE AO HAS ESTIMATED THE INCOME ON THE BILLS ISSUED BY THE ASSESSEE AND THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS SAVED 4% COMMERCIAL TAXES. THE KOTHARI GROUPS MIGHT HAVE ARRANGED THE BILLS THE ASSESSEE HAS MADE PURCHASES AND SAME QUANTITATIVE DETAILS HAVE BEEN SHOWN. THEREFORE THE AO HAS ESTIMATED THE INCOME ON PURE GUESS WORK. THE SIMILAR ISSUE HAD COME BEFORE THE HON'BLE M.P. HIGH COURT IN THE CASE OF CIT VS. SHIVNARAYAN JAMNALAL (1998) 232 ITR 311( MP) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WERE NOT PROPERLY MAINTAINED AND IF ASSESSEE HAS NOT CONCEALED ANY MATERIAL AND NOT TRIED TO DEFRAUD THE AUTHORITIES THE PENALTY CANNOT BE LEVIED BECAUSE THE INCOME WAS ASSESSED ON ESTIMATE BASIS. WE FOUND THAT SIMILAR CASE HAS COME UP BEFORE THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF HARIGOPAL SINGH VS. CIT 258 ITR 85 (P&H) WHEREIN IT IS HELD THAT IT WAS A DIFFERENCE OF OPINION AS REGARDS THE ESTIMATE OF INCOME OF THE ASSESSEE IT COULD NOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE INCOME SO AS TO ATTRACT THE PROVISIONS OF SECTI ON 271(1)(C). IN THE INSTANT CASE THE ASSESSEE HAS FI LED THE RETURN OF INCOME AND WHICH WAS REOPENED ON THE BASIS OF THE STATEMENT OF SHRI MAYUR KOTHARI AND ON THE BASIS OF THE STATEMENT THE ASSESSEES INCOME WAS ESTIMATED ON THE GROUND THAT THE ASSESSEE HAS SAVED THE COMMERCIAL TAX @4% AND HIS INCOME WAS ESTIMATED. IN ORDER TO PROTECT THE CLAUSE (C) OF SE CTION 271(1) OF THE ACT IT IS NECESSARY THAT THERE MUST BE CONCEALMENT BY THE ASSESSEE OF PARTICULARS OF HIS INCOME OR IF HE FURNISHES THE INACCURATE PARTICULAR S OF INCOME. THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNTS AND HE HAS FILED THE RETURN OF INCOME AND DURING THE COURSE OF SEARCH THE AO HAS ESTIMATED 6 % PROFIT ON THE GROUND THAT THE ASSESSEE MIGHT HAVE SAVED 4% OF COMMERCIAL TAX BY OBTAINING BOGUS BILLS . I.T.A.NOS. 403 TO 406/IND/2016 A.YS.2003-04 TO 2006 -07 SHRI RAJESH GANDHI INDORE. PAGE 14 OF 14 THE ASSESSEE MIGHT HAVE MADE PURCHASES WITHOUT BILLS. THEREFORE THE ADDITION WAS MADE AND INCOME WAS ESTIMATED. THEREFORE THE ADDITION WAS MADE ON ESTIMATED BASIS. THEREFORE WE ARE OF THE VIEW THAT THE PENALTY CANNOT BE LEVIED. 12. WE FIND THAT THE ABOVE DECISION OF THE I.T.A.T. IN DORE BENCH IS SQUARELY APPLICABLE TO THE INSTANT CASE A LSO. RESPECTFULLY FOLLOWING THE DECISION OF I.T.A.T. INDO RE BENCH WE DELETE THE PENALTY IN ALL THE YEARS. 13. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE ALLO WED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON T HE 26 TH OCTOBER 2016. SD/- (..) (D.T.GARASIA) JUDICIAL MEMBER SD/- (..) (O.P.MEENA) ACCOUNTANT MEMBER * / DATED : 26 TH OCTOBER 2016. CPU* 25.10