M/s Ramani Ice Cream Co. Pvt. Ltd, v. The DCIT 2(1),

ITSSA 1/IND/2009 | misc
Pronouncement Date: 25-05-2010 | Result: Allowed

Appeal Details

RSA Number 122716 RSA 2009
Assessee PAN AABCR4589H
Bench Indore
Appeal Number ITSSA 1/IND/2009
Duration Of Justice 1 year(s) 4 month(s) 12 day(s)
Appellant M/s Ramani Ice Cream Co. Pvt. Ltd,
Respondent The DCIT 2(1),
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 25-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 25-05-2010
Date Of Final Hearing 10-05-2010
Next Hearing Date 10-05-2010
Assessment Year misc
Appeal Filed On 12-01-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER IT(SS)A NO.1/IND/2009 B.P. 1.4.96 TO 16.2.01 M/S. RAMANI ICE CREAM CO. PVT. LTD. 61-B KASTURBA NAGAR BHOPAL PAN AABCR 4589 H . APPELLANT VS DY. COMMISSIONER OF INCOME TAX 2(1) BHOPAL . RESPONDENT APPELLANT BY : SHRI S.S. DESHPANDE CA RESPONDENT BY : SHRI K.K. SINGH SR. DR O R D E R PER JOGINDER SINGH JM THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-I BHOPAL DATED 10.10.2008 ON THE GROUND T HAT LD. FIRST APPELLATE AUTHORITY ERRED IN LAW AND ON FACTS IN CONFIRMING T HE LEVY OF PENALTY OF RS.50 000/- IMPOSED U/S 158BFA(2) OF THE ACT. DURIN G HEARING OF THIS APPEAL WE HAVE HEARD SHRI S.S. DESHPANDE LD. COUN SEL FOR THE ASSESSEE AND SHRI K.K. SINGH LEARNED CIT DR. 2 2. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE PENALTY WAS LEVIED FOR THE ADDITION SUSTAINED TO TH E TUNE OF RS.74 040/- ON THE BASIS OF LOOSE PAPER FOUND. THE HUGE ADDITIO N MADE BY THE ASSESSING OFFICER WAS CLAIMED TO BE DELETED BY THE LD. CIT(A) WHICH WAS AFFIRMED BY THE TRIBUNAL. THE PAYMENTS MADE WERE CL AIMED TO BE OF BUSINESS EXPENSES. IT WAS SUBMITTED THAT IF THE EXP ENSES ARE INCURRED FOR BUSINESS PURPOSES THERE IS NO QUESTION OF IMPO SITION OF PENALTY AS THE BONA FIDE OF EXPLANATION OF THE ASSESSEE WAS NO T IN DOUBT. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE FROM THE D ECISIONS IN MANSUKALAL RATANLAL JAIN VS. UNION OF INDIA 6 ITJ 2 19 (MP) AND DR. HAKIM S.A. SAYYAD SATTAR VS. ACIT [2009] [123 TTJ ( CHE) 573]. THE CRUX OF ARGUMENTS IS THAT THE PENALTY IS NOT EXIGIB LE. ON THE OTHER HAND THE LD. CIT DR DEFENDED THE IMPUGNED ORDER BY CONT ENDING THAT THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY SUSTAINED THE PENALTY AS THE COMPUTATION OF UNDISCLOSED INCOME WAS NOT MADE IN A CCORDANCE WITH THE PROVISIONS OF THE ACT. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RE CORD. BRIEF FACTS ARE THAT THE ASSESSEE IS PRIVATE LIMITED COMPANY ENGAG ED IN THE BUSINESS OF MANUFACTURING AND SALE OF ICE CREAM. A SEARCH WAS C ONDUCTED ON 16.2.2001 AND WAS CONCLUDED ON 30.4.2001 WHEREIN NO UNACCOUNTED ASSETS CASH STOCK OF FINISHED GOODS RAW MATERIAL PACKING MATERIAL ETC. 3 WERE FOUND AS IS EVIDENT FROM ASSESSMENT ORDER ITSE LF. THE ASSESSEE MAINTAINED ACCOUNTS IN A DETAILED MANNER AND ARE AU DITED ALSO. THE MANUFACTURED ITEMS ARE SUBJECT TO CENTRAL EXCISE. I N TERMS OF QUANTITIES THE PRODUCTION OF ICE CREAM IS MAINTAINED IN THE EX CISE REGISTER. THE MONTHLY DETAILS OF PRODUCTION AND SALES AND CLOSING STOCK WAS ALSO SUBMITTED TO THE CENTRAL EXCISE DEPARTMENT WHEREIN NO DISCREPANCY WAS FOUND. HOWEVER AS PER THE ASSESSING OFFICER THERE WAS UNACCOUNTED PRODUCTION OF 5 41 953 LITRES WHICH WAS SOLD OUTSID E THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER MADE THE ADDITION O F RS.3 11 22 178/- AND FURTHER ADDITION OF RS.31 12 211/- TOWARDS THE COST OF PACKING MATERIAL. THE LD. ASSESSING OFFICER MADE THE ADDITI ON MAINLY ON THE FOLLOWING REASONS AS HAS BEEN RECORDED IN PARA 4.2 OF THE IMPUGNED ORDER: 1. STATEMENT OF SHRI S.D. GAUR GENERAL MANAGER WAS RECORDED ON 23.10.2001 AND 24.10.2001 IN WHICH HE SAID THAT ON THE BASIS OF CONSUMPTION OF SUGAR THE PRODUCTION OF ICE-CREAM CAN BE CALCULATED. 2. THE STATEMENT OF MR. GAUR WAS SHOWN TO VIJAY HARIRAMANI FOR REPLYING BUT HE DID NOT COMMENT UPON THE SUGAR AND STABILIZER RATIO IN A BATCH OF RAW MA TERIAL MIX. 3. THE INSPECTION OF FACTORY WAS CARRIED OUT ON 25.4.2003. DURING THE VISIT 50 LITRES ICE-CREAM MI X CONTAINING SUGAR BUTTER MILK SMP STABILIZER PO WDER 4 AND LIQUID GLUCOSE WAS PUT TO MACHINE TO ASCERTAIN THE PRODUCTION. FROM THE SAID 50 LITRES OF ICE-CREAM MI X 83 PARTY PACKS OF 1 LITRE EACH WAS MADE AND PACKED. 4. WASTAGE AND SPILLAGE ARE NOT CLAIMED EVER IN THE RETURN OF INCOME AND THEREFORE THE OBJECTION OF THE ASSESSEE ON THIS GROUND IS NOT ACCEPTED. 5. IN SURVEY U/S 133A ON 16.2.2001 AT ROHIT SALES RAIPUR WHO IS EXCLUSIVELY WHOLESALE DEALER OF THE COMPANY EXCESS STOCK OF RS.54 180/- WAS FOUND. IT WAS FOUND THAT AS PER BOOKS OF ACCOUNT ROHIT SALES HAD STOCK OF RS.129496 AND AS PER PHYSICAL VERIFICATION THE STOCK FOUND WAS RS.183681. THE RA TIO OF EXCESS STOCK FOUND WAS 42%. THE EXCESS STOCK OF THE DEALER SUGGEST THAT THE ASSESSEE COMPANY HAD LARGE VOLUME OF UNACCOUNTED PRODUCTION AND SALES. 6. SURVEY U/S 133A WAS ALSO CONDUCTED AT ASSESSEES MAIN DEALER M/S. TOP-N-TOWN NEW MARKET BHOPAL WHICH IS THE FAMILY CONCERN. IN THE SURVEY VIJAY HARIRAMANI IN HIS STATEMENT CATEGORICALLY STATED TH AT SALE VOUCHERS OF SALES AT TOP-N-TOWN SHOP ARE NOT ISSUED ITEM-WISE BUT AT THE TIME OF CLOSE OF SHOP IN NIGHT CASH IS COUNTED AND SINGLE VOUCHER FOR THE SALE IS PREPARED. THIS CLEARLY SHOWS THAT THE ASSESSEES SALES ARE NOT RELIABLE AND VERIFIABLE. 7. THE PURCHASES OF RAW MATERIAL ARE DIRECTLY RECEI VED BY THE STORE OF FACTORY AND THEN ISSUED TO PRODUCTI ON CENTRE ON THE BASIS OF REQUISITION SLIPS ISSUED BY PRODUCTION CENTRE. SUCH SLIPS ARE NOT PRESERVED BY THE STORE. THUS THE VERIFICATION OF CONSUMPTION OF RAW 5 MATERIAL WITH PRODUCTION IS NOT POSSIBLE. THE PRODU CTION SHOWN BY THE ASSESSEE IN SUCH CIRCUMSTANCES IS NOT RELIABLE/VERIFIABLE. 8. THE UN-ACCOUNTED INCOME GENERATED HAS BEEN INVESTED IN PURCHASE OF PROPERTY AND ACCORDING TO T HE A.O AS PER PARA 29 OF HIS ORDER THE SAID INVESTME NT IS OF RS.6012755. 4. ON THE BASIS OF THE AFORESAID REASONING THE ASS ESSING OFFICER MADE THE ADDITION. HOWEVER THE LD. CIT(A) QUASHED THE QUANTUM ADDITION BUT MAINTAINED THE ADDITION OF RS.74 842/ - AS UNDISCLOSED INCOME OF THE BLOCK YEAR. THE ASSESSING OFFICER IMP OSED PENALTY U/S 158BFA(2) OF THE ACT ON THE ADDITION OF RS.74 842/- SUSTAINED BY THE LD. CIT(A). ON APPEAL THE PENALTY WAS AFFIRMED AGAINS T WHICH THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. HOWEVER FACT REMAINS THAT THE SUBSTANTIAL ADDITION WAS DELETED BY THE LD. CIT (A). THE CONTENTION OF THE LD. ASSESSING OFFICER IS THAT THE DOCUMENTS WER E NEITHER ACCOUNTED FOR IN THE BOOKS NOR WERE VERIFIABLE AND THE ASSESS EE HAS ALSO WITHDRAWN ITS CROSS-OBJECTION BEFORE THE TRIBUNAL. IT HAS ALS O BEEN MENTIONED THAT THE ASSESSEE COULD NOT EXPLAIN TRANSACTION CONTAINE D IN THE LOOSE PAPER THEREFORE THE PENALTY WAS LEVIABLE. ON PERUSAL OF QUANTUM ORDER AND THE PENALTY ORDER THERE IS A CONTRADICTION ITSELF ON ONE HAND THE QUANTUM PROCEEDINGS WERE QUASHED BY THE LD. CIT(A) VIDE ORD ER DATED 26.3.2004. THE EXPLANATION SUBMITTED BY THE ASSESSEE IS AS UND ER: 6 1. THE PROPOSAL PENAL PROCEEDINGS ARE UNLAWFUL AND UNJUSTIFIED. 2. IT IS SUBMITTED THAT IN THE CASE OF THE ASSESSEE THE ALLEGATIONS WERE THAT THE ASSESSEE HAD UNDISCLOSED INCOME FROM SALE OF ICECREAM AND THEREFORE SUBSTANTIAL ADDITIONS WERE MADE. THE SAID ADDITIONS WERE DELETED BY THE FIRST APPELLATE AUTHORITY. THE APPELLATE TRIBUNAL HAS ALSO CONFIRMED THE ORDER OF FIRST APPELLATE AUTHORITY. IT IS THUS SUBMITTED THAT THE ASSESSEE DID NOT HAVE ANY UNDISCLOSED BUSINESS INCOME IN THE BLOCK PERIOD. HOWEVER THE ADDITIONS MADE BY THE AO AT RS.74842/- (U/S 69C) HAS BEEN UPHELD THE APPELLATE AUTHORITIES. IT IS SUBMITTED T HAT NONE OF THE AUTHORITIES HAVE ADJUDICATED THE BONAF IDE EXPLANATIONS OF THE ASSESSEE JUDICIOUSLY AND REJECT ED THE SAME SUMMARILY WITHOUT FINDING ANY FALSITY THER EIN. THE COPY OF THE EXPLANATION IS ATTACHED. THE BREAK- UP OF RS.74842/- IS AS UNDER: (I) PAYMENT BY DIRECTORS FROM THEIR OWN POCKET BUT AS THE SAME WERE NOT REIMBURSED TO THEM HENCE THE SAME WERE NOT FOUND ENTERED IN THE ACCOUNTS OF COMPANY. (SL.NO.1 3 4 5 15 18 19) 2 892 (II) TRANSACTION APPEARING IN ACCOUNTS. (SL.NO.6 13 17 20) 9 105 (III) NOTINGS OF PAPERS NOT RELATED TO ASSESSEE. (SL.NO.2 7 9 10 11 12 16) 48 898 (IV) BILLS SUBMITTED BY PARTIES BUT NO PAYMENT WAS MADE TO THEM. (SL.NO.8 14 21) 13 145 74 040 3. IT IS SUBMITTED THAT THE ADDITION OF RS.74 842/- HAS BEEN SUSTAINED REJECTING BONAFIDE AND HONEST EXPLANATION OF ASSESSEE. THE SUSTAINED ADDITIONS DO NOT REFLECT THE UNDISCLOSED INCOME OF THE ASSESSEE HENCE THE PROPOSED PENAL PROCEEDINGS BE KINDLY DROPPED. 7 THE SUM & SUBSTANCE OF THE ADDITION IS THAT THE EXP LANATION FURNISHED BY THE ASSESSEE WAS NOT FOUND TO BE PLAUSIBLE BY THE R EVENUE. IN SUCH A SITUATION THE RATIO LAID DOWN IN THE LATEST DECISI ON FROM THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. L TD. [2010] (322 ITR 158) (SC) COMES TO THE RESCUE OF THE ASSESSEE WHERE IN THE INFORMATION FURNISHED BY THE ASSESSEE IN ITS RETURN WAS NOT FOU ND TO BE INCORRECT. IT WAS HELD BY THE HONBLE APEX COURT THAT IT DOES NOT AMOUNT TO CONCEALMENT OF PARTICULARS. IDENTICALLY THE INDORE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI MAYANK GUPTA [IT(SS)A NO.67/IND /2009] VIDE ORDER DATED 15.3.2010 DELETED THE PENALTY IMPOSED U/S 158 BFA(2) OF THE ACT. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HER EUNDER: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R OF THE LEARNED CIT(A) DATED 3 RD MARCH 2009 ON THE GROUND THAT THE LD. FIRST APPELLATE AUTHORITY WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE AO LEVYING PENALTY U/S 158BFA(2) OF THE ACT. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHR I PRADEEP GUPTA LD. COUNSEL FOR THE ASSESSEE AND SM T. APARNA KARAN LEARNED SENIOR DR. THE CRUX OF ARGUME NTS ON BEHALF OF THE ASSESSEE IS THAT RS.1 LAC WAS DEPO SITED IN THE BANK WHICH WAS TREATED AS UNEXPLAINED BY THE AO . IT WAS POINTED OUT THAT THE AMOUNT WAS DEPOSITED ON 4. 12.1996 BY THE FATHER OF THE ASSESSEE (FATHER DIED ON ON 8. 12.2000). IT WAS POINTED OUT THAT THE IMPUGNED AMOUNT IS FROM PAST SAVINGS AND THE FAMILY IS ALSO HAVING AGRICULTURAL INCOME. ON THE OTHER HAND THE LEARNED SR. DR CONTENDED TH AT PENALTY IS MANDATORY AND THE TRIBUNAL EVEN CONFIRME D THE QUANTUM APPEAL. THE RESPECTIVE CASES RELIED UPON IN THE IMPUGNED ORDER WERE REITERATED BY THE LEARNED SR. D R AS WELL AS BY THE LEARNED COUNSEL FOR THE ASSESSEE. 3. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL 8 AVAILABLE ON RECORD. BRIEFLY THE FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE OPERATION U/S 132(1) WAS CARRIED OUT AT THE BUSINESS PREMISES OF M/S LAXMANDAS PRANCHAND AN D M/S GUPTA BROTHERS ON 13.6.2002 AND ALSO AT THE RES IDENTIAL PREMISES OF THE ASSESSEE. THE FATHER OF THE ASSESS EE WAS ENGAGED IN THE BUSINESS OF TRADING OF GOLD JEWELLER Y AND ALSO MONEY LENDING BUSINESS. THE AO COMPLETED THE BLOCK ASSESSMENT PROCEEDINGS U/S 158BC OF THE ACT READ WI TH SECTION 143(3) VIDE ORDER DATED 28.6.2004 ON THE TO TAL INCOME AT RS.14 49 512/- AND INITIATED PENALTY PROC EEDINGS U/S 158BFA(2) OF THE ACT FOR DISCLOSING INACCURATE PARTICULARS OF INCOME. IT IS SEEN THAT ON RECEIPT O F APPELLATE ORDER FROM THE TRIBUNAL SHOW CAUSE NOTICE WAS ISSUE D TO THE ASSESSEE ON 16.5.2008 AS TO WHY PENALTY U/S 158BFA( 2) SHOULD NOT BE IMPOSED. THE ASSESSEE IN REPLY CLAIME D THAT THE MATERIAL FACTS FOR COMPUTATION OF UNDISCLOSED I NCOME WERE TRULY DISCLOSED AND NOTHING WAS CONCEALED FROM THE DEPARTMENT. IT WAS FURTHER CLAIMED THAT THE ADDITIO N OF RS. 1 LAC DEPOSITED IN BANK ACCOUNT ON 4.12.2006 SUSTAIN ED BY THE TRIBUNAL IS NOT ITSELF SUFFICIENT TO LEVY THE PENA LTY. IN THE PRESENT APPEAL SEARCH TOOK PLACED ON 13.6.2002 AT THE RESIDENTIAL PREMISES WHEN THE PRESENT ASSESSEE WAS LIVING WITH OTHER FAMILY MEMBERS ALL AS HUF MEMBERS. SHRI SURESHCHAND GUPTA DIED ON 12.12.200 AND NOTICE U /S 158BC WAS RECEIVED BY HIS ONLY SON MAYANK GUPTA (WH O WAS HARDLY 20 YEARS OF AGE AT THE TIME OF DEATH OF HIS FATHER) ON 3.2.2003 WHO WAS REQUIRED TO FILE THE RETURN IN RESPECT OF DECEASED WHO DID NOT LEAVE BEHIND ANY MEMORANDUM OF AFFAIRS/STATEMENT OF AFFAIRS. THE LEGAL HEIR/PRESEN T ASSESSEE WAS OF THE FEELING THAT THERE WAS NO INCOME WHICH R EMAINED UNDISCLOSED BY THE DECEASED WHO WAS INDIVIDUALLY RE CEIVING COMPENSATION ON GAS TRAGEDY IN BHOPAL. HE WAS HAVIN G INCOME FROM JEEP HIRE CHARGES AND AGRICULTURAL INCO ME AND NO BOOKS OF ACCOUNTS WERE MAINTAINED BY HIM. THERE WAS 1/6 TH SHARE WITH THE ASSESSEE (RS.1 01 016/-) ON THE SAL E OF SILVER OF RS.24 06 097/-. UNDER THE AFOREMENTIONED FACTS NOW THE QUESTION ARISES WHETHER THE DEPOSITING OF R S.1 LAC ON 4.12.2006 SUSTAINED BY THE TRIBUNAL CAN AUTOMAT ICALLY BE SAID TO BE SUFFICIENT FOR IMPOSITION OF PENALTY U/S 158BFA(2) OF THE ACT. ADMITTEDLY THE QUANTUM PROCE EDINGS AND PENALTY PROCEEDINGS ARE ALTOGETHER DIFFERENT. IT CAN BE SAID THAT IMPOSITION OF PENALTY IS NOT AUTOMATIC AN D THE DISCRETION CASTS UPON THE AO HAS TO BE JUDICIOU SLY 9 EXERCISED BY KEEPING THE MATERIAL FACTS IN M IND WHEREAS IT CAN BE SAID THAT SUSTENANCE OF ADD ITION BY THE TRIBUNAL AUTOMATICALLY NOT SUFFICIENT THAT THERE WAS UNDISCLOSED CONCEALED INCOME. THE SITUATION NARRATE D ABOVE MAY BE GOOD FOR QUANTUM ADDITION BUT MAY NOT BE FOR IMPOSING PENALTY. IF THE LANGUAGE OF SECTION 158BFA (2) IS ANALYSED IT IS NOT MANDATORY AND IT IS ALMOST IN P ARA MATERIA WITH SECTION 271(1) WHICH ALSO RELATES TO CONCEALMENT OF INCOME THEREFORE WE ARE REPRODUCIN G HEREUNDER THE ORDER OF THE TRIBUNAL IN THE CASE OF DEEPCHAND LADHARAM KOTWANI IN ITA NO. 123/IND/2008 ORDER DATED 8 TH MARCH 2010 :- THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 30.11.2007. THE SUM AN D SUBSTANCE OF THE GROUNDS OF APPEAL RAISED BY THE AS SESSEE IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CON FIRMING THE PENALTY OF RS. 13 50 000/- LEVIED U/S 271(1)(C) OF THE ACT WHICH IS TOTALLY WRONG ILLEGAL AND UNWARRANTE D AS THE PENALTY HAS BEEN CONFIRMED ON THE ISSUE OF GP ADDITION AND MEAGER AMOUNT OF FD INTEREST OF RS.7 9 72/-. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHRI S.S. DESHPANDE LEARNED COUNSEL FOR THE ASSESS EE AND SMT. APARNA KARAN LEARNED ADDL. CIT DR. THE ARGUMENT ADVANCED BY MR. DESHPANDE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE ASSESSEE IS A LIQUOR CONTRACTOR MADE SALE OF RS.22 69 30 850/- AND DECLA RED INCOME OF RS.15 64 470/- IN THE ORIGINAL RETURN WHI CH WAS REVISED FOR THE FIRST TIME TO RS.16 04 880/- BY INCLUDING THE BANK INTEREST. THE RETURN WAS AGAIN R EVISED SUO MOTO BY DECLARING THE INCOME AT RS. 17 10 620/- BY INCLUDING THE EARLIER YEARS EXPENSES. IT WAS PLEA DED THAT THE ACCOUNTS OF THE ASSESSEE ARE AUDITED HOWE VER THE AO REJECTED THE BOOKS OF ACCOUNTS BY ADOPTING G P RATE AT 8.5% WHICH RESULTED INTO ADDITION OF RS. 82 08 372/- BY ACCEPTING THE SALES. IT WAS POINTED OUT THAT THE LEARNED CIT(A) RESTRICTED THE ADDITION BY ALLOWING RELIEF OF RS.10 21 189/-. IT WAS PLEADED THAT THE ASSESSEE AS WELL AS THE REVENUE PREFERRED APPEAL BE FORE THE TRIBUNAL WHERE THE GP RATE WAS ADOPTED AT 7%. T HE CRUX OF THE ARGUMENTS IS THAT THE PENALTY WAS LEVIE D ON THE BASIS OF ADOPTION OF GP RATE WHICH IS UNJUSTIFI ED. THE LEARNED COUNSEL PLACED RELIANCE ON THE DECISION FRO M THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. 10 SHIVNARAYAN JAMNALAL & CO.; 232 ITR 311(MP) DILIP N. SHROFF V. JCIT; 291 ITR 519 (SC) ON ESTIMATION OF INCOME THE DECISION IN CIT V. AJAIB SINGH & COMPANY ; 253 ITR 630 (P&H) AND CIT V. DHILLON RICE MILLS; 25 6 ITR 447 (P&H). IT WAS POINTED OUT THAT THE ASSESSE E NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURA TE PARTICULARS OF SUCH INCOME. ON THE OTHER HAND THE LEARNED SR. DR HEAVILY RELIE D UPON THE DECISION OF THE LEARNED CIT(A) BY FURTHER CONTENDING THAT THE ADDITION WAS EVEN CONFIRMED BY THE TRIBUNAL. IT WAS ALSO PLEADED THAT ASSESSEE HIMSEL F REVISED THE RETURN AND THE CLOSING STOCK WAS NOT PR OPERLY VALUED. RELIANCE WAS PLACED UPON THE DECISION IN MO OLJI JATMAL V. CIT; 160 ITR 475 (MP) BY FURTHER PLEADING THAT THERE WAS DEFECT IN THE BOOKS OF ACCOUNTS OF T HE ASSESSEE THEREFORE THE IMPOSITION OF PENALTY WAS ARGUED TO BE JUSTIFIED. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A COUNTRY LIQUOR CONTRACTOR FOR KHANDWA DISTRICT . HE IS ENGAGED IN THE BUSINESS OF RETAIL SALE OF LIQUOR . THERE ARE 78 SHOPS AT DIFFERENT PLACES. IN REPLY TO THE QUERY OF THE AO AS TO HOW THE SALES OF DIFFERENT SHOPS ARE RECORDED THE ASSESSEE SUBMITTED THAT THE SALE PRO CEEDS OF ALL THE SHOPS ARE COLLECTED DAILY AND RECORDED I N THE BOOKS OF ACCOUNTS. THE AO OBSERVED THAT THE TOTAL S ALES ARE NOT FULLY RECORDED IN THE BOOKS OF ACCOUNTS AS THE SAME ARE NOT SUPPORTED BY PROPER VOUCHERS/BILLS. TH E ASSESSEE ALSO ADMITTED THAT THE SALES ARE RECORDED ON THE BASIS OF CASH COLLECTED FROM DIFFERENT SHOPS. THE A O FURTHER OBSERVED THAT SINCE THE RECORDING OF SALES IS EXCLUSIVELY AT THE OPTION OF THE ASSESSEE THERE IS NO CHECK TO THE AUTHENTICITY OF THE SALES RECORDED AS THE SA ME ARE NOT OPEN TO VERIFICATION. THE AO ALSO NOTED THAT TH E AUDITORS IN THE TAX AUDIT REPORT EXPRESSED THEIR IN ABILITY TO GIVE THE QUANTITATIVE DETAILS OF STOCK BY MENTIO NING IN ANNEXURE F TO FORM NO. 3CD OF THE TAX AUDIT REPOR T THAT DUE TO NUMBEROUS ITEMS IT IS NOT POSSIBLE TO ASCERTAIN THE SAME. THE AO ALSO OBSERVED THAT THE AUDITORS IN THE TAX AUDIT REPORT CLEARLY STATED THA T NO EXPENSES PERTAINING TO PREVIOUS YEAR WERE DEBITED/CREDITED IN THE P&L ACCOUNT. HOWEVER THE ASSESSEE FOR THE REASONS BEST KNOWN TO HIM HIMSEL F REVISED THE RETURN OF INCOME BY ADDING A SUM OF 11 RS.1 05 745/- ON ACCOUNT OF EARLIER YEAR EXPENSES DEBITED/CLAIMED IN THE P&L ACCOUNT. THE AO FURTHER NOTED THAT THOUGH THE AUDITORS HAVE SPECIFIED THAT MERCANTILE SYSTEM OF ACCOUNTING HAS BEEN FOLLOWED YET THE ACCRUED INTEREST ON FDRS WAS NEITHER CREDITED N OR SPECIFIED IN THE AUDITORS REPORT. SIMILARLY INTER EST OF RS.1 70 458/- RECEIVABLE FROM STATE BANK OF INDORE WAS NEITHER TAKEN IN THE P&L ACCOUNT NOR WAS MENTIONED BY THE AUDITORS IN THE TAR. THE SAME WAS SUBSEQUENTLY DECLARED BY THE ASSESSEE VIDE THE FIRST REVISED RET URN. THE AO ALSO FOUND THAT THE TRANSPORT EXPENSES OF RS. 4 02 795/- ARE NOT SUPPORTED BY VOUCHERS. THE AO THEREFORE OBSERVED THAT THE TAX AUDIT REPORT COULD NOT BE CONSIDERED AS CORRECT AND COMPLETE AND ACCORDINGLY HELD THAT THE CORRECT PROFITS COULD NOT BE ASCERTAINED F ROM THE BOOKS. HE THEREFORE BY APPLYING THE PROVISIONS OF SECTION 145(3) OF THE ACT REJECTED THE BOOKS OF AC COUNTS OF THE ASSESSEE AND ESTIMATED THE INCOME OF THE ASS ESSEE AT @ 8.5% OF THE SALES DECLARED RESULTING IN AN ADD ITION OF RS.82 08 372/- ON THIS ACCOUNT. THE LEARNED CI T(A) AND THE TRIBUNAL CONFIRMED THE REJECTION OF BOOKS O F ACCOUNTS OF THE ASSESSEE. HOWEVER THE ADDITION MA DE ON THIS ACCOUNT WAS FINALLY WORKED OUT AT RS.48 04 751 /-. THE ADDITION OF RS. 7 972/- WAS ALSO MADE ON ACCOUN T OF ACCRUED INTEREST ON FIXED DEPOSITS WHICH WERE NOT DISCLOSED BY THE ASSESSEE. THIS ADDITION WAS ALSO CONFIRMED BY THE LEARNED CIT(A) AND THE TRIBUNAL IN APPEAL. IN VIEW OF THE ABOVE THE AO INITIATED PENA LTY PROCEEDINGS U/S 271(1)(C ) OF THE INCOME TAX ACT 1 961. IN APPEAL THE LEARNED CIT(A) AFTER CONSIDERING THE DETAILED SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ACTION OF THE AO IN IMPOSING THE PENALTY U/S 271(1)(C) OF THE ACT. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND THE MATERIAL AVAILAB LE ON RECORD. WE FIND THAT THE PENALTY HAS BEEN LEVIED B ECAUSE THE TRIBUNAL CONFIRMED THE GP ADDITION OF RS. 48 04 751/- AND THE INTEREST OF RS. 7 972/- WAS NOT SHOWN IN THE RETURN OF INCOME FILED BY THE ASSESSEE. WE FIND FORCE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT SINCE THE GP ADDITION HAS BEEN MADE O N ESTIMATE BASIS AND THE INTEREST AMOUNT OF RS. 7 972 /- ON 12 FD THOUGH WAS NOT SHOWN IN THE RETURN OF INCOME BUT THE SAME WAS REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE THEREFORE NO PENALTY CAN BE LEVIED. WE F URTHER FIND THAT FOR LEVYING PENALTY U/S 271(1)(C ) OF THE ACT EITHER THERE SHOULD BE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. THE REVENUE H AS NOT PINPOINTED THAT EITHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OR CONCEALED ITS INCOME. IN THE CASE OF CIT V. SHIVNARAYAN JAMNALAL & COMPANY (SUPR A) THE FACTS ARE THAT THE ASSESSEE WHO HAD NINE LIQUOR SHOPS LOCATED IN SEVERAL PLACES MAINTAINED A SINGLE CASH BOOK AND LEDGER. THE ASSESSING OFFICER HELD THAT IT WAS NOT POSSIBLE TO ACQUIRE DAILY ACCOUNT FROM ALL THE SHOP S REGULARLY AT A PARTICULAR PLACE AND THAT THE SALES OF ALL THESE SHOPS WERE RECORDED AT A STRETCH. HE THEREF ORE ESTIMATED THE SALES AND NET PROFIT. HE INITIATED P ENALTY PROCEEDINGS UNDER SECTION 271(1) OF THE INCOMETAX ACT 1961 FOR CONCEALMENT AND IMPOSED PENALTY. THE TRIBUNAL CANCELLED THE PENALTY. ON A REFERENCE TH E HONBLE HIGH COURT OF MADHYA PRADESH HELD AS UNDER :- HELD THAT THE ASSESSEE HAD PLACED BEFORE THE AUTHORITIES WHATEVER BOOKS OF ACCOUNT IT HAD MAINTAINED WHETHER THEY WERE PROPERLY MAINTAINED O R NOT AND IT HAD NOT WITHHELD OR CONCEALED ANY MATER IAL OR MADE ANY DELIBERATE ATTEMPT TO DEFRAUD THE AUTHORITIES. THEREFORE THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE PENALTY WAS NOT LEVIABLE. KEEPING IN VIEW THE FACTS AND THE CIRCUMSTANCES TH E AFORESAID RATIO LAID DOWN BY THE HONBLE JURISDICTI ONAL HIGH COURT FAVOURS THE CASE OF THE ASSESSEE. THE AS SESSEE ALSO FINDS SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN HARIGOPAL SINGH V. CIT; 258 ITR 85 WHEREIN THERE WA S A DIFFERENCE OF OPINION AS REGARDS THE ESTIMATE OF IN COME. THE AO AS WELL AS THE TRIBUNAL ADOPTED DIFFERENT ESTIMATES IN ASSESSING THE INCOME OF THE ASSESSEE. ON REFERENCE IT WAS HELD BY THE HONBLE HIGH COURT TH AT PENALTY CANNOT BE LEVIED WHERE INCOME HAS BEEN ESTIMATED. IN THE PRESENT APPEAL ALSO THERE IS A DIFFERENCE OF ESTIMATION OF GP RATE BY THE AO AND T HE TRIBUNAL. DURING HEARING THE LEARNED DR TOOK THE PLEA 13 THAT SINCE QUANTUM ADDITION HAS BEEN SUSTAINED THO UGH BY REDUCING THE GP RATE THEREFORE PENALTY PROVISI ONS ARE ATTRACTED IN THIS CASE. WE ARE NOT AGREEING WIT H THIS PROPOSITION BECAUSE QUANTUM AND PENALTY PROCEEDINGS ARE ALTOGETHER DIFFERENT. EVEN OTHERWISE NORMALLY THE ESTIMATION DEPENDS UPON THE APPROACH OF THE INDIVI DUAL AUTHORITY FOR WHICH THE ASSESSEE SHOULD NOT SUFFER UNLESS AND UNTIL IT IS PROVED ON RECORD THAT THE ASSESSEE CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTIC ULARS OF SUCH INCOME. THEREFORE THE PENALTY SHOULD BE L EVIED SPARINGLY BY OBJECTIVELY AND JUDICIOUSLY ANALYZING THE MATTER WHICH THE AO HAS FAILED TO DO AND HAS MECHANICALLY IMPOSED. FOR THE SUBJECTIVE APPROACH O F THE AUTHORITIES ANY PERSON SHOULD NOT BE PUT TO HA RDSHIP THAT TOO WITHOUT BRINGING COGENT MATERIAL ON RECORD . THE AO HAS NOT BROUGHT ON RECORD ANY POSITIVE MATERIAL JUSTIFYING ESTIMATION OF A PARTICULAR RATE OF GP. THE ESTIMATION OF GP CANNOT LEAD TO A CONCLUSION THAT T HE ASSESSEE HAS EITHER CONCEALED HIS INCOME OR FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME. IN ORDER TO ATTRACT CLAUSE OF SECTION 271(1) OF THE ACT IT IS NECESS ARY THAT THERE MUST BE CONCEALMENT BY THE ASSESSEE OF HIS IN COME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INC OME. WE ARE THEREFORE OF THE CONSIDERED OPINION THAT T HE PENALTY PROVISION IS NOT ATTRACTED TO THE CASES WHE RE THE INCOME OF THE ASSESSEE IS ASSESSED ON ESTIMATE BASI S AND CONSEQUENT ADDITIONS ARE MADE THEREON. IDENTICAL RA TIO WAS LAID DOWN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V AJAIB SINGH AND COMPANY (SUPRA) WHEREIN THE ADDITION TO THE INCOME WAS BASE D ON ESTIMATE AND DISALLOWANCE OF EXPENDITURE THE TRIBU NAL WAS HELD TO BE JUSTIFIED IN CANCELLING THE PENALTY. WHILE COMING TO THIS CONCLUSION THE HONBLE COURT ALSO CONSIDERED THE DECISIONS IN THE CASES OF ADDL.CIT V . SMT. CHANDRAKANTA (205 ITR 607) AND ADDL. CIT V. JEEVANL AL SHAH (205 ITR 244) (SC). THE DECISION IN THE CASE O F CIT V. GURBAX LAL & COMPANY (256 ITR 133( (P&H) CAN ALSO BE CITED WHEREIN THE REVISED RETURN WAS FILED VOLUNTARILY BY THE ASSESSEE EVEN AFTER ASSESSMENT. THE TRIBUNAL WAS HELD TO BE JUSTIFIED BY THE HONBLE HI GH COURT IN CANCELLING THE PENALTY IMPOSED U/S 271(1) OF THE ACT. DURING HEARING THE LEARNED DR RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I TSELF IN 14 THE CASE OF MOOLJI JATMAL V. CIT; 160 ITR 475 (MP) WHEREIN THE RETURNED INCOME WAS LESS THAN 80% OF TH E ASSESSED INCOME AND THE ASSESSEE EVEN DID NOT APPEA R BEFORE THE ITO. IT WAS HELD THAT BURDEN IS ON THE A SSESSEE TO SHOW THAT NO CASE OF IMPOSITION OF PENALTY IS MA DE OUT THEREFORE IT IS ON DIFFERENT FACTS CONSEQUENTLY MAY NOT HELP THE REVENUE. THE HONBLE APEX COURT IN THE CAS E OF DILIP N. SHROFF (SUPRA) HELD THAT IMPOSITION OF PE NALTY IS NOT AUTOMATIC AND IT IS A MATTER OF DISCRETION BECA USE THE AO HAS TO BE FAIR AND OBJECTIVE. ON THE ISSUE OF CA PITAL GAINS THE HONBLE COURT HELD THAT THE REPORT OF TH E REGISTERED VALUER CANNOT BE EXACT. IN THE PRESENT APPEAL ALSO THE AO ESTIMATED THE GP BY ADOPTING THE RATE AT 8.5% WHICH WAS REDUCED TO 7% BY THE TRIBUNAL ON QUANTUM ADDITION. THE AO LEVIED THE PENALTY ON THE BASIS OF SUCH ESTIMATION. WE ARE OF THE VIEW THAT IT MAY BE A GOOD CASE FOR QUANTUM ADDITION BUT MAY NOT BE FOR IMPOSING PENALTY. IN THE IMPUGNED ORDER THERE IS A MENTION THAT THE FREQUENT REVISION OF RETURNS BY TH E ASSESSEE IS SUFFICIENT FOR IMPOSING PENALTY. WE ARE NOT AGREEING WITH THIS PROPOSITION BECAUSE IT IS NOT TH E CASE THAT THE RETURN WAS REVISED WHEN SOMETHING CONTRARY WAS DETECTED BY THE DEPARTMENT RATHER THE ASSESSEE SUO MOTO REVISED ITS RETURNS THEREFORE IT CANNOT BE SAID T HAT THE ASSESSEE WANTED TO CONCEAL ANYTHING RATHER THE BEHA VIOR OF THE ASSESSEE WAS MORE RESPONSIBLE THAT ANY PORTI ON OF THE INCOME MAY NOT LEFT UNRETURNED. SUO MOTO REVISI ON OF INCOME BY THE ASSESSEE ITSELF DOES NOT AMOUNT TO CONCEALMENT OF INCOME UNTIL AND UNLESS SOME CONTRAR Y MATERIAL IS BROUGHT ON RECORD WHICH THE REVENUE HA S FAILED TO DO SO. EVEN REJECTION OF BOOKS ITSELF IS NOT SUFFICIENT FOR LEVYING PENALTY UNLESS AND UNTIL IT IS BROUGHT ON RECORD THAT THE ASSESSEE CONCEALED ITS INCOME. I F THE INTENTION OF THE ASSESSEE WOULD HAVE BEEN TO HIDE SOMETHING THE ASSESSEE WOULD NOT HAVE SUO MOTO FIL ED THE REVISED RETURN. ON THE ISSUE OF REVISING THE RE TURN BEFORE DETECTION BY THE DEPARTMENT THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF SHRI NIRAJ JAI N AND ALOK JAIN(ITANO. 1091 & 1092/CHD/08) ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUNDER: 15 THESE APPEALS ARE BY THE DIFFERENT ASSESSEES FOR ASSESSMENT YEAR 2004-05 AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 7.10.2008 ON THE GROUND THAT THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY OF RS.64 818/- AND R S. 68 737/- IMPOSED UNDER SECTION 271(1)(C) OF THE ACT . 2. DURING ARGUMENTS WE HAVE HEARD SHRI VISHAL MOHAN LD COUNSEL FOR THE ASSESSEE AND SMT. SARITA KUMARI LEARNED DR. MR VISHAL MOHAN CONTENDED THA T THE FACTS AND THE ISSUE IN BOTH THE APPEALS ARE IDE NTICAL BY SUBMITTING THAT THE RESPECTIVE ASSESSEE FILED OR IGINAL RETURN ON 1.11.2004 AND 31.10.2004 WHICH WERE SUBSEQUENTLY REVISED BEFORE ANYTHING DETECTED BY TH E DEPARTMENT THEREFORE THE PENALTY WAS ARGUED TO BE NOT JUSTIFIED. RELIANCE WAS PLACED IN CHEAP CYCLE STOR ES VS. CIT (281 ITR 166)(ALL.) CIT VS. GURBAX LAL & CO (2 56 ITR 133) (P&H) CIT VS. RAJENDRA PRASAD GUPTA (220 ITR 558) (PAT.) AND CIT VS. SURESH CHANDRA MITTAL (241 ITR 124) (M.P.). ON THE OTHER HAND THE LEARNED DR DEFENDED THE PENALTY ORDER BY SUBMITTING THAT THE ASSESSEE REVISED THE RETURN AFTER NOTICE WAS ISSUED TO THE RESPECTIVE ASSESSEE. RELIANCE WAS PLACED IN T HE CASE OF UNION OF INDIA & OTHERS VS. DHARMENDRA TEXT ILES PROCESSORS AND OTHERS (306 ITR 277)(SC) 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. SINCE F ACTS / ISSUE IN BOTH THE APPEALS ARE IDENTICAL THEREFORE THESE CAN BE DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER. BRIEF FACTS IN THE CASE OF SHRI ALOK JAIN A RE THAT ORIGINAL RETURN DECLARING INCOME OF RS. 29 70 890/- INCLUDING CAPITAL GAINS OF RS. 28 73 659/- WAS FILE D BY THE ASSESSEE ON 1.11.2004. THE CASE WAS SELECTED FOR SCRUTINY; THEREFORE NOTICES UNDER SECTION 143(2) A ND 142(1) OF THE ACT WERE ISSUED ON 5.8.2005. THE ASSESSEE REVISED ITS RETURN OF INCOME ON 31.3.2006 BY DECLARING THE INCOME AT RS. 35 60 150/-. IT IS PERT INENT TO MENTION HERE THAT ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) AT AN INCOME OF RS.35 60 105/- VIDE ORDER DATED 7.12.2006. THE LEARNED ASSESSING OFFICER REJ ECTED THE EXPLANATION OF THE ASSESSEE AND LEVIED PENALTY OF RS. 64 818/- UNDER SECTION 271(1)(C) OF THE ACT. LIKEWISE IN THE CASE OF SHRI NEERAJ JAIN THE ASSE SSEE SHOWED INCOME OF RS.28 01 050/- IN ITS RETURN FILE D ON 31.10.2004. THE CASE WAS PROCESSED UNDER SECTION 14 3 (1) AT THE RETURNED INCOME ON 21.2.2005. THE ASSES SEE LATER ON REVISED HIS INCOME RS. 33 65 860/- ON 31.3.2006. THE CASE WAS SELECTED FOR SCRUTINY 16 CONSEQUENTLY NOTICES UNDER SECTION 143(2) AND 142( 1) WERE ISSUED TO THE ASSESSEE TO WHICH THE ASSESSMENT PROCEEDINGS WERE ATTENDED FROM TIME TO TIME AND REQUISITE DETAILS WERE FURNISHED. THE LEARNED ASSES SING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS CONCE ALED ITS INCOME BY FURNISHING INACCURATE PARTICULARS TH EREFORE PENALTY OF RS. 68 737/- WAS IMPOSED. ON APPEAL THE LEARNED FIRST APPELLATE AUTHORITY AFFIRMED THE PENA LTY ORDER WHICH ARE UNDER CHALLENGE BEFORE THE TRIBUN AL. 4. NOW QUESTION ARISES WHETHER PENALTY CAN BE IMPOSED ON THE BASIS OF REVISED RETURN BEFORE DETECTING THE SAME BY THE DEPARTMENT . WE HAVE FOUND THAT IN THE ASSESSMENT ORDER IT HAS BEEN MENTIONED THAT THE ASSESSEE REVISED THE RETURN OF RS.35 60 150/- AND RS. 33 65 860/- ON 31.3.2006 RESPECTIVELY. THERE IS NO MENTION IN THE ASSESSMEN T ORDER THAT ANY NOTICE WAS SERVED UPON THE ASSESSEE BEFORE FILING THE REVISED RETURN. EVEN THE LEARNED ASSESSING OFFICER CONSIDERED THE REVISED RETURN BY FRAMING THE ASSESSMENT UNDER SECTION 143(3). IT IS NOT THE CASE OF THE REVENUE THAT REVISED RETURN WERE FI LED BY THE ASSESSEE WHEN THEY WERE CORNERED BY THE DEPARTMENT THEREFORE WE ARE OF THE VIEW THAT IMPOSITION OF PENALTY IS NOT JUSTIFIED. THE INITIA L BURDEN LIES ON THE REVENUE TO ESTABLISH THAT THE ASSESSEE HAS CONCEALED THE INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME BUT THE BURDEN SHIFTS TO ASSESSEE ONLY IF HE FAILED TO OFFER ANY EXPLANATION FOR THE UNDISCLOSED INCOME OR OFFERS AN EXPLANATION WHICH I S OTHERWISE FALSE. FOR THIS VIEW WE ARE FORTIFIED BY THE FOLLOWING DECISIONS:- 1. CIT VS. SURESH CHANDRA MITTAL (241 ITR 124)(M.P.) 2. CIT VS. RAJENDRA PRASAD GUPTA ( 220 ITR 558) (PATNA) 3. CIT VS. GURBAX LAL & CO (256 ITR 133) (P&H) 4. CHEAP CYCLE STORES VS. CIT (281 ITR 166)(ALL.) IF THE AFORESAID JUDICIAL PRONOUNCEMENTS ARE KEPT I N JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL WE HAVE FOUND THAT IN THE PRESENT APPEAL THE FINDING RECORDED BY THE LEARNED ASSESSING OFFICER IS CONTRA RY TO THE ARGUMENTS ADVANCED BY THE LEARNED DR TO THE EFF ECT THAT REVISED RETURN WERE FURNISHED AFTER DETECTION BY THE DEPARTMENT. IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS & OTHERS ((SUPRA) RELIED UPON BY THE LE ARNED DR PERTAINS TO LEVY OF PENALTY ON THE BASIS THAT MENS REA IS NOT ESSENTIAL FOR ATTRACTING CIVIL LIABILITY OF PENALTY. HOWEVER IN THE PRESENT APPEALS THE ISSUE BEFORE US IS WHETHER PENALTY CAN BE LEVIED ON THE BASIS OF REVIS ED 17 RETURN FILED BY THE ASSESSEE BEFORE ANY CONCEALMENT IS DETECTED BY THE DEPARTMENT. IN VIEW OF THESE FACT S WE ARE OF THE VIEW THAT THE DECISION FROM THE HON'BL E APEX COURT IS NOT APPLICABLE TO THE FACTS OF THE PRESENT APPEAL. EVEN OTHERWISE PENALTY IS NOT IMPOSABLE IF THERE IS CONSCIOUS BREACH OF LAW AS WAS HELD BY THE HON'BLE APEX COURT IN THE CASE OF HINDUSTAN STEELS LTD VS. STATE OF ORISSA (83 ITR 26). EVEN OTHERWISE ANY CONCEALMENT OR INACCURACY IF ANY IN THE PARTICULARS OF INCOME H AS TO BE CONSIDERED UPTO ULTIMATE STAGE OF WORKING OUT OF TO TAL INCOME. THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. SKYLINE AUTO PRODUCTS (P) LTD EVEN WENT TO THE EXTENT THAT PENALTY IS NOT IMPOSABLE WHEN MI STAKE IS BONAFIDE. EVEN IF WE PRESUME THAT THE ASSESSEE WRONGLY CLAIMED SOMETHING DUE TO CERTAIN WRONG NOTI ONS AND LATER ON REVISE THE RETURN BEFORE IT IS DETECT ED BY THE DEPARTMENT CERTAINLY IT IS NOT A CASE OF IMPOSITIO N OF PENALTY AND SPECIALLY WHEN THE REVISED RETURN WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. IN VIE W OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS WE ARE OF THE VIEW THAT PENALTY IS NOT LEVIABLE CONSEQUENTLY B OTH THESE APPEALS OF THE ASSESSEE ARE ALLOWED. EVEN IN THE CASE OF PERSONS WHO ARE DEALING IN LIQU OR IT IS ALWAYS NOT POSSIBLE TO MAINTAIN THE BOOKS DAILY IN THE REQUIRED MANNER AS DIFFERENT SHOPS ARE LOCATED AT DIFFERENT PLACES AND THE SAME IS THE SITUATION OF S ALES. EVEN OTHERWISE KEEPING IN VIEW THE NATURE OF THE BUSINESS THE GROSS PROFIT/INCOME MAY NOT ALWAYS BE THE SAME. IN THE AFOREQUOTED DECISION OF NEERAJ JAIN & ALOK JAIN THE CHANDIGARH BENCH HAS ALREADY CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS BEING MATTER OF RE CORD THE SAME ARE NOT BEING REPEATED THEREFORE MAY BE READ AS PART AND PARCEL OF THIS ORDER. IN THIS VIEW OF T HE MATTER WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE PENALTY LEVIED U/S 271(1)(C ) OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 8 TH MARCH 2010. 4. THE BASIC QUESTION FOR DETERMINATION IS WHETHER LEVY OF PENALTY IS AUTOMATIC IRRESPECTIVE OF FACTS AND CIRC UMSTANCES OF THE CASE. THERE ARE CERTAIN FUNDAMENTAL PRINCIP LES WITH REFERENCE TO LEVY OF PENALTY WHICH MUST BE LOOKED I NTO AND 18 CONSIDERED BEFORE TAKING ANY DECISION FOR LEVYING P ENALTY. ADMITTEDLY THE PENALTY PROCEEDINGS ARE SEPARATE AN D INDEPENDENT OF ASSESSMENT PROCEEDINGS THEREFORE F INDINGS RECORDED IN ASSESSMENT PROCEEDINGS THOUGH RELEVANT BUT NOT CONCLUSIVE FOR LEVY OF PENALTY. THE SECOND PRIN CIPLE IS THE FOREMOST PRINCIPLE OF RULE OF NATURAL JUSTICE I .E. NO PERSON SHOULD BE PENALIZED OR CONDEMNED WITHOUT GIV ING A REASONABLE OPPORTUNITY THOUGH THIS PRINCIPLE IS NOR MALLY INCORPORATED IN PENAL PROVISIONS. THE THIRD PRINCIP LE IS THAT LEVY OF PENALTY IS DISCRETIONARY AND NOT MANDATORY. A CO- JOINT READING OF THESE PRINCIPLES LEADS TO ONLY ONE CONCLUSION THAT LEVY OF PENALTY IS NOT AUTOMATIC IRRESPECTIVE OF FACTS AND CIRCUMSTANCES THEREFORE THE TAX AUTHORITIES MUST TAKE INTO CONSIDERATION THE ENTIRE FACTS AND CIRCUMSTANCES BE FORE LEVYING ANY PENALTY. EVERY PERSON AGAINST WHOM PEN AL ACTION IS SOUGHT HAS AN INHERENT RIGHT TO EXPLAIN THE FACTS AND CIRCUMSTANCES OF THE CASE TO PROVE HIS INNOCENC E. IN THE PRESENT APPEAL THE SHARE FROM THE SILVER WAS AVAIL ABLE WITH THE ASSESSEE AND THE ASSESSEE WAS ALSO HAVING AGRIC ULTURAL INCOME. EVEN TELESCOPING HAS NOT BEEN PROVIDED TO THE ASSESSEE. A TOTAL OF 16.094 KG OF SILVER VALUING R S. 1 14 612/- WAS FOUND AND SHRI RAM PRAKASH GUPTA WHO WAS REPRESENTING ALL THE BROTHERS WHEREIN ON 25.6.2002 HE CATEGORICALLY TENDERED THAT HE WILL EXPLAIN THE SAM E ALONG WITH EVIDENCE IN ONE MONTH AND SHRI GUPTA VIDE HIS STATEMENT DATED 14.8.2002 IN REPLY TO QUESTION NO. 22 EXPLAINED THE SOURCE OF JEWELLERY AS 4184 GM DECLAR ED IN THE WEALTH TAX RETURN OF VARIOUS FAMILY MEMBERS 1800 G MS WAS DECLARED BY SHRI RADHESHYAM GUPTA IN 1975 SCHEME 2 292 GMS WAS DECLARED BY SMT. SANDHYA GUPTA UNDER VDIS BESIDES 540 GMS OF GOLD JEWELLEY WAS BROUGHT HOME BY SHRI OMPRAKASH GUPTA WHICH ACTUALLY BELONGED TO LAXMANDA S PRANCHAND AND THE REMAINING JEWELLERY WAS CLAIMED T O BE BELONGED TO VARIOUS MEMBERS OF THE FAMILY RECEIVED BY THEM DURING MARRIAGE CEREMONY AND OTHER OCCASIONS. ANOTH ER POINT PERTINENT TO MENTION HERE THAT THE ASSESSEE W AS JUST 20 YEARS OLD WHEN HIS FATHER DIED THEREFORE THIS ASP ECT HAS BEEN COMPLETELY IGNORED BY THE AO WHILE IMPOSING PE NALTY AS IT IS ALWAYS MAY NOT BE POSSIBLE THAT THE BOY OF SUCH A TENDER AGE MAY BE KNOWING THE FULL FACTS AND IS BUR DENED WITH A PENALTY OF RS.1 LAC. AS WE HAVE MENTIONED E ARLIER IT MAY BE A GOOD CASE FOR QUANTUM ADDITION BUT MAY NOT BE A GOOD CASE FOR LEVY OF PENALTY. THE PRESENT ASSESSEE MAY NOT 19 BE AWARE OF THE FINANCIAL AFFAIRS OF HIS FATHER TH EREFORE THE PENALTY HAS TO BE SPARINGLY EXERCISED THAT TOO IN C ASES OF CLEAR CONCEALMENT. THE BONA FIDES OF THE LEGAL HEIR COULD NOT BE DOUBTED AS FAR AS PENALTY IS CONCERNED. THE USE OF THE WORD MAY IN SECTION 158BFA(2) CLEARLY SHOWS THAT THE AO IS VESTED WITH THE DISCRETION WHILE LEVYING PENALTY . THE ASSESSEE HAS DEMONSTRATED HIS INNOCENCE THEREFORE THERE IS AN INBUILT MECHANISM IN SECTION 158BFA TO THE EFFEC T THAT PENALTY MAY NOT BE LEVIED IF THE FACTS AND CIRCUMST ANCES OF THE CASE JUSTIFY THE BONA FIDES OF THE ASSESSEE CO NSEQUENTLY LEVY OF PENALTY U/S 158BFA IS NOT AUTOMATIC. THE L EARNED AO MUST CONSIDER THE CIRCUMSTANCES OF THE CASE AND THEN SUPPOSED TO EXERCISE THE DISCRETION IN JUDICIOUS MA NNER. OUR VIEW FINDS SUPPORT FROM THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO V. SMT. PRAMILA PRA TAP SHAH (2006) 100 ITD 160 (MUM) WHEREIN VARIOUS OTHER JUDI CIAL PRONOUNCEMENTS HAVE ALREADY BEEN CONSIDERED BY THE BENCH. IN VIEW OF THESE FACTS WE ARE OF THE CONSID ERED OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENAL TY U/S 158BFA(2) OF THE ACT CONSEQUENTLY THE IMPUGNED PE NALTY IS DELETED THEREFORE THIS APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 15 TH MARCH 2010. THE DECISION OF THE CHENNAI BENCH IN DR. HAKIM S.A. SAYYAD SATTAR VS. ACIT [2009] [123 TTJ (CHE) 573] AND ALSO FROM HONB LE JURISDICTIONAL HIGH COURT IN MANSUKALAL RATANLAL JAIN VS. UNION OF INDIA (6 ITJ 219) (MP) WHEREIN ADDITION U/S 69 OF THE ACT WAS MADE ON THE ALLEGATION OF UNEXPLAINED INVESTMENT. THE ASSESSEE EXPLAINED THE SOURCE OF PART OF CASH AS BANK WITHDRAWALS JUST FEW DAYS PRIOR TO SEI ZURE. THE APPEAL OF THE ASSESSEE WAS ALLOWED. HOWEVER IN VIEW OF THE D ETAILED ORDER IN THE CASE OF SHRI MAYANK GUPTA (SUPRA) WHEREIN VARIOUS CASES HAVE BEEN DISCUSSED AND THE DECISION FROM THE HONBLE APEX CO URT IN THE CASE OF 20 RELIANCE PETRO PRODUCTS P. LTD. (SUPRA) AND THE PRO VISO CONTAINED AFTER SUB-CLAUSE (2) TO SEC. 158BFA OF THE ACT THIS APPE AL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY 2010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MAY 25 TH 2010 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR G UARD FILE !VYAS!