M/S PARV SALES AND SERVICE,RANCHI vs. ITO,WARD-2(2), RANCHI

Coming to the assessee’s quantum appeal learned authorized representative is very fair at the outset in not pressing for all other grounds except that of estimation of gross profit rate. He submits that this assessee is a wholesaler in trading of soft drinks and other allied products. It had declared gross &171/Ran/2019 M/s. Parv Sales and Services Assessment Year:2015-16 Page 2 profits @6.38% which has been increased to 50% during the course of assessment and restricted to 25% in the lower appellate proceedings.

Learned departmental representative fails to dispute the clinching aspect that the impugned estimation has not been guided by any contemporary factors such as similar line of business by quoting relevant comparable cases. The fact also remains that the assessee has not been able to explain its profit rate by way of cogent evidence. We keep in mind all these peculiar facts and deem it appropriate to restrict the impugned gross profit rate from 25% to 9 % with a rider that the same shall not be treated as precedent in any other assessment year. The Assessing Officer shall frame consequential computation including that of interest as per law. This quantum appeal is partly allowed.

Coming to 271(1)(c) of the Act, we are of the view that since the quantum dispute pertains to estimation only, it cannot be held that the taxpayer had furnished inaccurate particulars. We make it clear that hon’ble apex court has settled the law long back in Reliance PetroProducts’s case 322 ITR 158(SC) that quantum and penalty proceedings are parallel wherein each and every disallowance /addition made in the course of former does not ipso facto attract the latter penal provision. We therefore accept the assessee’s instant penalty appeal ITA No.171/Ran/2019.

The assessee former quantum appeal is partly allowed and penalty appeal is allowed. Ordered accordingly.