SATYA PRAKASH MUNDRA,JAIPUR vs. ITO, KISHANGARH

Rival contentions have been heard and record perused. Facts in brief are that the assessee is an individual and proprietor of M/s Star Marbles. Return of income for the relevant assessment year was filed on 17.10.2011 declaring a total income of Rs. 2,95,140/-. A survey was 2 ITA 753/JP/2016_ Satya Prakash Mundra Vs. ITO conducted in the case of Shri P.C. Vijayvargiya and others on 06.11.2011 by the Investigation wing, Jaipur. When confronted with the information so received, the assessee vide his letter dated 30.01.2014, firstly informed the Assessing Officer that, he has no business relation whatsoever with Shri P.C. Vijayvargiya, and that the impounded diaries/ documents may kindly be produced/ handed over to be verified. He lastly submitted that, since he chose not to fall into unnecessary litigation and to save unnecessary waste of time, the same may be added as income @ 10% of the total amount involved provided no penalty proceedings be initiated against the assessee. The Assessing Officer did not agree with the assessee’s contention and estimated 10% of deposit in bank account of Shri P.C. Vijayvargiya as income of the assessee amounting to Rs.3,84,000/-. The Assessing Officer also levied penalty U/s 271(1)(c) of the Act amounting to Rs. 59,000/-. By the impugned order, the ld. CIT(A) confirmed the action of the Assessing Officer against which the assessee is in further appeal before the ITAT.

The assessee has raised ground with regard to defective notice as well as merit of penalty so imposed.

We have considered the rival contentions and carefully gone through the orders of the authorities below. From the record we found

3 ITA 753/JP/2016_ Satya Prakash Mundra Vs. ITO that the Assessing Officer had only estimated the income of the assessee, based merely on statements of third party, which was not corroborated with any evidence/ documents to establish that the said sum was undisclosed sales of the assessee. Only because the assessee agreed to an addition of 10% of the said amount to his taxable income, it cannot be construed, as concealment and / or furnishing of inaccurate particulars. It is established position of law that penalty proceedings are independent of assessment proceedings. Penalty cannot be imposed simply and merely on the basis of assessment proceedings. It is incumbent upon the Assessing Officer to bring sufficient material on record to allege that there was concealment of income or furnishing of inaccurate particulars of income. This has not been done in this case and penalty has been levied in a very routine manner. Keeping in view the totality of facts and circumstances, we do not find it is a fit case for levy of penalty, therefore, Assessing Officer is directed to delete same.

As we have already allowed the assessee’s appeal on merit, we are not going into the ground taken by the assessee with regard to defective notice having been issued U/s 274 of the Act.