SANJAYKUMAR VALLABHBHAI PAN (HUF),RAJKOT vs. ITO, WARD-2(1)(1), RAJKOT, RAJKOT

आयकर अपील�य अ�धकरण, राजकोट �यायपीठ, राजकोट। IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं /.ITA No.958/RJT/2024 �नधा�रणवष�/ Assessment Year: 2012-13 Sanjaykumar Vallabhbhai Pan (HUF) The ITO, Ward-2(1)(1) बनाम 703-, Pyramid Tower Rajkot. Bansi Park Vs. Amin Marg Rajkot 360 001. PAN : AAOHS 9548 F (अपीलाथ�/Assessee) (��यथ�/Respondent) :

�नधा�रती क� ओर से/Assessee by : Shri Mehul Ranpura, ld.AR राज�व क� ओर से/Revenue by : Shri Abhimanyu Singh Yadav, ld.SR.DR

सुनवाई क� तार�ख /Date of Hearing : 04/03/2025 घोषणा क� तार�ख /Date of Pronouncement : 02/06/2025 ORDER Per Dr. Arjun Lal Saini, Accountant Member: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2012-13, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi[in short ‘Ld.CIT(A)/NFAC’], under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 22.10.2024, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Act, dated 17.03.2015. 2. The grounds of appeal raised by the assessee are as follows: “The grounds of appeal mentioned hereunder are without prejudice to one another.

Sanjaykumar Vallabhbhai Pan (HUF) ITA No.958 /RJT/2024 (AY : 2012-13) 2 The Id. CIT(A) erred on facts as also in law in confirming penalty of Rs.5,99,530/-, on the addition made on estimated basis on the alleged ground, unexplained income of Rs.19,68,993/-, in guise of agriculture income. The penalty levied and confirmed unjustified and uncalled for, which may kindly be deleted. Your Honour's assessee craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.” 3. The facts of the case which can be stated quite shortly are as follows: The assessee, filed its return of income on 11.10.2012, declaring income of Rs.1,51,210/-. The case of the assessee, selected for scrutiny under CASS. The assessment was completed u/s 143(3) on 17.03.2015, by making addition of Rs.26,06,199/- on account of unexplained income introduced in the guise of agriculture income. The assessing officer also initiated penalty proceedings u/s 271(1)(c) of the Act, for concealment of income. Aggrieved with the order of the assessing officer, the assessee preferred an appeal before the CIT(A), . The CIT(A)-2, Rajkot vide order in an appeal No. CIT(A)-2/0243/2014-15, dated 07.10.2016, decided and confirmed the addition of Rs.22,40,551/-, out of total addition made by the assessing officer of Rs. 26,06,199/-. Thereafter, assessee aggrieved with the order of the CIT(A)-2, Rajkot, preferred an appeal before the Hon’ble ITAT, Rajkot. The Hon’ble ITAT, Rajkot vide order in ITA No.6/RJT/2017 dated 27.09.2017 decided the appeal of the assessee and partly allowed appeal of the assessee and confirmed the addition of Rs.19,68,993/-. Subsequently, penalty of Rs.5,99,530/- u/s 271(1)(c) of the, Act was levied by the assessing officer, ( respect of estimated confirmed addition of Rs.19,68,993/-), vide order dated 07.03.2018 for AY 2012-13.

Sanjaykumar Vallabhbhai Pan (HUF) ITA No.958 /RJT/2024 (AY : 2012-13) 3 5. Learned Counsel for the assessee, argued that the assessing officer has imposed penalty on estimated addition. The ld.Counsel, took us through the paper book (PB) Page no.23, wherein in assessee’s own case, in a quantum proceedings, the Tribunal has estimated the addition in ITA No.06/RJT/2017 for AY 2012-13, vide order dated 27.90.2017 and allowed the appeal of the assessee, partly, observing as follows: “4. We have given our thoughtful consideration to rival submissions. The sole issue that arises for our adjudication is regarding cotton crop income addition of Rs.22,40,551/-. The Assessing Officer has admittedly relied upon CCFs data to estimate assessee's cotton production @ Rs.647/- per hectare as against the CIT(A) taking it to be @ 2000 kg. per hectare. The assessee's explanation supported by Talati certificate indicating the impugned cotton yield as high as 4200 to 5800/- kg. per hectare stands rejected. This gives rise to the instant litigation between the parties. We notice in above backdrop of facts that both the lower authorities have been mainly guided by CCI figures collected from various authorities. We observe in this backdrop of facts that estimating or relying upon statistical figures in a totally nature based occupation alike agriculture operations may or may not be always correct as such a subjective issue cannot be based upon mere statistical operations only. We deem it appropriate to further opine that this modern age is witnessing a daily improvement in all spheres including quality of agricultural inputs like seeds, fertilizers and other such items. We therefore opine that such an estimation based on past figure only may not be always correct. Coupled with this, the assessee has also filed revenue certificates claiming the average yield to be exorbitantly high in the range of 4200 to 500 kg. per hectare. We therefore are of the view that larger interest of justice would be served in this case if we ourselves estimate assessee's cotton yield to be 3000 kg. per hectare in the relevant previous year on ad hoc basis. The Assessing Officer is directed to frame consequential computation enhancing the CIT(A)'s estimation from Rs.2000/- kg. per hectare to Rs.3000/- kg. per hectare as per law after affording adequate opportunity of hearing to the assessee. It is made clear that our instant estimation shall not be in any way be treated as a precedent in preceding or succeeding assessment year.” 6. Therefore, the ld. Counsel for the assessee, argued that in quantum proceedings, the Tribunal has re-estimated the addition sustained by the learned CIT(A), and in fact, order of Ld. CIT (A) is also based on estimation. The ld. Counsel submitted that the penalty on estimated addition should not be sustained.

Sanjaykumar Vallabhbhai Pan (HUF) ITA No.958 /RJT/2024 (AY : 2012-13) 4 7. On the other hand, the ld.DR for the Revenue, relied on the findings of the impugned penalty order under section 271(1) (c) of the Act. 8. We have heard both the parties and perused the material available on record. We find that the assessing officer in the assessee’s case in the quantum proceeding has made addition in respect of the exempt income received by the assessee for doing the agriculture activities, and the assessee has explained the source, of agriculture income, by producing sufficient evidence’s about the ownership of the land and the quantum of the agriculture land, and production etc. Therefore, we note that there is no conscious concealment on the part of the assessee, as the assessee has submitted entire details and documents to the satisfaction of the assessing officer. We also find that the addition retained was only on estimation. The initial production as per general Government data, the production was estimated at 647 kg/hectare irrespective of quality and area cultivated. This has been estimated at 2000 kg/hectare i e. 3 times more by Id. CIT(A). This is further estimated at 3000 kg/hectare by Hon'ble ITAT, means 4 times higher than estimated by the Government data. Thus, there is different estimation of production of cotton, the addition therefore changed accordingly. Thus, there is more than one opinion came on the records, for estimation, in assessee`s case under consideration. Since the addition retained by the Hon'ble ITAT, in quantum processing, is on estimate basis, hence no penalty could be levied u/s. 271(1)(c) of the Act.

Sanjaykumar Vallabhbhai Pan (HUF) ITA No.958 /RJT/2024 (AY : 2012-13) 5 amount of conscious concealment or act of furnishing of inaccurate particulars. Hon'ble High Court of Gujarat has in the case of National Textiles vs. CIT 249 ITR 125 (Guj) observed that "In order to justify the levy of penalty, two factors must co-exist, (i) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee's income. It is not enough for the purpose of penalty that the amount has been assessed as income, and (ii) the circumstances must show that there was i.e., conscious concealment or act of furnishing of inaccurate particulars on the part of the assessee." 10. Hon'ble Bombay High Court has in the case of CIT vs. Arkay Saree Museum 187 ITR 147 (Bom) held that; “mere addition to income on estimated basis would not constitute basis for levy of penalty u/s. 271(1)(c) of the Act, unless the revenue proves the ingredients of concealment or that of furnishing of inaccurate particulars." The Hon'ble High Court of Punjab & Haryana has in the case of CIT vs. Sangrur Vanaspati Mills Ltd. (SLP ITR 303 TR St. P-18 (SC) held that, when the addition of income is based on estimate, penalty is not leviable. Based on these facts and circumstances, we delete the penalty under section 271(1) (c) of the Act. 11. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 02/06/2025 Sd/- Sd/- (DINESH MOHAN SINHA) (DR.ARJUNLAL SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER राजकोट /Rajkot िदनांक/ Date: 02/06/2025 *vk

Sanjaykumar Vallabhbhai Pan (HUF) ITA No.958 /RJT/2024 (AY : 2012-13) 6 आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to :  अपीलाथ�/ The Assessee  ��यथ�/ The Respondent  आयकर आयु�/ CIT  आयकर आयु�(अपील)/ The CIT(A)  िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, राजकोट/ DR, ITAT, RAJKOT  गाड�फाईल/ Guard File By order/आदेशसे , // True Copy // /True copy/ By order Assistant Registrar/Sr. PS/PS ITAT, Rajkot