SH. VINAY KUMAR BANSAL (LEGAL HEIR OF SAJJAN KUMAR BANSAL),FATEHABAD vs. ITO, FATEHABAD

सुनवाई क� तार�ख/Date of Hearing : 18/04/2017 घोषणा क� तार�ख /Date of Pronouncement: 20/04/2017 ORDER This appeal of the assessee arises from the order of learned CIT(A), Rohtak, vide order dated 11.11.2016 for the assessment year 2012-13.

. “The CIT(A) erred in confirming the action of the ld. AO in levying penalty of Rs.2,59,887/- u/s.271(1)(c) of the Income Tax Act, 1961.”

3. The brief facts of the case as are emanating from the order of the penalty are reproduced hereinbelow: “The assessee is a commission agent. Survey u/s 133A of the Income tax Act, 1961 was carried out at the business premises of the assessee on 20.03.2012. Return declaring, a taxable of Rs. 2797400/- which inter-alia includes additional income of Rs.1000000/- surrendered during the course of survey, was e-filed on 30.09.2012. Later on, the case was selected for compulsory scrutiny and assessment was completed u/s 143(3) on 18.03.2015 at a total income of Rs.3688491/- by making an addition of Rs.746309/- on account of out of book purchase of guar-stock of 73.70 quintals, an addition of Rs.6752/- on account of out of books sale of alleged stock of guar of 63.70 quintals and addition of Rs.88000/- on account of unexplained investment/out of books purchase of bardana/sutli stock..Simultaneously, penalty proceedings u/s. 271(1)(c) were also initiated aqalnst the assessee for concealment of particulars of income to the tune of Rs. 841061/-(746309+6752+88000) and the satisfaction to this effect is also duly recorded in the assessment order dated 18.03.2015. Accordingly, penalty notice u/s 274 read with section 271 of the Income Tax Act, 1961 was also issued to the assessee on 18.03.2015 which was served alongwith assessment order on 26.03.2015 for compliance on 01.04.2015.

2. In reply to the said notice, the assessee, vide application dated 13.04.2015, stated that the addition of Rs.746309/- and of Rs.6752/- have been made disbelieving the appellant's plea that this stock of guar 63.70 quintals is very much included in the total purchase and sale of 2858 quintals of guar made during the year and the profit and sale of guar stock is also duly reflected in the trading account. With regard to the addition of 88000/- made on account of unexplained investment in purchase of bardana/sutli, the assessee has stated that, being a commission agent, the purchases/sales of agricultural commodities are made on behalf of the traders and the parties on whose behalf purchase/sale of commodities are made keep bardana at their premises which is sent to the sellers at the time of despatch and that the assessee has neither purchase bardana/sutli nor have consumed or sold the same. 2.1 The assessee has raised the same plea at the time of completion of the assessment proceedings also and the same has already been rejected during the course of assessment proceedings with detailed discussion in the assessment order. For the sake of brevity, the same is not needed/required to be reproduced again. However, the present submission/plea of the assessee is gain considered and rejected with the observation that the said additions have been made on the basis of unrecorded stock of quar/bardana/sutli found during the course of survey and that too after having confronted to the assessee. It is again imperative to mention here that on being confronted to the assessee with regard to the excess stock of guar, the assessee in his statement recorded during the course of survey stated that I am not aware of this stock and so far as my knowledge is concerned, this stock does not pertain to my firm and my firm has stock of only of Khal and Binola. Except, my firm has no stock of any other commodity. Whereas, during the course of assessment proceedings as well as during the course of present penalty proceedings, the assessee has' submitted that the excess stock of guar of 63.70 quintals is included in the total stock of guar purchased and sold during the, year. The assessee's contradictory statement on this crucial issue without any documentary evidence appears to be odd and is, therefore, not acceptable.

3. The ratio of citations/judgments quoted by the assessee are also not applicable in the case of the assessee as there are positive evidence on record in the shape of Inventory of stock showing the physical stock of guar and bardana/sutli which was not found recorded in the books of the accounts of the assessee even after completion thereof. Even on being asked, the assessee could not produce the purchase/sale bills of the alleged guar and bardana stock of 63.70 quintals. Rather, the assessee went of reiterating that the guar stock of 63.70 quintal is included in the total stock of guar purchased and sold during the year. From the above facts of the case, it is crystal clear that the mensrea of the assessee was to conceal the particulars of Income in relation to which additions have been made. Needless to say, out of books sale/purchase of guar stock is not a mere omission or negligence. Rather, it is a conscious and deliberate act & attempt on the part of the assessee to conceal the particulars of income with the sole intention to evade the chargeability of tax, interest and penalty on the concealed income. 3.1 As the sales/purchase of alleged stock of quar/bardana/sutli is not found recorded in the books of accounts even after completion thereof; and no surrender on this account was also made by the assessee; and the assessee has no material/evidence contrary to this fact; the deliberate and willful attempt of the assessee to conceal of particulars of income is proved to the extent of Rs. 841061/- is proved. The mere assertion of the assessee that the stock of guar of 63.70 quintals is included in the total sale/purchase of guar made during the year without proper substantial is not acceptable. The assessee assertion without proper substantiation in respect of the unaccounted stock of bardana/sutli is also not acceptable.

4. I, therefore, hold the assessee in default for concealment of particular of income to the extent of Rs.841061/- and impose a penalty of Rs.259887/- for the said default u/s.271(1)(c) of the Income Tax Act, 1961. The quantum of penalty is calculated as under: (i) Tax sought to be evaded : Rs.259887/- (ii) Maximum penalty @ of 300% : Rs.779661/- of the tax sought to be evaded (iii) Maximum penalty @ of 100% : Rs.259887/- of the tax sought to be evaded For the sake of natural justice and to be fair and reasonable, a minimum penalty of Rs.259887/- is imposed upon the assessee.”

4. Learned CIT(A) confirmed the action of the AO.

5. I have heard the rival contentions and perused the facts of the case. It was brought to my notice by the learned counsel for the assessee, Shri K. Sampat, Adv., the assessee has made a surrender of Rs.10 lakh on account of marriage expenses, were surrendered on account itself in binola. The survey was made on 20.03.2012 and the accountant was on leave for about two months and when he came back he prepared the final accounts and filed the return of income as per the final audited accounts before the due date on 30.09.2012. As a matter of fact, the difference pointed out of guar, sutli, etc. are in fact tallied and there is no difference and therefore the additions on this account cannot be made and no concealment can be said to have been done. Though the assessee has not appealed against the additions made by the AO, which does not mean the assessee has accepted the penalty provisions. The assessee has submitted the explanation and the accounts during the penalty proceedings as well as the assessment proceedings. As regards the packaging expenses like sutli, etc. are on account of customers and normally the assessee has never been dealing on account of guar, etc. but in the impugned year he dealt with a little on account of guar, etc. The assessee having submitted all the explanations has not concealed the particulars of his income or has not furnished inaccurate particulars of such income, and therefore, no penalty is liable to be levied in such circumstances and the penalty so levied by the AO and confirmed by the learned CIT(A) is directed to be deleted. Thus, the sole ground of the assessee is allowed.