KADUNGAMPARAMBIL MANUAL GEORGE JOSEPH,ERNAKULAM vs. ITO , NON CORPORATE WARD 2(4) & TPS, KOCHI

It emerges during the course of hearing that all these assesse’s appeals arise from the learned lower authorities activities , i.e. reassessment, section 143(3) r.w.s. 147 assessment(s), 271(1)(c), 271AAA, 271B penlty, etc. This is for the precise reason that there was a search carried out at assessee’s business premises who is engaged in LPG distribution business. Both the counsel(s) fairly submit before us that the first substantial issue that invites our apt adjudication is estimation of to 18/Coch/2023 Kadungamparampil Manual George Joseph assessee’s net profits @2.4% by the Assessing Officer as upheld in CIT(A)’s lower appeallte discussion.

The Revenue’s vehement contentions before us are that not only the assessee had failed to substantiate his net prfit @0.7% but also the learned Assessing Officer had drawn comparables in the same line of busiess to arrive at the impugned rate of 2.4% in question.

The assessee’s case on the other hand is that rejection of book results form a conditin precedent for the departmental authporities before such a couse of action of estimation of net profit is finalised.

We find no merit in assessee’s argument in principle as the learned Assessing Officer’s detailed discussion in the respective assessment/reassessment have given elaborate reasoning for the purpose of rejecting assessee’s net profit in question. We wish to emphasise here that the Assessing Officer impugned estaimation has further considerd the comparable cases as well in the very line of business. We thus uphold the impugned estimation @ 2.4% in all if assessee’s quantum cases.

We next note that the assessee’s quantum appeal in 2017-18 involves unexplained cash deposit addition of Rs.90,00,000/- made during the demonitisation period. The assessee all along claims the source of the impugned cash deposit as attributable to his business of LPG dealership and cash receipts derived therefrom. Learned counsel seeks to buttres the point that once both the lower autorities have accepted his business sales in principle, the impugned cash deposits ought not to be treated as unexplained even if made during demonetisation.

We find in this factual backdrop that neither parties arguments against and in support of the impugned addition deserves to be accepted in the entiriety. This is for the precise reason that not only the lower autorities have given credit to assessee’s to 18/Coch/2023 Kadungamparampil Manual George Joseph sales in LPG dealership business but also they have not taken into account the latter’s sales qua the estimation of profit @2.4%. The assessee has also failed to reconcile all of his business sales vis-a-vis the impughed cash deposits to the satisfaction of the lower authorities. Our attention is further invited to the assessment findings in 2017- 18 declaring a sum of Rs.50,00,000/- . Faced with this situation, we are of the considered view that a lump sum relief of Rs. 40,00,000/- in the given facts and circumstances of the case would meet the ends of justicein assessee’s case. Necessary computation shall follow as per law.

We now proceed to deal with the consequential section 271B and section 271(1)(c) penalties for concealment and furnishing of inaccrate particulars of income involving varyig sums in these appeals. Learned DR seeks to submit that AY 2017-18 also involves section 270A penalty of under reporting of incomes as a consequence to misreporting. We are of the considered view that once the lower authorities have estimated the assessee’s book results there is hardly any justification to levy section 271B penalty for non-submition of tax audit report, which was filed well before the Assessing Officer n. Herein again we are of the considred view the same would not be sustainable once the addition have been made on the basis of estimation @ 2.4% (supra). All these penalties stand deleted therefore since there exists a “reasonable” cause in assessee’s explanations within the meaning of section 273B of the Act.

Lastly comes the Revenue’s case in AY 2017-18 that we ought to confirm the impugned section 270A penalty as it pertains to unexplained cash deposit made during the demonetisation period. Learned DR’s case is that assessee’s cash deposits in fact represent his under reported income u/s. 270A of the Act. We find no merit to accept the Revenue’s instant argument as it has come on record in the preceding paragraphs that the assessee had attributed source therefor to his regular business sales, which forms a bonafide “reasonable” cause within the meaning of section to 18/Coch/2023 Kadungamparampil Manual George Joseph 270A(6)(a) of the Act. We accordingly delete all these penalties levied in assessee’s case. Necessary computation shall follow as per law. We clarify before parting that we have uphold only the quarterly NP estimation @ 2.4% and partly confirmed Rs. 90,00,000/- addition to the extent of Rs.50,00,000/- (supra) in AY 2017-18 only. All penalties stand deleted.

These appeals are filed with a delay of 18/21 days as the case may be. Considering assessee’s condonation petition(s) explaining the delay(s) as well as going by the decision in the case of Collector Land Acquisition vs. Mst. Katiji & Ors(1987) 167 ITR 471 (SC) settling the issue long back that that all such technical aspects must make way for the cause of substantial justice, the delay is condoned.

These assessee’s appeals are allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files.