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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: SHRI I.C. SUDHIR & SHRI L.P. SAHU
ORDER PER I.C. SUDHIR, JM
The assessees have questioned first appellate order whereby the ld.
CIT(A) has upheld the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act.
We have heard and considered the arguments advanced by the parties in view of the orders of the authorities below, material available on record and the decisions relied upon. & 6768/D/2013 ASSESSMENT YEARs 2000-01 2001-02 3. The relevant facts in the case of Shri Ajay Gupta in the year 2000-01 remain that the assessee had received a loan of Rs. 2,00,000/- from M/s Anand Jute Company for which no confirmation was filed before the Assessing Officer. The assessee, however, had filed balance sheet with his reply dated 29.11.07 showing a liability of Rs. 5,48,000/- standing in the name of M/s Anand Jute Company as against Rs. 2,00,000/- mentioned in the letter. The Assessing Officer added the entire amount of Rs.5,48,000 as no confirmation was filed. Before the ld. CIT(A), the assessee filed application under Rule 46A for submitting confirmation letter from M/s Anand Jute Company. Ld. CIT(A) did not accept the confirmation letter on the basis that it was signed by the accountant and not by the proprietor of M/s Anand Jute Company and that no Permanent Account Number was mentioned therein. In the result, the ld. CIT(A) confirmed the addition of Rs. 2,00,000/- only which, according to him, was received during the year and Rs. 3,48,000 was the opening balance. The Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act and levied penalty of Rs.66,000/- @100% of tax sought to be evaded. Ld. CIT(A) has sustained this penalty against which the assessee is in appeal.
In support of the ground, ld. AR submitted that the addition of Rs. 2,00,000/- upheld by the ld. CIT(A) has been deleted by the Tribunal in I.T.A.
No. 4139/Del/2010 and others vide order dated 22.9.14. Ld. AR, on the other hand, tried to justify the levy of penalty in question. Considering the above & 6768/D/2013 ASSESSMENT YEARs 2000-01 2001-02 submission, specially keeping in mind that the subject matter of the penalty i.e. addition of Rs. 2,00,000/- made on account of loan taken from M/s Anand Jute Company has ultimately been deleted by the Tribunal, we are of the view that the penalty in question is not sustainable, reason being that it cannot be said beyond doubt that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee regarding the above addition. We, thus, while setting aside the orders of the authorities below, direct the Assessing Officer to delete the penalty levied u/s 271(1)(c) of the Act at Rs.66,000/-. The ground is accordingly allowed.
In the assessment year 2001-02, the Assessing Officer had made addition of Rs.12,00,000/- in the proprietary concern of the assessee i.e. M/s Balaji Products on account of low GP. Ld. CIT(A) observed that during the year under consideration, the GP rate declared by the assessee at 23.56% was less than the GP rate of 25% declared in the case of M/s Balaji Products and GP rate of 26% in case of assessee itself for the assessment year 2000-01. He accordingly found it reasonable to apply GP rate at 26% resulting into sustenance of addition of Rs. 90,129/-.
The Assessing Officer made another addition of Rs.28,599 on account of unconfirmed sundry creditors. Ld. CIT(A) held that like in the case of M/s Royal Packaging wherein the assessee had offered the amount on the ground of cessation of liability in the assessment year 2002-03, the assessee could have & 6768/D/2013 ASSESSMENT YEARs 2000-01 2001-02 offered the sum of Rs.28,599 in the case of M/s Shivangi Printers also. The Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act and levied penalty of Rs.62,510 @150% of the tax sought to be evaded. Ld. CIT(A) has reduced the penalty to Rs.41,673 by applying the rate of 100% of the tax sought to be evaded. This action of the ld. CIT(A) has been questioned by the assessee.
Ld. AR submitted that penalty cannot be levied on the estimated trading addition and the addition of Rs.28,559 sustained by the ld. CIT(A) has been deleted by the Tribunal in the case of assessee itself for the assessment year 2001-02 in vide order dated 22.9.2014. Ld. AR placed reliance on the decision of CIT vs Aero Traders Pvt. Ltd. 322 ITR 316 (Del) holding that penalty u/s 271(1)(c) of the Act cannot be levied on estimated income.
Ld. DR, on the other hand, placed reliance on the orders of the authorities below.
Considering the above submission that the trading addition was made on estimate basis and another addition of Rs.28,599 made on account of unconfirmed sundry creditor has been deleted by the Tribunal, we find that the penalty in question is not sustainable in absence of a finding beyond doubt that there was concealment of particulars of income or furnishing inaccurate & 6768/D/2013 ASSESSMENT YEARs 2000-01 2001-02 particulars thereof on the part of the assessee towards the additions which remained the subject matter of the penalty. We, thus, setting aside the orders of the authorities below, direct the Assessing Officer to delete the penalty levied u/s 271(1)( c) of the Act at Rs.62,510. The ground is accordingly allowed.
In the result, both the appeals are allowed.
Order pronounced in the open court on 11.12.2015.