RAJESH POPLI,SHIMLA vs. DCIT, CHANDIGARH

Per Sanjay Garg, Judicial Member:

The above bunch of appeals has been preferred by the assessee against the different orders dated 29.06.2016 of the Commissioner of Income Tax (Appeals), [hereinafter referred to as CIT(A)]-3, Gurgaon for different assessment years agitating the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').

ITA Nos 1387 to 1392/Chd/2016- Shri Rajesh Popli, Shimla 2

The Assessing officer made additions of different amounts on account

of unexplained investment in purchases and at certain percentage of

gross profit on account of unaccounted sales. The assessee agitated

the aforesaid addition before the higher authorities. The matter

travelled up to the level of the Tribunal. The Tribunal vide his order

dated 11.7.2014 in ITA Nos. 77 to 81/Chd/2014 and in other appeals

sustained the addition of Rs. 3 lacs on account of unexplained

investment for initial assessment year 2005-06, however, deleted the

addition on account of unaccounted investment in subsequent years

observed that the same money might have been reinvested by the

assessee in subsequent years. So far as the unaccounted sales were

concerned, the Tribunal observed that the Assessing officer has been

more than reasonable to assess the profit at the GP rate declared by

the assessee in various years. In the meantime penalty, proceedings

were also initiated against the assessee and penalty was levied by the

Assessing officer in respect of the unexplained investment of Rs. 3

lacs for assessment year 2005-06 and also in respect of the additions

confirmed by the Tribunal in respect of unaccounted sales for other

assessment years.

addition on account of gross profit was made on estimation basis. He

has relied upon the decision of Hon’ble Punjab & Haryana High Court

in the cases of ‘Hari Gopal Singh Vs. CIT’ (2002) 258 ITR 85 and of

the Hon'ble Rajasthan High Court in ‘CIT Vs. Krishi Type Retreading

and Rubber Industries’ (2014) 360 ITR 580 (Raj.) to submit that if

the additions are made on estimation basis, it cannot be said that the

ITA Nos 1387 to 1392/Chd/2016- Shri Rajesh Popli, Shimla 3

assessee had furnished inaccurate particulars of income or concealed

his income; hence, no penalty was leviable.

lower authorities.

a simple case of additions on estimation basis. During the course of

search action, the assessee himself had admitted that he was indulged

in unaccounted purchases and unaccounted sales. The Tribunal has

confirmed the additions on account of unexplained investment in the

initial assessment year 2005-06 and has deleted the additions in this

respect for the remaining years considering that the same amount

might have been reinvested by the assessee. The assessee did not

produce the source of the initial investment. So far as the additions

on account of unexplained sales is concerned, a perusal of the

assessment order reveals that the Assessing officer first calculated

sales made outside the books of account and has made the addition in

respect of the said sales at the same rate of profit at which the

assessee had shown on the accounted for sales. The Assessing officer

has made a scientific calculation and has been very much reasonable

in arriving at the amounts of the additions liable to be made to the

income of the assessee. It is not the case of the assessee that it was

not indulged in unaccounted sales. Had the search action not been

taken, the aforesaid unaccounted income of the assessee, would have

escaped taxation. The facts on the file clearly prove that the assessee

had not only furnished the inaccurate particulars of income but had

also concealed his income. The proposition of law laid down by the

ITA Nos 1387 to 1392/Chd/2016- Shri Rajesh Popli, Shimla 4

Hon'ble Supreme Court in the case of Mak Data( P) Ltd (2013) 388

ITR 593 (SC) is squarely applicable to the case of the assessee. We

therefore, do not find any infirmity in the penalty levied by the

Assessing officer on the assessee u/s 271(1)(c) of the Act. Since the

facts and issues involved in all the aforesaid appeals are identical,

hence, the penalty is confirmed on this issue in all the appeals.

assessment year 2010-11 is concerned, penalty is also levied on

another issue in relation to the capital gains assessed. The assessee

had claimed the cost of improvement at Rs. 3 lacs on the property

sold. However, the Assessing officer noted that the assessee has

failed to furnish any evidence regarding the incurring of expenditure

on improvement of property, he therefore, did not allow the

deduction of Rs. 3 lacs out of the capital gains on account of cost of

improvement. The matter travelled upto the level of this Tribunal.

This Tribunal considering the fact that the assessee had shown a sum

of Rs. 1,60,000/- towards construction, further a sum of Rs. 44,333

towards transfer charges and Rs. 28,550/- for purchase of wood,

observed that the assessee might have incurred some expenditure

towards the cost of improvement which was estimated at Rs. 1 lakh.

The Tribunal, therefore, restricted the addition on this issue at Rs. 2

lakhs. The Assessing officer levied one penalty u/s 271(1)(c) of the

Act on this addition which was been further confirmed by the CIT(A).

The Ld. counsel for the assessee before us, has submitted that the

assessee had furnished the cash flow statement. That even the

ITA Nos 1387 to 1392/Chd/2016- Shri Rajesh Popli, Shimla 5

Tribunal has also observed that the assessee had incurred some

expenses towards cost of improvement.

had failed to furnish any evidence regarding the incurring of any

expenditure on cost of improvement.

the assessee had failed to fully prove his claim regarding the cost of

improvement and, hence, the addition has been made to the income of

the assessee. However, it does not seem to be a fit case for levy of

penalty u/s 271(1)(c) of the Act on this issue. It is not established on

file that the assessee had furnished inaccurate particulars of income

or had concealed his income on this issue. The penalty levied on this

issue, is therefore, ordered to be deleted.

assessment years 2005-06 to 2009-10 are hereby dismissed whereas

the ITA No.1392/Chd/2016 for assessment year 2010-11 are treated

as partly allowed.

Order pronounced in the Open Court on 24.04.2018.

Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 24 .04.2018 Rkk Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR