PPP Associates, v. Asstt. CIT Ichalkaranji Cir.,

ITA 946/PUN/2009 | 2004-2005
Pronouncement Date: 29-10-2010 | Result: Allowed

Appeal Details

RSA Number 94624514 RSA 2009
Assessee PAN AAAAP4935G
Bench Pune
Appeal Number ITA 946/PUN/2009
Duration Of Justice 1 year(s) 2 month(s) 19 day(s)
Appellant PPP Associates,
Respondent Asstt. CIT Ichalkaranji Cir.,
Appeal Type Income Tax Appeal
Pronouncement Date 29-10-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 29-10-2010
Date Of Final Hearing 25-04-2011
Next Hearing Date 25-04-2011
Assessment Year 2004-2005
Appeal Filed On 10-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI B. RAMAKOTAIAH AM I.T.A. NO. 946 TO 953/PN/2009 A.Y. 2004-05 2005-06 2002-03 2003-04 2000-01 2001-02 1998-99 1999-00 PPP ASSOCIATES 10/1220-21 KAGWADE MALA ICHALKARANJI PAN AAAAP 4935 G APPELLANT VS. ASSTT. CIT ICHALKARANJI CIR . IACHAKARANJI RESPONDENT APPELLANT BY : SHRI M.K. KULKARNI RESPONDENT BY: SHRI ABHAY DAMLE ORDER PER B. RAMAKOTAIAH AM THESE 8 APPEALS ARE BY THE ASSESSEE AGAINST THE COMMON ORDER OF THE CIT(A) KOLHAPUR DATED 27-2-2009 FOR ALL THE YEARS CONFIRMING THE PENALTY U/S 271(1)(C) PARTLY OR FULLY IN THE RESPEC TIVE YEARS. SINCE FACTS AND ISSUES ARE COMMON THEY ARE CONSIDERED TOGETHER AND DECIDED AS UNDER. 2. THE ASSESSEE RAISED THE GROUNDS COMMONLY IN ALL THE YEARS. FOR THE SAKE OF RECORD THE GROUNDS RAISED IN APPEAL NO . 952/PN/2009 FOR A.Y. 1998-99 IS EXTRACTED AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A WAS NOT JUSTIFIED IN CONFIRMING THE PE NALTY LEVIED U/S 271(1)(C) OF THE ACT TREATING THE ASSESS EE AS NEW ASSESSEE WITHIN THE MEANING OF EXPLANATION 3 TO SEC TION 271(1)(C) OF THE ACT. THE PENALTY LEVIED BE DELETE D SINCE THE EXPLANATION NO. 3 WOULD NOT OVERRIDE EXPLANATION 1 WHICH IS A RULE OF EVIDENCE REBUTTABLE AS PROVIDED IN THE SA ID EXPLANATION 1 ITSELF. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE PENALTY U/S 271(1)(C) LEVIED BY A.O AND CONFIRM ED BY LD. ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 2 CIT(A) AS THERE IS NO FINDING IN THE ASSESSMENT ORD ER THAT THE ADDITION MADE TO TOTAL INCOME AND SUSTAINED BY HONB LE ITAT WHICH ADDITION WAS ONLY ON THE BASIS OF ESTIMATION OF INCOME @ 1.5% AS AGAINST ESTIMATED BY THE ASSESSEE WHILE F ILING THE RETURN AS NO BOOKS OF ACCOUNT WERE MAINTAINED. THE PENALTY DESERVES TO BE CANCELLED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW AND SINCE THE ADDITION TO TOTAL INCOME IS ON ESTIMA TION BASIS SUCH ADDITION HAS NOT BEEN ESTABLISHED OR CAN BE RE ASONABLY INFERRED THAT IT WAS ON ACCOUNT OF CONTUMACIOUS CON DUCT OR CAN BE INFERRED OR ESTABLISHED THAT THE ASSESSEES EXPLANATION WAS NOT BONAFIDE. IN SUCH A SCENARIO N O PENALTY U/S 271(1)(C) WOULD BE SUSTAINED EVEN AFTER THE PRONOUNCEMENT OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN DHARMANEDRA TEXTILES CASE. THE PENALTY BE QUASHED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE PENALTY U/S 271(1)(C) HAS BEEN LEVIED BY A.O AN D CONFIRMED BY LD. CIT(A) AS IF IT IS AN AUTOMATIC CO NSEQUENCE OF AN ADDITION MADE TO TOTAL INCOME. THE PENALTY TH EREFORE IS NOT SUSTAINABLE AND IT BE QUASHED. 3. BRIEFLY STATED THE A.O CONDUCTED SURVEY U/S 133 A ON 21 ST AND 22 ND FEBRUARY 2005 IN THE CASE OF PUSHPAK ARJUNDAS AGARW AL AND OTHERS OF ICHALKARANJI AND FOUND OUT THAT THE BUSINESS OF T RADING OF YARN CLOTH WAS BEING CONDUCTED IN THE NAME OF FIVE CONCERNS AN D THE BANK ACCOUNTS MAINTAINED IN JIVAJI SAHAKARI BANK LTD. WAS TAKEN AS BASIS AS THE BOOKS OF ACCOUNT WERE NOT MAINTAINED. ON THE BASIS OF INQ UIRIES AND SUBSEQUENT QUESTIONING THE ASSESSEE FILED RETURNS F OR VARIOUS YEARS UNDER CONSIDERATION ON 21-3-2005 FOR A.Y. 1998-99 A ND ON 26-12-2005 FOR OTHER YEARS. SINCE THE RETURNS WERE NOT FILED E ARLIER IN THE RESPECTIVE YEARS U/S 139 AND THE INCOME HAS ESCAPED ASSESSMENT THE A.O INITIATED PROCEEDINGS U/S 147 ON 25-3-2005 FOR A.Y. 1998-99 A ND ON 7-6-2005 FOR OTHER YEARS BY ISSUING NOTICE U/S 148. 3.1 THE STATUS OF THE ASSESSEE WAS DETERMINED AS AOP AS UNDER : THE ASSESSEE HAS SHOWN STATUS AS THAT OF AOP WITH T HE DETERMINATE SHARES OF PERSONS INTERESTED IN JOINT VE NTURE. THE RETURN FILED ACCOMPANIES INDENTURE OF AOP WHICH HAS BEEN MADE ON 1 ST APRIL 1998 WHEREAS THE ACCOUNTING PERIOD STARTS ON 1-4- 1997. THEREFORE INDENTURE FOR AOP IS NOT RELEVANT FOR THE A.Y UNDER CONSIDERATION. ALSO THE ASSESSEE HAS NOT MAI NTAINED BOOKS OF ACCOUNTS. THEREFORE THE SHARES OF THE BENEFICIA RIES ARE NOT DETERMINABLE. MORESO IN THIS GROUP OF CASES SURVEY OPERATION WAS CONDUCTED ON 21 ST AND 22 ND OF FEBRUARY 2005. CONSEQUENT UPON ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 3 SURVEY ACTION U/S 133A(1) SOME BENAMI BANK ACCOUNTS WERE DETECTED IN POST SURVEY ENQUIRIES DETAILED AS BELOW : CURRENT ACCOUNT NO. NAME OF THE BANK 1. KAMAL LAXMI WEAVING MILLS 7/292 JIVAJI SAHAKARI BANK LTD. ICHALKARANJI 2. KRISHNA WEAVING MILLS L30010/000566 -DO- 3. MAYUR MILLS L30010/000565 -DO- 4. PIYUSH TEXTILES L30010/000564 -DO- 5. SHYAM FABRICS L30010/000563 -DO- THE BOOKS OF ACCOUNT HAVE NOT BEEN MAINTAINED. THE TOTAL CREDITS IN VARIOUS BANK ACCOUNTS IN DIFFERENT NAMES OF M/S. KA MAL LAXMI TEXTILE MILLS KRISHNA WEAVING MILLS MAYUR MILLS PIYUSH T EXTILES AND SHYAM FABRICS WAS TAKEN AS BASIS AND THE CREDITS/TURNOVER IN VARIOUS YEARS CONSIDERED BOTH BY THE ASSESSEE AND A.O IS AS UNDER : FINANCIAL YEAR A.Y. TOTAL CREDITS NET PROFIT % OF AGARWAL GROUP INCOME ESCAPED 97-98 98-99 4 176 340 -- 1 041 760 98-99 99-00 88 894 920 0.19 168 898 99-00 00-01 32 798 920 0.34 111 516 00-01 01-02 25 712 875 0.71 182 561 01-02 02-03 47 204 510 0.66 311 549 02-03 03-04 83 209 114 0.4 332 836 03-04 04-05 126 280 134 0.21 265 188 04-05 05-06 70 591 417 -- RETURN NOT YET DUE 478867 377 -- 2 414 308 4.1 FOR THE A.Y. 1998-99 THE INCOME WAS OFFERED ON THE BASIS OF CASH CREDITS IN THE BANK ACCOUNT AT RS. 10 41 760/- WHER EAS FOR THE OTHER YEARS THE INCOME WAS OFFERED ON THE BASIS OF TURNOV ER OF TOTAL CREDITS IN THE BANK ACCOUNTS AND ESTIMATING THE PROFITS AT DIF FERENT PERCENTAGES AS CAN BE SEEN FROM THE ABOVE TABLE. 5. IN THE ASSESSMENT COMPLETED SUBSEQUENTLY THE A.O ESTIMATED THE PROFIT AT 1.5% OF THE TURNOVER AND ALSO ADDED THE P EAK CREDIT IN THE RESPECTIVE YEARS WHEREVER THE INCOME OFFERED SO FAR WAS SHORT OF PEAK ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 4 CREDIT ARRIVED AT. THE CIT(A) HAS REDUCED THE PROF IT TO 1% OF THE TURNOVER AND DELETED THE PEAK CREDITS AND THE ORDERS WERE AT TAINED FINALITY BEFORE THE ITAT. THE HONBLE HIGH COURT ALSO REJECTED THE DEPARTMENT APPEALS ON THE REASON THAT NO PRINCIPLE OF LAW WAS INVOLVED . THE INCOME DETERMINED HAS ATTAINED FINALITY. THE A.O HAS FINA LIZED THE PENALTY U/S 271(1)(C) IN VARIOUS YEARS. 6. THE CIT(A) KOLHAPUR AFTER EXAMINING THE ISSUES L EGALLY CONFIRMED / MODIFIED THE PENALTIES VIDE HIS COMMON ORDER IN PAR A 15 TO 18 AS UNDER. 15. IN VIEW OF THE ABOVE LEGAL PROVISIONS FOR THE A.Y. 1999-00 TO 2002-03 THE PROVISIONS OF EXPLANATION 3 TO SECTION 271 ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT. THIS BEIN G SO PENALTY CAN ONLY BE LEVIED UPON THE APPELLANT U/S 271(1)(C) ONLY IN RESPECT OF ADDITIONAL INCOME ASSESSED OVER AND ABOVE THE INCOME RETURNED BY THE APPELLANT. 16. AS FAR AS A.Y. 1998-99 IS CONCERNED HOWEVER THE P OSITION WAS DIFFERENT THAT THE APPELLANT CAN BE SAID TO HAV E NOT PREVIOUSLY BEEN ASSESSED TO TAX WITH RESPECT TO A.Y . 1998-99. EXPLANATION 3 WOULD THEREFORE APPLY WITH FULL FOR CE TO THE APPELLANTS CASE. 17. AS FAR AS A.Y 2003-04 TO 2005-06 ARE CONCERNED THE PHRASE (PERSON) WHO IS NOT PREVIOUSLY BEEN ASSESSED UNDER THIS ACT WAS OMITTED VIDE FINANCE ACT 2002 W.E.F. 1-4-2003. THE PROVISIONS OF EXPLANATION 3 THEREFORE APPLY TO ANY PERSON WHETHER AN OLD OR NEW ASSESSEE. IRRESPECTIVE OF TH E FACT THAT THE APPELLANT WAS PREVIOUSLY ASSESSED TO TAX THE P ROVISIONS OF EXPLANATION 3 WOULD APPLICABLE. HOWEVER IT IS SEEN FROM THE TABLE AT PARA NO. 13 ABOVE THAT TIME LIMIT WHIC H IS TWO YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME IS FIRST ASSESSABLE HAD NOT EXPIRED WHEN THE APPELLANT FILED ITS RETURN IN PURSUANCE OF NOTICE U /S 147 ISSUED BY THE A.O. THE NOTICES WERE ISSUED IN A.Y. 2003-04 AND THE RETURNS WERE FILED SUBSEQUENTLY WHEREAS TH E TIME LIMIT FOR A.Y. 2003-04 WAS 31-3-2006 AND FOR A.Y. 2 004-05 AND 2005-06 WERE EVEN ALTER. AS SUCH THE PROVISION S OF EXPLANATION 3 ALSO DO NOT APPLY TO THESE YEARS. 18. IN SUMMARY IT IS HELD AS UNDER: THE PROVISIONS OF EXPLANATION 3 ARE APPLICABLE ONLY IN RESPECT OF A.Y. 1998-99 AND NOT TO ANY OF THE SUBSE QUENT ASSESSMENT YEARS. THEREFORE FOR THE A.Y. 1999-00 T O 205-06 PENALTY SHOULD BE REWORKED AND LEVIED ONLY ON THE A DDITIONAL INCOME BROUGHT TO TAX AS A RESULT OF ASSESSMENT OVE R AND ABOVE THE INCOME RETURNED. IN CASE OF A.Y. 1998-99 HOWEVER THE PENALTY LEVIED U/S 271(1)(C) READ WITH EXPLANATION 3 IS JUSTIFIED AND THEREFORE CONFIRMED. THE ASSESSEE IS CONTESTING THE SAME. ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 5 7. THE LEARNED COUNSEL PLACED ON RECORD THE SYNOPSI S OF 11 PAGES AND ASSESSMENT ORDERS OF VARIOUS YEARS IN PAGES 12 TO 5 3 NOTICES ISSUED FROM PAGES 54 TO 71 AND VARIOUS COPIES OF JUDGMENTS FROM PAGES 72 ONWARDS IN THE PAPER BOOK. THE LEARNED COUNSELS AR GUMENTS ARE TWO FOLD. ONE BEING THAT THE A.O DID NOT SPECIFY INVOK ING EXPLANATION 3 TO SECTION 271(1)(C) AND THE SAID EXPLANATION WAS NOT APPLICABLE TO THE ASSESSEE. DETAILED WRITTEN SUBMISSIONS ARE MADE EX PLAINING THE HISTORY OF EXPLANATION 3 AND ITS ANALYSIS. THE OTHER BEING THAT THE INCOME WAS BEING DETERMINED ON THE BASIS OF ESTIMATION AND PEN ALTY IS NOT LEVIABLE WHEN INCOME WAS ESTIMATED. THE FOLLOWING CASES WERE RELIED FOR THE ABOVE PROPOSITION. 1) CIT VS. SANGRUR VANASPATI MILLS LTD. SLP (CIVIL) NO. 31541 OF 2008 2) CIT VS. SANGRUR VANASPATI MILLS LTD. (2008) 303 ITR 53 (P & H) 3) CIT VS. RAVAIL SINGH CO. (2002) 254 ITR 191 P & H) 4) HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P & H) 5) CIT VS. DHILLON RICE MILLS (2002) 256 ITR 447 ( P & H) 6) SILVER PALACE VS. ITO (1999) 64 TTJ (PUNE) 120 7) R.B. SINGH VS. ACIT (2001) 71 TTJ (MUMBAI) 37 8) HARYANA DELHI TPT COMMISSION AGENCY VS. ACIT (20 01) 79 ITD 145 (AGRA) 9) NARENDRA KUMAR VS. ITO (2005) 94 TTJ (JD) 156 10) AVR PRASAD VS. ITO (2005) 97 ITD 325 (HYD) 11) ACIT VS ALLIED CONSTRUCTION (2007) 106 TTJ (D EL) 616 12) CIT VS. TRADERS & TRADERS (2000) 244 ITR 367 ( MAD) 13) CIT VS. SMT K MEENAKSHI KUTTY (2002) 258 ITR 4 94 (MAD) 14) CIT VS. RAJ BANS SINGH (2005) 276 ITR 351 (ALL) 15) ASHOK PAI VS. CIT (2007) 292 ITR 11 (SC) 16) ACIT VS. A. PARAMESWARAN NAIR (1995) 52 TTJ (C OCH) 247 17) CIT VS. SMT KAMLA JAIN (2006) 152 TAXMAN 329 ( ALL) 18) YESHWANT B. CHIGTERI VS. ACIT (2000) 75 ITD 37 7 (PUNE) 19) K.V. SRINIVASA RAO & ORS VS. ACIT (2009) 29 DT R (VISAKHA) (TRIB) 257 8. THE LEARNED DR REITERATED THE FACTS AND RELIED O N THE ORDERS OF A.O AND CIT(A). HE ALSO SUBMITTED THAT THE DEPARTMENT COULD NOT CONTEST THE ORDER OF CIT(A) GIVING RELIEF DUE TO TAX EFFECT INV OLVED. ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 6 9. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH THE PAR TIES AND PERUSED THE RECORD. BEFORE CONSIDERING TO THE ARGUMENTS TH E REASONING OF THE A.O WHILE LEVYING THE PENALTY IS NECESSARY TO CONSIDER. FOR THE SAKE OF CLARITY THE ORDER IN 1998-99 PARA 6 IS EXTRACTED. 6. THE ASSESSEES REPLY IS DULY CONSIDERED. IT IS A FACT THAT THE ASSESSEES NET PROFIT WAS TAKEN ON ESTIMATED BASIS. HOWEVER THE ESTIMATION IS ON ACCOUNT OF NON-MAINTENANCE OF BOOK S OF ACCOUNTS BY THE ASSESSEE NON-FILING OF RETURN OF INCOME AND THERE IS NO WAY BUT TO DETERMINE THE NET PROFIT ON ESTIMATION BASIS . IT IS ALSO A FACT THAT SURVEY WAS CONDUCTED ON 23/24-2-2005 TILL THA T DATE THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE A.Y. 1998-99. THUS THE INTENTION OF THE ASSESSEE WAS VERY MUCH CL EAR NOT TO PAY TAX ON INCOME EARNED BY THE AOP. AS SUCH CONCEALME NT OF INCOME IS CRYSTAL CLEAR. THE ASSESSEE IN HIS REPLY HAS RE LIED UPON VARIOUS DECISIONS STATING THAT THE ADDITION TO THE INCOME A RE BEING PURELY ON ESTIMATED BASIS. THERE CANNOT BE ANY PENALTY LE VIABLE U/S 271(1)(C). ONE OF THE DECISIONS QUOTED BY THE ASSE SSEE IS IN THE CASE OF HARIGOPAL SINGH VS. CIT IN 258 ITR 85. THE FACTS OF THE CASE ARE NOT ALL APPLICABLE IN THE CASE OF ASSESSEE . IN THE SAID CASE (SUPRA) THE ASSESSEE WAS NOT MAINTAINING BOOKS OF A CCOUNTS AND THEREFORE THE ASSESSEE HAS FILED HIS RETURN OF INC OME VOLUNTARILY ON ESTIMATE BASIS AND DECLARED HIS INCOME AT RS. 52 00 0/-. WHEREAS IN THE CASE OF THE ASSESSEE THE RETURNS OF INCOME WAS NEVER FILED AND THE ASSESSEE NEVER INTENDED TO FILE RETURNS. T HE PRESENT RETURN IS FILED ONLY IN RESPONSE TO NOTICE ISSUED B Y THE DEPARTMENT. IN ORDER TO ATTRACT CLAUSE (C) OF SECTION 271(1) OF THE ACT IT IS NECESSARY THAT THERE MUST BE CONCEALMENT BY THE ASS ESSEE OF THE PARTICULARS OF HIS INCOME OR IF HE FURNISHES INACCU RATE PARTICULARS OF SUCH INCOME. WHAT IS TO BE SEEN IS WHETHER THE ASSESSEE IN THE PRESENT CASE HAD CONCEALED HIS INCOME OR NOT. THE ANSWER TO THIS QUESTION IS YES. HAD THE DEPARTMENT NOT TAKEN ACTI ON U/S 133A THE ASSESSEE WOULD NOT HAVE FILED THE RETURN AND WO ULD HAVE ENJOYED THE INCOME EARNED WITHOUT PAYING TAX. AS SU CH CONCEALMENT IS VERY CLEAR. THE MENS-REA IS ALSO ES TABLISHED THAT ASSESSEE NEVER INTENDED TO FILE THE RETURN AND TO P AY TAX THEREFORE I AM SATISFIED TO LEVY PENALTY ON ASSESSED INCOME O F RS. 10 41 760/- WHICH BECAME THE FINAL ON RECEIPT OF IT ATS ORDER. THEREFORE PENALTY U/S 271(1)(C) IS LEVIED AT RS. 3 64 616/- WHICH AT 100% OF THE TAX SOUGHT TO BE EVADED BEING MINIMU M PENALTY. 9.1 SIMILAR REASONS WERE IN OTHER YEARS AS WELL BUT THE QUANTUM ONLY CHANGED. THE A.O HAS RELIED ON FACT THAT ASSESSEE HAS NEVER FILED RETURNS TILL THE SURVEY U/S 133A WAS CONDUCTED. THE ARGUME NTS THAT EXPLANATION 3 TO THE SECTION 271(1)(C) WAS INVOKED WAS RAISED BEFORE THE CIT(A) AND AFTER DISCUSSION HE HAS ACCEPTED THE REASONING FOR SOME YEARS. WE HAVE OUR RESERVATIONS ON THE ORDER OF THE CIT(A) ON THE APPLICABILITY OF ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 7 EXPLANATION 3 AS THE FACT IS THAT THE ASSESSEE HAS NEVER BEEN ASSESSED AND TIME LIMITS US/ 153(1) HAS ALREADY EXPIRED FOR A.Y. 1999-00 TO 2002- 03. SINCE ALL THE YEARS RETURNS WERE FILED AT THE SAME TIME JUST BECAUSE A.Y. 1998-99 ASSESSMENT WAS COMPLETED FIRST IN OUR VIEW THE ASSESSEE COULD NOT BE TREATED AS ASSESSED TO TAX FOR THE SUB SEQUENT YEARS. HOWEVER SINCE THIS ISSUE DECIDED BY THE CIT(A) IN FAVOUR OF THE ASSESSEE WAS NOT CONTESTED BY THE REVENUE WE DO NOT INTEND TO MAKE ANY FINDING ON THIS ISSUE WHICH CAN BE CONSIDERED IN AN APPROPR IATE CASE. TO THAT EXTENT THE ORDER OF CIT(A) HAS TO BE ACCEPTED IN T HIS CASE AS THE REVENUE IS NOT IN APPEAL. 9.2 THE OTHER ISSUE RAISED IS ON ESTIMATION OF INCO ME AND CONSEQUENT LEVY OF PENALTY ON THE ESTIMATED INCOME. THE ENTIR E CASE LAW RELIED ON BY THE COUNSEL IS ON THE FACTS WHERE THE A.O IN THE CO URSE OF REGULAR ASSESSMENT HAS REJECTED THE BOOKS OF ACCOUNT AND EST IMATED THE INCOME/TURNOVER ETC. THE FACTS ARE DIFFERENT IN TH IS CASE AND SO RELIANCE ON THE PRINCIPLES ESTABLISHED IN DIFFERENT SET OF F ACTS CAN NOT BE CONSIDERED AS APPLICABLE. IN THIS CASE FIRST OF AL L THE ASSESSEE HAS NOT FILED RETURNS AT ALL FOR A.Y. 1998-99 TO A.Y. 2002- 03 IN TIME AS PROVIDED. NO BONAFIDE EXPLANATION WAS ON RECORD WHY THE RETU RNS WERE NOT FILED. ONLY CONSEQUENT TO THE SURVEY U/S 133A AND UNEARTHI NG OF BANK ACCOUNTS WHICH ARE NOT DISCLOSED TO THE DEPARTMENT EARLIER THE ASSESSEE HAS FILED RETURNS OF INCOME IN RESPONSE TO NOTICES U/S 148 ACCEPTING THE CREDITS IN A.Y. 1998-99 AS INCOME AND FOR OTHER YEA RS AS TURNOVER AND ESTIMATION OF INCOME THEREON. EVEN THE ESTIMATION IS NOT UNIFORM. EVEN THOUGH THE GROUNDS RAISED MENTION THE RATE OF ESTIM ATION BY THE ASSESSEE AT 0.19% THAT WAS ONLY IN A.Y. 1999-00 ON A TURNOVER OF RS. 8.88 CRORES. IN LATER YEARS THE ASSESSEE ESTIMATE D THE INCOME AT 0.34% 0.71% 0.66% 0.40% 0.21% SO AS TO OFFER INCOME AT A LESSER RATE ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 8 DEPENDING ON THE TURNOVER. THESE FACTS CAN BE NOTIC ED FROM THE TABLE EXTRACTED IN PARA 3.1 ABOVE IN THIS ORDER. SINCE TH ERE IS NO BASIS FOR ESTIMATING AT DIFFERENT RATES IN VARIOUS YEARS THE A.O IS CORRECT IN TAKING THE RATE OF ESTIMATION AT 1.5% UNIFORMLY WHICH WAS HOWEVER RESTRICTED TO 1.0% ULTIMATELY. AS SEEN FROM THE FACTS ONLY QUAN TIFICATION OF INCOME WAS ON THE BASIS OF 1% ESTIMATION WHEREAS THERE IS NO DOUBT ABOUT THE ESCAPEMENT OF INCOME IN RESPECTIVE YEARS AS THE ASS ESSEE HAS KEPT THE ENTIRE TRANSACTIONS OUTSIDE THE PURVIEW OF DEPARTME NT BY NOT FILING THE RETURNS IN TIME. THERE IS NO EXPLANATION WHY THE R ETURNS WERE NOT FILED AND AS PER EXPLANATION 1 TO THE PROVISIONS OF SECTI ON 271(1)(C THERE IS NO BONAFIDE EXPLANATION AND SO THE PENALTY PROCEEDINGS ARE ATTRACTED EVEN THOUGH THE INCOME DETERMINED WAS ON ESTIMATION. WE ARE OF THE OPINION THAT THE ASSESSEE DESERVES PENALTY U/S 271(1)(C) AS THE PROCEEDINGS WERE INITIATED FOR ESCAPEMENT OF INCOME U/S 147 AND ASSE SSEE ADMITTED INCOMES CONSEQUENT TO THOSE PROCEEDINGS. EVEN THOU GH THE AO LEVIED PENALTY ON THE WHOLE OF INCOME DETERMINED CORRECTLY THE CIT(A) FOR A.Y. 1999-00 TO 2005-06 HAS REDUCED IT ONLY TO ADDITIONA L INCOME BROUGHT TO TAX. SINCE REVENUE IS NOT IN APPEAL THIS PART OF THE CIT(A) ORDER ALSO HAS TO BE APPROVED EVEN THOUGH WE HAVE OUR RESERVATIONS ON THE RELIEF GRANTED. 10. NOW FOR CONSIDERATION OF EACH YEAR. (A) IN A.Y. 1998-99 THE PENALTY HAS TO BE CONFIRMED AS THIS IS THE FIRST YEAR AS ASSESSEE WAS NOT ASSESSED TO TAX EARLIER. THE RETURN WAS FILED AFTER THE TIME LIMITS WERE EXPIRED AND THE INCOME O FFERED WAS ON CASH CREDITS AND NOT ON ESTIMATION OF INCOME. THEREFORE ON THE REASONING GIVEN BY THE CIT(A) THE PENALTY IS SUSTAINED. ASSE SSEES GROUNDS ARE REJECTED AS THEY ARE FACTUALLY WRONG ALSO TO THE EXT ENT OF CONTESTING THE PENALTY AS OF ESTIMATION OF INCOME IN THIS YEAR. ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 9 (B) FOR A.Y. 1999-00 TO A.Y. 2002-03 ALSO THE ORDER OF THE CIT(A) IS CONFIRMED FOR THE REASONS STATED BY HIM AND ALSO AS ASSESSEE HAS NOT GIVEN ANY BONAFIDE REASON FOR NOT FILING THE RETURN S IN TIME AND THE ASSESSMENT PROCEEDINGS ARE UNDER SEC. 147. TO THE E XTENT RELIEF GRANTED BY THE CIT(A) THE ORDER GETS CONFIRMED AS THE REVEN UE HAS NOT CONTESTED THE SAME. (C) FOR A.Y. 2003-04 TO 2005-06 THE ASSESSEE HAS T IME TO FILE THE RETURN U/S 139/153(1). IN FACT THE RETURN WAS NOT DUE FOR A.Y. 2004-05 AND 2005-06 AT THE TIME OF SURVEY HENCE A.O WAS NO T CORRECT IN INITIATING PROCEEDINGS U/S 147 FOR A.Y. 2004-05 AND 2005-06. SINCE THE ASSESSEE HAS TIME TO FILE RETURN AND AS THE ASSESS EE FILED THE RETURNS FOR THESE YEARS WITHIN THE TIME LIMITS PRESCRIBED WE A RE OF THE VIEW THAT THE PROVISIONS OF SECTION 271(1)(C) ARE NOT ATTRACTED. THE PENALTY LEVIED FOR A.Y. 2003-04 2004-05 AND 2005-06 ARE HEREBY CANCEL LED. 11. IN THE RESULT THE PENALTY FOR A.Y. 1998-99 TO A.Y. 2002-03 ARE CONFIRMED AND ASSESSEES APPEAL NOS. 952/PN/2009 95 3/PN/2009 950/PN/2009 951/PN/2009 AND 948/PN/2009 ARE THEREF ORE DISMISSED WHEREAS APPEALS IN ITA NO. 949/PN/2009 946/PN/2009 AND 947/PN/2009 FOR AY 2003-04 AY 2004-05 AY 2005-06 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF OCTOB ER 2010. SD/- SD/- (SHAILENDRA KUMAR YADAV) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED THE 29 TH OCTOBER 2010 ANKAM ITA NO. 437 AND 324/PN/09 KANTILAL JAIN A.Y. 2001-02 10 COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT (A) I NASIK (4) CIT I NASIK (5) THE D.R. ITAT 'A' PUNE BENCH PUNE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL PUNE BENCHES PUNE