Pawan Kumar Sharma, New Delhi vs Department Of Income Tax

This appeal by the Revenue for the assessment year 2004-05 is directed against the order of learned CIT(A)-II, New Delhi dated 18th December, 2009.

2. At the time of hearing, none appeared on behalf of the assessee- respondent nor any application for adjournment of the case was filed by the assessee. In these facts, we proceed to decide this appeal ex parte qua the assessee-respondent on merits after hearing the arguments of learned DR.

3. The only ground of appeal of the Revenue is as under:-

"1(a) On the facts and under the circumstances of this case the ld. CIT(A) has erred in deleting the penalty of Rs.7,78,793/- levied u/s 271(1)(c) as the quantum addition 2 ITA-1033/Del/2010

was made by the Assessing Officer on the basis of the seized documents and not on the basis of pure guess work.

1(b) On the facts and under the circumstances of this case the ld.CIT(A) has erred in deleting the penalty of Rs.7,78,793/- levied u/s 271(1)(c) by ignoring the non- production of boa as also non-filing of appeal by the assessee against the quantum addition."

4. Learned DR has relied on the order of the Assessing Officer. He submitted that the trading addition made has become final and, therefore, the assessee should be made liable for penalty under Section 271(1)(c) of the Act. The assessee has not maintained account books and there was no basis for the assessee for declaring income from its cashew nut business. The Assessing Officer has estimated the GP at the rate of 4% on the total turnover of `3.93 crores and the turnover was adopted by him on the basis of seized material and that the GP rate of 4% applied is normal in the line of trade of the assessee. He relied on the order of the Assessing Officer.

5. We have considered the submissions of the learned DR and have perused the order of the Assessing Officer and the CIT(A). We find that merely because the assessee has not maintained the books of account, it does not follow that the assessee would be liable for penalty for concealment of income or for filing inaccurate particulars of income, in case some addition to the trading results of the assessee was made by the Assessing Officer and the same has become final. The seized material may be a valid basis for estimating the turnover of the assessee but the fact remains that the trading addition has been made by applying a flat GP rate of 4% on the turnover of the assessee. The GP rate of 4% was applied by the Assessing Officer by observing that in the trade of dry fruit, the normal GP rate applied was 4%. The whole case of trading addition made by the Assessing Officer in the quantum case of the assessee is based on preponderance of probabilities and 3 ITA-1033/Del/2010

estimate of profit was based on guesswork only. The facts of the case may justify the estimation of turnover and the application of flat rate of GP at 4% for making the trading addition, but, are not sufficient to levy penalty on the assessee under Section 271(1)(c) of the Act. Learned CIT(A), in the facts of the case, has concluded that the addition made by the Assessing Officer was purely a guesswork and estimation without any material whatsoever and it could not amount to concealment. There being no mistake in the order of learned CIT(A) on this issue, the same is confirmed and the ground of appeal of the Revenue is dismissed.

6. In the result, the appeal of the Revenue is dismissed.

Decision pronounced in the open Court on 6th May, 2015.

Sd/- Sd/- (INTURI RAMA RAO) RAO) (G.C. (G.C. GUPTA) GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT PRESIDENT

VK.

Copy forwarded to: -

1. Appellant : Deputy Commissioner of Income Tax, Central Circle- Circle-09, New Delhi.

2. Respondent : Shri Pawan Kumar Sharma, C-9/62, Yamuna Vihar, New Delhi.

3. CIT

4. CIT(A)

5. DR, ITAT

Assistant Registrar