Savitri Devi, Kanpur vs Assessee

Smt. Savitri Devi, Vs. A.C.I.T., 43/16, Dhobi Mohal, Central Circle-III, Kanpur. Kanpur. PAN:ABNPD0077E (Appellant) (Respondent)

ITA Nos.149 to 151/LKW/2013 A. Yrs.2001-02 & 2008-09

Smt. Surinder Kaur, Vs. Dy.C.I.T., 11E, Anand Cotage, Moti Vihar, Central Circle-V, Sarvodaya Nagar, Kanpur. Kanpur. PAN:ABAPK7127R (Appellant) (Respondent)

ITA Nos.152 to 154/LKW/2013 A. Yrs.2003-04, 2007-08 & 2008-09

Shri Kunwar Pal Singh, Vs. Dy.C.I.T., 11E, Anand Cotage, Moti Vihar, Central Circle-V, Sarvodaya Nagar, Kanpur. Kanpur. PAN:AUSPS3761N (Appellant) (Respondent)

ITA Nos.157 & 158/LKW/2013 A. Yrs.2002-03 & 2007

Shri Paramjeet Singh, Vs. Dy.C.I.T., Plot No. 66A, 123/305, Central Circle-V, Dadarian Purwa, Kanpur. Kanpur. PAN:ABSPS6577R (Appellant) (Respondent) 2

ITA No.159/LKW/2013 Assessment year:2008-09

Shri Paramjeet Singh, Vs. Dy.C.I.T., Plot No. 66A, 123/305, Central Circle-1, Dadarian Purwa, Kanpur. Kanpur. PAN:ABSPS6577R (Appellant) (Respondent)

ITA No.160/LKW/2013 Assessment year:2008-09

Shri Ramandeep Singh, Vs. Dy.C.I.T., 24/4, The Mall, Central Circle-II, Kanpur. Kanpur. PAN:ABYPS8692P (Appellant) (Respondent)

Appellant by Shri Ashish Jaiswal, Advocate Respondent by Shri Vivek Mishra, C.I.T., D. R. Date of hearing 09/01/2015 Date of pronouncement 19/02/2015

ORDER

PER A. K. GARODIA, A.M.

In this bunch of eleven appeals, all the appeals are filed by various assessees who are inter-connected and the issue involved is also inter- connected and therefore, all these appeals were heard together and are being disposed of by way of this common order for the sake of convenience.

2. First we take up the appeal of the assessee Smt. Savitri Devi for the block period ending on 12/03/99 in I.T.A. No.147/Lkw/2013. In this appeal, the assessee has raised the following grounds:

3 "1. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in confirming penalty of Rs.56,615.00 imposed u/s 158BFA(2) of the Income tax act, 1961.

2. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in not appreciating that when the assessee was following cash system of account and there was not unanimity in either assessing authority or Hon'ble appellate authorities about the addition and figures of addition, penalty should not have been imposed on the assessee.

3. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in not appreciating that during the course of search, no unexplained valuable or cash has been found from the possession of the assessee.

4. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in not appreciating the facts of the case and submissions of the assessee.

5. Because on facts and in circumstances of the case, submissions before ld. Assessing Officer and ld. CIT(A) statement of facts and grounds of appeal in 1 st appeal may be treated as part of these grounds of appeal.

6. Because on facts and in circumstances of the case, impugned order is bad in law as well as facts and appropriate relief deserves to be allowed."

3. Briefly stated, the facts of the case are that the assessee is engaged in the business of pawning and deriving income therefrom. A search & seizure operation in the case of Shri Satish Chandra Verma group was carried out on 12/03/99 and the present assessee is wife of Shri Satish Chandra Verma, now deceased. On the basis of documents found during the course of search, action u/s 158BD has been initiated against the assessee. In response to 4

notice u/s 158BD, the assessee filed return of income showing nil undisclosed income against which assessment has been completed at Rs.2,14,619/- by making three additions. First addition is of Rs.82,877/- on account of undisclosed peak investment in business. The second addition was of Rs.53,431/- on account of undisclosed interest earned and the third addition was of Rs.78,311/- on account of undisclosed interest earned on pawing items given to others. When the assessee carried the matter in appeal before the CIT(A) in quantum proceedings, part relief was allowed by him of Rs.935/- only against the first addition, and second addition of Rs.53,431/- was deleted in full. The assessee preferred second appeal before the Tribunal and Tribunal allowed further relief of Rs.26,740/- against the first addition and Rs.39,155/- against the third addition. In this manner, after giving appeal effect of the order of CIT(A) and of the Tribunal, the addition sustained was of Rs.94,358/- including Rs.55,202/- on account of undisclosed peak investment in business and Rs.39,156/- on account of undisclosed interest earned on pawing items given to others. On this final addition of Rs.94,358/-, the Assessing Officer imposed penalty u/s 158BFA(2) of Rs.56,615/-. Against this penalty order also, the assessee filed appeal before the CIT(A) but without success and now the assessee is in further appeal before the Tribunal.

4. It was submitted by Learned A.R. of the assessee that the additions made by the Assessing Officer had been either deleted or reduced in appellate proceedings. He submitted that under these facts, it should be accepted that the addition ultimately sustained, on which penalty is imposed, is based on estimation and assumption and not on any seized material found during search. He submitted that under these facts, penalty u/s 158BFA(2) is not justified. Reliance was placed on the Tribunal decision in the case of Smt. Bitoli Devi vs. ACIT [2009] 31 SOT 30 (ITAT[Luck]).

5 5. Learned D.R. of the Revenue supported the orders of the authorities below.

6. We have considered the rival submissions. We find that as per the Tribunal order in quantum proceedings in I.T.A. No. 446/Lkw/04 dated 30/06/2006 submitted by Learned A.R. of the assessee, it is seen that the Tribunal has upheld the addition to the extent of 50% of the addition made by the Assessing Officer on mercantile basis by estimating that this much amount must have been received in this year because it was the claim of the assessee that the assessee is following cash system of accounting. Hence, it is seen that the addition upheld by the Tribunal is on estimate basis only and this fact should be kept in mind while deciding the penalty issue. In the light of above facts, we now examine the applicability of the Tribunal decision cited by Learned A.R. of the assessee. In that case, the assessee declared income by applying net profit rate of 4.4%, which was subsequently reduced to 4% by the CIT(A) as well as by the Tribunal. Under these facts, it was held by the Tribunal that since the addition was made on estimate basis, penalty u/s 158BFA(2) is not justified. Since in the present case also, the addition sustained by the Tribunal is on estimate basis alone, this Tribunal decision is squarely applicable in the present case and therefore, following this Tribunal decision, we hold that penalty imposed by the Assessing Officer is not sustainable in the facts of the present case. We, therefore, delete the penalty.

7. In the result, the appeal of the assessee stands allowed.

8. Now we take up the appeal in the case of Shri Paramjeet Singh for assessment year 2002-2003 in I.T.A. No.157/Lkw/2013. In this appeal, the assessee has raised the following grounds:

6 "1. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in confirming penalty of Rs.8,000.00 imposed u/s 271 (1) (c) of the income tax act, 1961.

2. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in not deciding the ground relating to quantum of penalty.

3. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in not appreciating that the additional income offered was such on which no penalty should have been imposed.

4. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in relying on the case laws which were not applicable to the case of the assessee.

5. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in not appreciating the facts of the case and submissions of the assessee.

6. Because on facts and in circumstances of the case, submissions before ld. Assessing Officer and ld. CIT(A), statement of facts and grounds of appeal in 1 st appeal may be treated as part of these grounds of appeal.

7. Because on facts and in circumstances of the case, impugned order is bad in law as well as facts and appropriate relief deserves to be allowed."

9. It was submitted by Learned A.R. of the assessee that in the present case, the return of income was filed by the assessee in response to notice u/s 153A by showing total income of Rs.2,50,236/- as against income shown in the original return of income at Rs.2,36,736/-. An additional amount of Rs.13,500/- was offered as sundry creditors written back. Although some 7

addition was made by the Assessing Officer but the same was deleted by CIT(A) and since no penalty has been imposed on such additional income added by the Assessing Officer, that aspect is not relevant. The penalty has been imposed of Rs.8,000/- in respect of additional income shown by the assessee in the return filed u/s 153A. He submitted that surrender was made bonafide and to buy piece of mind and to avoid litigation and therefore, penalty is not justified under these facts. He further submitted that in assessment year 2002-03 in assessee's own case, similar penalty was imposed but was deleted by the Tribunal. He submitted that as per this Tribunal decision for assessment year 2002-03, the penalty in the present year is not justified.

10. Learned D.R. of the Revenue supported the orders of the authorities below.

11. We have considered the rival submissions. The relevant Para from the Tribunal order for assessment year 2003-04 being Para - 5 is available on page 75 of the paper book, which is reproduced below:

"5. We have carefully perused the orders of the lower authorities and the judgments referred to by the assessee and we find that undisputedly assessee has made a voluntary surrender during the course of search and returned additional income filed in response to notice under section 153A of the Act and accordingly the tax was also paid. Since the Revenue has not brought out a case to show that the surrender was made when the assessee was cornered by the queries raised by the Revenue authorities. Therefore, we are of the considered view that it was a voluntary surrender made by the assessee at the first instance, therefore, penalty under section 271(1)(c) of the Act should not be levied. We, accordingly, uphold the order of the Ld. CIT(A) deleting the penalty."

8 12. Since in the present year also, additional income of Rs.13,500/- was returned by the assessee under the similar facts as in assessment year 2003- 04, we hold that penalty is not justified by following the Tribunal decision in assessee's own case for assessment year 2003-04. We, therefore, delete the penalty.

13. In the result, the appeal of the assessee stands allowed.

14. Now we take up the appeal in the case of Smt. Surinder Kaur for assessment year 2001-2002 in I.T.A. No.149/Lkw/2013. In this appeal, the assessee has raised the following grounds:

"1. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in confirming penalty of Rs.1,50,000.00 imposed u/s 271 (1) (c) of the income tax act, 1961.

2. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in not deciding the ground relating to quantum of penalty.

3. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in not appreciating that the additional income offered was such on which no penalty should have been imposed.

4. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in relying on the case laws which were not applicable to the case of the assessee.

5. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (appeals)-I, Kanpur has erred in not appreciating the facts of the case and submissions of the assessee.

9 6. Because on facts and in circumstances of the case, submissions before ld. Assessing Officer and ld. CIT(A), statement of facts and grounds of appeal in 1 st appeal may be treated as part of these grounds of appeal.

7. Because on facts and in circumstances of the case, impugned order is bad in law as well as facts and appropriate relief deserves to be allowed."

15. It was submitted by Learned A.R. of the assessee that in the present case, since search was conducted, penalty can be levied only under explanation 5 to section 271(1)(c) of the Act. He further submitted that in the present case, no adverse material has been found in course of search or subsequent to search and therefore, penalty is not justified and in support of this contention, reliance was placed on the Tribunal decision in assessee's own case for assessment year 2000-2001 and 2004-2005 as reported in ACIT vs. Smt. Surinder Kaur [2009] 31 SOT 23 (Lucknow) (URO). He submitted that the copy of the Tribunal order is available on pages 47 to 53 of the paper book and in particular, our attention was drawn to Para 19 and 20 of the Tribunal decision.

16. Learned D. R. of the Revenue supported the orders of the authorities below.

17. We have considered the rival submissions. We find that in compliance to notice issued by the Assessing Officer u/s 153A, the assessee filed return of income showing income of Rs.4,03,263/- as against income shown in the original return of income at Rs.1,88,263/-. As per the assessment order, nothing comes out to show that any incriminating material was found during the course of search or subsequent to search and the assessment was completed by the Assessing Officer on the basis of return filed by the assessee u/s 153A and the additional income declared by the assessee of 10

Rs.2.15 lac was stated to be on account of expenses left out earlier meaning thereby that expenses were incurred out of undisclosed income. It is not the case of the revenue that any material was found in search showing these expenses which were incurred by the assessee out of undisclosed income. Hence, it is seen that in the facts of the present case, it cannot be said that any incriminating material was found during the course of search for which addition was made by the Assessing Officer because this is the claim of the assessee that extra income was declared by the assessee voluntarily although such declaration is after search but still, it cannot be said that any incriminating material was found in course of search or after search.

18. Now in the light of these facts, we examine the applicability of the Tribunal decision cited by Learned A.R. of the assessee rendered in the case of same assessee. Para 19 and 20 of the Tribunal decision are reproduced below:

"19. Notwithstanding we find that even Expln. 5 to s. 271(1)(c) is not attracted. For the sake of convenience, we reproduce Expln. 5 to s. 271(1)(c) as under :

"Explanation 5' Where in the course of a search under s. 132, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (hereafter in this Explanation referred to as assets) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income,'

(a) for any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, where such return has been furnished before the said date, such income has not been declared therein; or

(b) for any previous year which is to end on or after the date of the search, then, notwithstanding that such income is declared by him in any return of income furnished on or after the date of the search, he shall, for the purposes of imposition of a penalty 11

under cl. (c) of sub-s. (1) of this section, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income, unless,'

(1) such income is, or the transactions resulting in such income are recorded,'

(i) in a case falling under cl. (a), before the date of the search;

and

(ii) in a case falling under cl. (b), on or before such date, in the books of account, if any, maintained by him for any source of income or such income is otherwise disclosed to the Chief CIT or CIT before the said date; or

(2) he, in the course of the search, makes a statement under sub-s. (4) of s. 132 that any money, bullion, jewellery or other valuable article or thing found in his possession or under his control, has been acquired out of his income which has not been disclosed so far in his return of income to be furnished before the expiry of time specified in sub-s. (1) of s. 139, and also specifies in the statement the manner in which such income has been derived and pays the tax, together with interest, if any, in respect of such income."

20. Thus, the first requirement for invoking Expln. 5 is that in a valid search, some tangible assets/documents must have been found which would reflect concealed income of the assessee and which have become basis for making addition of concealed income. It is an admitted position that there has not been any seizure of tangible assets/documents in the search which could be said to be belonging to the assessee. Therefore, it cannot be said that assessee has been found to be the owner of tangible assets and that such tangible assets have been acquired by her by utilizing her undisclosed income earned before the date of search, and also there is no claim by the assessee that she has acquired any such asset out of income not disclosed before the Department."

18.1 From the above Paras from the order of the Tribunal, it is seen that it was held by the Tribunal that for invoking explanation 5 to section 271(1) (c), it is essential that some tangible assets/documents must have been found which would reflect concealed income of the assessee and which have 12

become basis for making addition of concealed income and if the addition is not made on such basis then explanation 5 cannot be invoked. In the present case also, the additional income declared by the assessee is not on the basis of any seized material and therefore, in our considered opinion, the present issue is squarely covered in favour of the assessee by this Tribunal decision in assessee's own case. Respectfully following the same, we delete the penalty.

19. In the result, the appeal of the assessee stands allowed.

20. Now we take up the appeal in the case of Smt. Surinder Kaur for assessment year 2008-2009 in I.T.A. No.150/Lkw/2013. In this appeal, the assessee has raised the following grounds:

"1. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I Kanpur has erred in confirming penalty of Rs.10,000.00 imposed u/s 271 (1)

(b) of the income tax act, 1961.

2. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in not appreciating the circumstances under which written compliance was not made and also not appreciating that the representative of the assessee appeared in compliance to notice u/s 142 (1).

3. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in holding that there was no reasonable cause for non compliance.

4. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in not appreciating the facts of the case and submissions of the assessee.

5. Because on facts and in circumstances of the case, submissions before ld. Assessing Officer and ld. CIT(A), statement of facts and grounds of appeal in 1 st appeal may be treated as part of these grounds of appeal.

13 6. Because on facts and in circumstances of the case, impugned order is bad in law as well as facts and appropriate relief deserves to be allowed."

21. It was submitted by Learned A.R. of the assessee that the assessee, through his Learned A.R. of the assessee, has appraised the Assessing Officer with the situation that it is not possible to reply all the points of questionnaire within short period of time as it will take time to prepare the case point by point and from the books of account and also that his son is paralyzed and his father was ill who later died on 1 st November. He further submitted that the Assessing Officer has not provided the reasonable opportunity to make compliance and therefore, penalty u/s 271(1)(b) of the Act is not justified. He also placed reliance on the Tribunal decision in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. Assistant Director of Income-tax [2008] 115 TTJ 419 (ITAT [Del])

22. Learned D. R. of the Revenue supported the orders of the authorities below.

23. We have considered the rival submissions. We find that it is noted by the Assessing Officer in the penalty order that notice u/s 142(1) was issued on 12/11/2009 requiring the assessee to furnish in writing and verify in the prescribed manner, the information called for, as per annexure to the notice for the year under consideration. He has also noted that the notice was issued and served on the assessee on 21/11/2009 and the date fixed for compliance was 27/11/2009. Thereafter the Assessing Officer noted that the assessee did not attend the office on the date fixed and made no compliance to the notice u/s 142(1) of the Act. He has also noted that no application for adjournment was received in his office. For this default of the assessee, this penalty has been imposed by the Assessing Officer. We also find that it is 14

noted by CIT(A) in Para 3.2 of the order that the assessee has submitted an affidavit and the contents of the same has been reproduced by the learned CIT(A) in his order. In the same, it is noted that the notice was served on the assessee and on 21/11/2009 and 22/11/2009 were Saturday and Sunday therefore, only four days were available for making compliance on 27/11/2009. It is also submitted in the affidavit that the assessee's Accountant Shri A. K. Agnihotri had appeared before the Assessing Officer on 27/11/2009 and requested for adjournment on the ground that similar notice with questionnaire dated 12/11/2009 is received in the name of the assessee and in other cases also, having compliance date of 27/11/2009 in all cases.

24. Now in the light of these facts, we examine the applicability of the Tribunal decision cited by Learned A.R. of the assessee. In this case, it was held by the Tribunal that when the assessee is not complying with the notice u/s 142(1) but assessment order was passed u/s 143(3) and not u/a 144, that meant that subsequent compliance in assessment proceedings was considered good compliance and non compliances earlier were ignored and therefore, levy of penalty u/s 271(1) (b) was not justified. In the present case also, the assessment order was passed by the Assessing Officer u/s 143(3) and not u/s 144. Hence, this Tribunal decision is squarely applicable in the present case and therefore, respectfully following this Tribunal decision, we delete the penalty.

25. In the result, the appeal of the assessee stands allowed.

26. Now we take up the appeal in the case of Smt. Surinder Kaur for assessment year 2008-2009 in I.T.A. No.151/Lkw/2013. In this appeal, the assessee has raised the following grounds:

"1. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I Kanpur has erred 15

in confirming the disallowance of Rs.21,277.00 made on account of expenses on vehicle.

2. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in confirming the addition of Rs.2,78,971/- made on account of application of provisions of 50C without appreciating that before making addition legal procedure for referring the property to valuation cell has not been followed.

3. That learned Assessing Officer has erred in not appreciating that when the transfer of property was executed in assessment year 2007-08, no addition in this year could be made.

4. That learned Assessing Officer has erred in ordering that protective addition on account of sale of property be made in assessment year 2007-08.

5. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in not appreciating the facts of the case and submissions of the assessee.

6. Because on facts and in circumstances of the case, submissions before ld. Assessing Officer and ld. CIT(A), statement of facts and grounds of appeal in 1 st appeal may be treated as part of these grounds of appeal.

7. Because on facts and in circumstances of the case, impugned order is bad in law as well as facts and appropriate relief deserves to be allowed."

27. It was submitted by Learned A.R. of the assessee that the Assessing Officer should have referred the matter to D.V.O. for valuation before making addition u/s 50C. Regarding the second issue i.e. disallowance of Rs.21,277/- on account of vehicle expenses, he reiterated the same contentions, which were raised before CIT(A).

16 28. Learned D. R. of the Revenue supported the orders of the authorities below.

29. We have considered the rival submissions. Regarding the first issue i.e. regarding addition of Rs.2,78,971/- on u/s 50C of the Act, we find force in the submissions of Learned A.R. of the assessee that Assessing Officer should have referred the matter to D.V.O. and therefore, we set aside the order of CIT(A) and restore the issue to the file of Assessing Officer for fresh decision after referring the matter to D.V.O. for valuation of the property u/s 50C (2).

30. Regarding the second issue i.e. disallowance of Rs.21,277/- on account of expenses on vehicle, we find that it is noted by the Assessing Officer that the assessee was having only one car and on this basis, he was of the opinion that the personal user cannot be ruled out and therefore, he made disallowance of 1/5th of the expenses. We find no infirmity in the order of the Assessing Officer and of CIT(A) on this issue. Hence, this issue is decided against the assessee.

31. In the result, the appeal of the assessee stands partly allowed.

32. Now we take up the appeal in the case of Shri Kanwar Pal Singh for assessment year 2003-2004 in I.T.A. No.152/Lkw/2013. In this appeal, the assessee has raised the following grounds:

"1. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in confirming penalty of Rs.100000.00 imposed u/s 271 (1) (c) of the income tax act, 1961.

2. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in not deciding the ground relating to quantum of penalty.

17 3. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in not appreciating that the addition was such on which no penalty should have been imposed.

4. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in not appreciating the facts of the case and submissions of the assessee.

5. Because on facts and in circumstances of the case, submissions before ld. Assessing Officer and ld. CIT(A), statement of facts and grounds of appeal in 1 st appeal may be treated as part of these grounds of appeal.

6. Because on facts and in circumstances of the case, impugned order is bad in law as well as facts and appropriate relief deserves to be allowed."

33. It was submitted by Learned A.R. of the assessee that the gift was received through bank but the same was not accepted for the reason that the donor is not relative of the assessee. He submitted that on this basis, the addition may be justified but penalty is not proper.

34. Learned D. R. of the Revenue supported the orders of the authorities below.

35. We have considered the rival submissions. We are of the considered opinion that for the purpose of imposing penalty u/s 271(1)(c), it is essential that the concealment should be established beyond doubt. In the present case, the addition was made on the basis that the donor is not relative of the assessee but this does not amount to establishment of concealment of income beyond doubt. Hence, in our considered opinion, penalty is not justified. We, therefore, delete the penalty.

36. In the result, the appeal of the assessee stands allowed.

18 37. Now we take up the appeal in the case of Shri Kanwar Pal Singh for assessment year 2007-2008 in I.T.A. No.153/Lkw/2013. In this appeal, the assessee has raised the following grounds:

"1. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in confirming addition on account of enhancement of jobwork charges by Rs.34,500.00.

2. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in observing that assessee has failed to give any basis for showing income from job work.

3. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in not appreciating the submissions and case laws relied upon by the assessee.

4. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in Confirming disallowance of car expenses of Rs.26,195.00.

5. Because on facts and in circumstances of the case, submissions before ld. Assessing Officer and ld. CIT(A), statement of facts and grounds of appeal in 1 st appeal may be treated as part of these grounds of appeal.

6. Because on facts and in circumstances of the case, impugned order is bad in law as well as facts and appropriate relief deserves to be allowed."

38. It was submitted by Learned A.R. of the assessee that the enhancement of job work income of Rs.34,500/- is arbitrary and therefore, not justified. Regarding disallowance of car expenses of Rs.26,195/- also, he submitted that this disallowance was made without bringing on record any adverse material and therefore, not justified.

19 39. Learned D. R. of the Revenue supported the orders of the authorities below.

40. We have considered the rival submissions. Regarding the first issue i.e. addition of Rs.34,500/- on account of job work receipt, we find that the addition was made by the Assessing Officer on the basis that there is possibility that the assessee has not issued cash memo in some cases. Before observing so, not even a single instance has been pointed out by the Assessing Officer of a cash memo not accounted for by the assessee. The CIT(A) has also confirmed this addition on this basis alone that the addition is only of 10% of the returned income. This is no basis for confirming an arbitrary addition. Hence, we delete this addition.

41. Regarding the second issue being disallowance of Rs.26,195/- out of car expenses, we find that it is noted by the Assessing Officer that the assessee has only one car and therefore, personal use cannot be ruled out. He therefore, made disallowance of 1/5 th of the expenses. Considering the facts, we do not find any infirmity in the orders of the authorities below on this issue. Hence, we decline to interfere in the order of CIT(A) on this issue.

42. In the result, the appeal of the assessee stands partly allowed.

43. Now we take up the appeal in the case of Shri Kanwar Pal Singh for assessment year 2008-2009 in I.T.A. No.154/Lkw/2013. In this appeal, the assessee has raised the following grounds:

"1. Because on facts and in circumstances of the case, ld. Commissioner of income tax (Appeals)-I, Kanpur has erred in confirming penalty of Rs.10,000.00 imposed u/s 271 (1) (b) of the income tax act, 1961.

20 2. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in holding that there was no reasonable cause for non compliance.

3. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in not appreciating the facts of the case and submissions of the assessee.

4. Because on facts and in circumstances of the case, submissions before ld. Assessing Officer and ld. CIT(A), statement of facts and grounds of appeal in 1 st appeal may be treated as part of these grounds of appeal.

5. Because on facts and in circumstances of the case, impugned order is bad in law as well as facts and appropriate relief deserves to be allowed."

44. It was submitted by Learned A.R. of the assessee that in the present case also, the assessment was completed u/s 143(3) and not u/s 144 of the Act and therefore, as per the Tribunal decision rendered in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. Assistant Director of Income-tax [2008] 115 TTJ 419 (ITAT [Del]) (supra), penalty imposed by the Assessing Officer u/s 271(1)(b) is not justified.

45. Learned D. R. of the Revenue supported the orders of the authorities below.

46. We have considered the rival submissions. We find that this is not disputed by Learned D.R. of the Revenue that the assessment was completed u/s 143(3) and not u/s 144 of the Act. Hence, the Tribunal decision cited by Learned A.R. of the assessee is squarely applicable in the present case. In that case, it was held by the Tribunal that if assessment is completed by the Assessing Officer u/s 143(3), it meant that even if there was some non compliance of notices u/s 142(1), subsequent compliances in assessment 21

proceedings were considered as good compliance and default committed earlier was ignored and therefore, levy of penalty u/s 271(1)(b) is not justified. Respectfully following this decision, we delete the penalty.

47. In the result, the appeal of the assessee stands allowed.

48. Now we take up the appeals in the case of Shri Paramjeet Singh for assessment years 2007-08 & 2008-2009 in I.T.A. Nos.158 & 159/Lkw/2013. In both the appeals, the assessee has raised common grounds which are as under:

"1. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in confirming penalty of Rs.10,000.00 imposed u/s 271 (1)

(b) of the income tax act, 1961.

2. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in holding that there was no reasonable cause for non compliance.

3. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in not appreciating the facts of the case and submissions of the assessee.

4. Because on facts and in circumstances of the case, submissions before ld. Assessing Officer and ld. CIT(A), statement of facts and grounds of appeal in 1 st appeal may be treated as part of these grounds of appeal.

5. Because on facts and in circumstances of the case, impugned order is bad in law as well as facts and appropriate relief deserves to be allowed."

49. It was submitted by Learned A.R. of the assessee that the facts in these appeals are identical to the facts in dispute in appeal of Shri Kunwar Pal Singh for assessment year 2008-09 in I.T.A. No.154/Lkw/2013. In the 22

present cases also, the assessment was completed u/s 143(3) and not u/s 144 of the Act. In the case of Shri Kunwar Pal Singh in I.T.A. No.154/Lkw/2013, in the foregoing Para, we have deleted the penalty by following the Tribunal decision in the case of Akhil Bhartiya Prathmik Shikshak Sangh Bhawan Trust vs. Assistant Director of Income-tax [2008] 115 TTJ 419 (ITAT [Del]). On the same line, for these assessment years also in the present cases, the penalty imposed by the Assessing Officer is deleted.

50. In the result, both the appeals of the assessee stand allowed.

51. Now we take up the appeal in the case of Shri Raman Deep Singh for assessment year 2008-2009 in I.T.A. No.160/Lkw/2013. In this appeal, the assessee has raised the following grounds:

"1. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in confirming addition made account of cash credit to the extent of Rs.1,68,000.00.

2. Because on facts and in circumstances of the case, ld.

Assessing Officer has erred in not applicating that assessee was employee of the company and every employee was drawing his entire salary from his employer regardless of cash available with him and denied assessee's holding of cash inspite of the fact that proper cash flow has been furnished and no defect has been pointed out in the cash flow statement.

3. Because on facts and in circumstances of the case, ld.

Commissioner of income tax (Appeals)-I, Kanpur has erred in not appreciating the facts of the case and submissions of the assessee.

4. Because on facts and in circumstances of the case, submissions before ld. Assessing Officer and ld. CIT(A), statement of facts and grounds of appeal in 1 st appeal may be treated as part of these grounds of appeal.

23 5. Because on facts and in circumstances of the case, impugned order is bad in law as well as facts and appropriate relief deserves to be allowed."

52. Learned A.R. of the assessee submitted that in course of assessment proceedings itself, it was submitted by the assessee that the amount deposited in bank in cash of Rs.2.18 lac was out of cash available with the assessee and even after this cash deposit in bank, the assessee was showing cash balance in the balance sheet at Rs.7,97,140.50. He further submitted that the said balance sheet of the assessee is available on page No. 12 of the paper book. He also submitted that on page NO. 17 of the paper book is the detail regarding cash deposited in bank of Rs.218,000/-. He also submitted that on pages 13 & 14 is a chart showing availability of cash on the date of deposit of cash in bank during financial year 2005-06. He submitted that considering all these facts, the addition is not justified.

53. Learned D. R. of the Revenue supported the orders of the authorities below.

54. We have considered the rival submissions. We find that as per the details available on page No. 17 of the paper book, an amount of Rs.40,000/- was deposited in ICICI bank on 13/06/2007 and another amount of Rs.19,000/- was deposited in bank on 14/06/2007 and total amount deposited in June was Rs.59,000/-. As per the chart, showing availability of cash in June 2007, the assessee is showing opening cash balance of Rs.4.15 lac and closing cash balance of Rs.3.99 lac after reducing this amount of Rs.59,000/-. Similarly, an amount of Rs.25,100/- was deposited in ICICI on 19/07/2007. As per the chart showing availability of cash in July, 2007, there was opening cash of Rs.3.99 lac and closing balance of Rs.4.16 lac. In September 2007, cash deposited was Rs.1.34 lac and as per the chart showing availability of cash in the September 2007, there was opening cash 24

balance of Rs.4.58 lac and closing balance of Rs.3.67 lac after reducing this amount of Rs.1.34 lac. Considering all these facts, we are of the considered opinion that the addition made by the Assessing Officer is not justified because if it is held that the cash balances shown in this chart is not acceptable than not only cash deposit in bank but the closing balance shown also stands unexplained. Since, no addition is made by the A.O. for closing balance, it means he has accepted the same. The deposit in bank is much lower than that and hence even if part opening balance is ignored as unestablished than also no addition is called for. We, therefore, delete the same.

55. In the result, the appeal of the assessee stands allowed.

56. In the combined result, two appeals in I.T.A. No.151 & 153/Lkw/2013 are partly allowed and all other nine appeals are allowed.

(Order was pronounced in the open court on the date mentioned on the caption page)

Sd/. Sd/.

(SUNIL KUMAR YADAV) ( A. K. GARODIA ) Judicial Member Accountant Member

Dated:19/02/2015 *C.L.Singh

Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Asstt. Registrar