TMI Blog2021 (3) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer for the Assessment Year - Decided in favour of assessee. - ITA. NO. 5553/MUM/2019 - - - Dated:- 9-3-2021 - SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER Assessee by : None Department by : Shri Michael Jerald ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the revenue against order of the Ld.Commissioner of Income-tax (Appeals)-3, Thane [hereinafter for short Ld. CIT(A)] dated 06.06.2019 for the A.Y. 2009-10 in deleting the penalty levied u/s. 271(1)(c) of the Act made by the Assessing Officer. 2. Briefly stated the facts are that, assessee engaged in the business of Manufacturer of metal stainless steel cutlery items filed return of income on 25.09.2009 declaring income of ₹ 4,30,990/- for the A.Y.2009-10. Assessment was reopened u/s. 147 of the Act and re-assessment was completed on 08.12.2014 u/s. 143(3) r.w.s 147 of the Act determining the income at ₹ 7,44,393/-. While completing reassessment the Assessing Officer considering the submissions of the assessee treated purchases of ₹ 3,13,404/- made from M/s. Navratna Impex as non-genuine on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Seth [356 ITR 451] estimated the profit element in such purchases at 12.5% and by reducing the Gross Profit already declared by the assessee. In the circumstances, we hold that there is no concealment of income or furnishing of inaccurate particulars as the profit element was determined by way of adhoc estimation. Coming to the interest, the assessee furnished complete details in the return of income and made a claim and simply because the claim is denied and cannot lead to furnishing of inaccurate particulars or concealment of income. No allegation by Assessing Officer that the assessee failed to disclose the particulars relating to its claim in the return of income. Thus we hold that there is no concealment of income or furnishing of inaccurate particulars of income. Thus we direct the Assessing Officer to delete the penalty levied u/s. 271(1)(c) of the Act. 7. Similarly, in the case of DCIT v. Manohar Manak, Alloys Pvt. Ltd in ITA No. 5586/MUM/2015 dated 16.01.2017 the Coordinate Bench held as under: - 9. We have heard the rival parties and carefully considered material placed before us including the order of the authorities below. We find from the assessment order th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in the following cases : a) Ramesh Kumar and Co V/s ACIT in ITA No.2959/Mum/2014 (AY-2010-11) dated 28.11.2014; b) DCIT V/s Shri Rajeev G Kalathil in ITA No.6727/Mum/2012 (AY-2009-10) dated 20.8.2014; and c) Shri Ganpatraj A Sanghavi V/s ACIT in ITA No. 2826/Mum/2013 (AY-2009-10) dated 5.11.2014 In all the above said cases, the Co-ordinate Benches of the Tribunal has held that the AO was not justified in making the addition on the basis of statements given by the third parties before the Sales Tax Department, without conducting any other investigation. In the instant case also, the assessing officer has made the impugned addition on the basis of statements given by the parties before the Sales tax department. We notice that the ld.CIT(A) has taken note of the fact that no sales could be effected without purchases. He has further placed reliance on the decision rendered by Hon ble Gujarat High Court in the case of CIT Vs. M.K. Brothers (163 ITR 249). He has further relied upon the decision rendered by the Tribunal in the case of ITO Vs. Premanand (2008)(25 SOT 11)(Jodh), wherein it has been held that where the AO has made addition merely on the basis of observa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of Harigopal Singh v. CIT [258 ITR 85] held as under: - 3. On further appeal, the Tribunal reduced the addition to ₹ 1,50,000. Hence, the income was finally assessed at ₹ 1,50,000 against the declared income of ₹ 52,000. The Assessing Officer initiated penalty proceedings against the assessee by invoking Section 271(1)(c) along with the Explanation 1(B) of the Act on the plea that he had concealed the particulars of his income. A show-cause notice was issued to him under Section 274 read with Section 271(l)(c) of the Act. In reply thereto, the assessee pleaded that since no positive concealment had been detected by the Department and the addition was made in his income only on estimate basis, no penalty under Section 271(1)(c) of the Act could be imposed because the assessee's income on estimate basis keeping in view his household expenses as well as the statement of accretion to his assets during the year under consideration, was bona fide. The Assessing Officer did not accept the reply and found that since the assessee had not filed any fresh evidence in penalty proceedings to prove that there was no attempt on his part to concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate particulars of such income. There has to be a positive act of concealment on his part and the onus to prove this is on the Department. We are also of the considered view that the Tribunal grossly erred in law in relying on Explanation 1(B) to Section 271(1)(c) of the Act to raise a presumption against the assessee. The assessee had justified his estimate of income on the basis of household expenditure and other investments made during the relevant period. It is not the case of the Revenue that he had, in fact, incurred expenditure in excess of what he had stated. In this view of the matter, it cannot be said that the explanation furnished by the assessee had not been substantiated or that he had failed to prove that such explanation was not bona fide. 5. In the result, the appeal is allowed and the question posed in the earlier part of the order is answered in the negative holding that the provisions of Section 271(1)(c) of the Act are not attracted to cases where the income of an assessee is assessed on estimate basis and additions are made therein on that basis. 9. Similar view has been taken by the Hon'ble Delhi High Court in the case of CIT v. Aero Traders Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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