TaxTMI 
TaxTMI 
2021 (9) TMI 1370
X X X X Extracts X X X X
X X X X Extracts X X X X
....gether for the sake of convenience. 3. Since, grounds are identical, we are referring to grounds from ITA No. 1547/Mum/2020 for AY 2011-12. The grounds of appeal are read as under:- 1. "On the facts and in the circumstances of the case, the Ld. CIT (AJ erred in deleting the penalty levied by the AO u/s 271(1(c) of the Income Tax Act, 1961, of Rs. 3,57,078/- without appreciating the fact that the Assessing Officer has correctly held that the assessee has failed to substantiate the transactions claimed in its return of income thereby evaded taxes to that extent." 2. "On the facts and circumstances of the case and in the law, the Ld. CIT(A) erred in not appreciating the fact that the act of assessee clearly falls within th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessment order added a sum of Rs. 1,12,81,923. AO in the assessment order added a sum of Rs. 1,12,81,923. Being 100% of such bogus purchases. During the assessment proceedings, the assessee filed ledger of the parties copies of purchase and sales bills and bank account statement proving the payments through banking channels. However, the AO held that the assessee failed to explain the purchases by not producing any lorry receipts and delivery details and failed to discharge onus by producing the parties before him, and added the 100% of the total purchases as nonPravin genuine to the total income. On appeal, the CIT(A) estimated 12.5% of the said purchases as profit. On further appeal by the assessee, ITAT Mumbai in 3532, 3533, 3534 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the assessment order u/s 69C even when the payments were made through banking channels and the source for the purchases was on the record. It is noted that the addition made by the AO was an adhoc addition on the assumption that purchases were made in grey market instead of the bills produced. An assumption however believable it is cannot take place of a fact. Be that as it may, on appeal in this case, the CIT(A) held that, even as per the assumption made, entire purchases cannot be taxed and held that only estimated profit of 12.5% of the said bogus purchases can be brought to tax. On further appeal, Hon'bel ITAT Mumbai vide order No. 3532, 3533, 3534 and 3535/M/2018 dated 28.06.2019 reduced the estimated profit to 5% of the alleged....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een that finally the income assessed in the hands of the appellant is based on estimation of profit. Estimation is a pure guess work and where income is estimated, it cannot be said that 'inaccurate particulars' have been furnished. Appellant argued that he genuinely purchased the goods based on the bills in his possession which the AO has not accepted. Furnishing of inaccurate particulars been not been established by the Assessing Officer, therefore, in such a case penalty u/s 271(1)(c) cannot be levied. In support of this proposition, reliance is placed on the decision of jurisdictional ITAT in the case of Earthmoving Equipment Service Corporation v. Dy. CIT, 22(2), Mumbai [2017] 84 taxmann.com 51 (Mumbai - Trib.) wherein, on simi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssive and it fixed the total income of the assessee at Rs. 1,50,000/- for the year under appeal. It is, thus, clear that there was a difference of opinion as regards the estimate of the income of the assessee. Since the Assessing Officer and the Tribunal adopted different estimates in assessing the income of the assessee, it cannot be said that the assessee had 'concealed the particulars of his income' so as to attract clause (c) of section 271(1)." Reliance is further placed on the decision of Hon'ble Mumbai in case of Sushil Chhatrabhuj Raheja v. ACIT [ITA No.1375/Mum/2017] dated 29.09.2017 wherein on the estimation of profits, the Hon'ble Tribunal has deleted penalty u/s 271(1)(c) of the Act. Relevant extracts are repr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n these backgrounds, in our considered opinion assessee cannot be visited with the rigours of penalty u.s 271(1)(c). As a matter of fact, on many occasions, on similar circumstances in quantum proceedings, the disallowance itself has been deleted. In our considered opinion, on the facts and circumstances of the case assessee cannot be said to have been guilty of concealment or furnishing of inaccurate particulars of income. In this regard, we draw support from the decision of a larger bench of the Hon'ble Supreme Court in the case of the State of Orissa 82 ITR 26, where in it was held that the authority may not levy the penalty, if the conduct of the assessee is not found to be contumacious. 8. We further note that tax effect in this cas....