2025 (12) TMI 804

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....date of order 12/08/2025. The impugned order was emanated from the order of the Ld. Deputy Commissioner of Incometax, Central Circle-2(1) Mumbai (in short, 'Ld.AO') passed under section 271(1)(c) of the Act, date of order 27/09/2024. 2. The brief facts of the case are that the assessment was originally completed under section 143(3) read with section 153C of the Act on 30/12/2016 by determining the total income at Rs. 19,70,220/- as against the returned income of Rs. 7,03,475/-. Subsequently, the assessment was reopened under section 147 of the Act and notice under section 148 was issued. During the reassessment proceedings, it was alleged that the assessee was engaged in providing accommodation entries. Consequently, the entire purchase....

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....s, the charge underlying the penalty has undergone a change from the stage of assessment to the stage of appeal, which renders the penalty unsustainable in law. 4. The Ld. AR further submitted that the addition for the impugned assessment year was sustained by the Hon'ble ITAT only to the extent of 3% of the alleged bogus purchases. Therefore, penalty cannot be levied on such estimated or ad-hoc additions. In support of this proposition, he placed reliance on the judgment of the Hon'ble Bombay High Court in Indermal Manaji vs. CIT (2017) 88 taxmann.com 525 (Bom). The relevant portion of the said judgment is reproduced below:- "17. The basis for initiation of Assessment Proceedings by the Assessment Officer is that the Assessment....

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...., therefore, was not required to give any explanation as his case was accepted by the Tribunal in Appeal. As such, for all the above reasons, Explanation (1) to Section 271(l)(c) of the Act would not be attracted. 18. The learned counsel for the Revenue has placed reliance on the Judgment of the Apex Court in case of Chuharmal (referred to supra}. In the said case, the wrist watches were seized from the assessee's bedroon No explanation was given at the time of seizure. The assessee also did not avail opportunity to show that he was not the owner. The deemed income comprising of value of unexplained articles was added to the disclosed income. In that context, the Apex Court has held that Explanation to Section 271(1)(c) of the ....