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TMI Blog2019 (12) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... TANT MEMBER Assessee by: Ms. Neha Paranjpe Department by: Shri S. Michael Jerald ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals) 3, Mumbai [hereinafter in short Ld.CIT(A) ] dated 27.07.2018 for the A.Y. 2010-11. 2. Revenue has raised the following grounds in its appeal: - 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-3, Thane erred in deleting the penalty of ₹ 1,01,310/- made on account of purchases made from hawala parties, even though the quantum appeal has been confirmed. 2. The appellant prays that the order of Ld. CIT(A)-3, Thane, may be set aside and that to the Assessing officer may be restored. 3. The appellant craves leave to add, amend or alter any ground/grounds which may be necessary. 3. Briefly stated the facts are that, assessee firm engaged in the business of manufacturer of traders of engineering tools. The assessment for the A.Y. 2010-11 was completed u/s. 143(3) r.w.s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Income Tax Officer in ITA.No. 1396/MUM/2017 dated 23.11.2017 held that no penalty is leviable observing as under: - 6. We have heard the rival submissions, perused the orders of the authorities below. In so far as the penalty levied on estimation of profit element on purchases is concerned, we are of the view that Assessing Officer had made only adhoc estimation of profit on certain purchases treated as unexplained expenditure. Assessing Officer did not doubt the sales made by the assessee from out of such purchases. Assessing Officer based on the decision of the Hon'ble Gujarat High Court in the case of CIT v. Simit P. 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 alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment. The AO placed full reliance on the enquiries conducted by Sales Tax Department in respect of the parties, referred above. Accordingly, the AO took the view that the purchases to the tune of ₹ 38.69 lakhs have to be treated as unexplained expenditure. Accordingly, he assessed the same u/s 69C of the Act. 11. The ld. CIT(A) deleted the addition and hence the Revenue is in appeal before the Tribunal. 12. The ld. DR strongly placed reliance on the order of Assessing Officer. 13. On the other hand, the ld. AR submitted that the additions made in the case of some other assesses on identical reasons have been deleted by the Co-ordinate Benches of the Tribunal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hes 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. Considering the facts as discussed hereinabove, we are of the considered opinion that in view of the ratio in the various decisions as above penalty cannot be sustained. It is also a settled legal position of law that penalty cannot be levied wherein the assessment is made on estimation basis. Accordingly, we are inclined to uphold the order passed by the ld.CIT(A) by dismissing the appeal of the revenue. 9. Further, the Hon'ble Punjab Haryana 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer was highly excessive and it fixed the total income of the assessee at ₹ 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) of the Act. There is not even an iota of evidence on the record to show that the income of the assessee during the year under appeal was more than the income returned by him. Additions in his income were made, as already observed, on estimate basis and that by itself does not lead to the conclusion that the assessee either concealed the particulars of his income or furnished inaccurate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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