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TMI Blog2020 (5) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... irmity in the order passed by the CIT(A) in deleting the penalty u/s. 271(1)(c) levied by the Assessing Officer. - Decided in favour of assessee. - ITA NO. 5337/MUM/2018 - - - Dated:- 28-2-2020 - Shri C.N. Prasad, Hon'ble Judicial Member And Shri S. Rifaur Rahman, Hon'ble Accountant Member For the Assessee : None For the Department : Ms. Samatha Mullamudi 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, Nasik [hereinafter in short Ld.CIT(A) ] dated 29.06.2018 for the A.Y. 2009-10. 2. Revenue has raised the following grounds in its appeal: - 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the penalty levied u/s 271(l)(c) merely on the grounds it was levied on estimate basis and voluntary surrender by the assessee without properly appreciating the decision of the Hon'ble Apex Court in the case of Mak Data Pvt Ltd. Vs CIT (Civil Appeal No. 9772 of 2013) . 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehemently supported the orders of the authorities below. 6. We have heard the submissions of the Ld. DR, perused the orders of the Authorities below. It is a settled position of law that penalty cannot be levied when an adhoc estimation is made. On a perusal of the record, in this case we find that an estimation of Gross Profit was made by the Assessing Officer restricting the profit element in the alleged bogus purchases at 20.71% for the year under consideration. 7. On identical situations the Coordinate Bench in the case of Shri Deepak Gogri v. 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. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed by the assessee during the year under consideration was ₹ 7,36,27,555/-. The AO noticed that the Sales Tax Department of Government of Maharashtra has listed out names of certain dealers, who were alleged to have been providing accommodation entries without doing actual business. The AO noticed that the assessee made purchases to the tune of ₹ 38.69 lakhs from two parties named M/s Umiya Sales Agency Pvt Ltd and M/s Mercury Enterprises, whose names found place in the list provided by the Sales Tax Department. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted the addition which are as under: - 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 10. 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. 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& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome on estimate basis. The Assessing Officer did not agree with the estimate of the assessee and brought his income to tax by increasing it to ₹ 2,07,500. This, too, was on estimate basis. The Tribunal agreed that the income of the assessee had to be assessed on an estimate of the turnover but was of the view that the estimate as made by the Assessing 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 hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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