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TMI Blog2021 (11) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... r And Shri C.N. Prasad, Judicial Member For the Assessee : Shri Rajkumar Singh. For the Department : Shri Hoshang Booman Irani. ORDER PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against order of Learned Commissioner of Income-tax (Appeals)-47, Mumbai [hereinafter for short Ld. CIT(A)] dated 18.01.2021 for the A.Y. 2009-10. 2. Assessee has raised following grounds in its appeal: - 1. That the Id. C.I.T. (Appeals) has erred in upholding the validity of impugned penalty order dated 27/11/2019 passed u/ s 271 (1)(c) imposing the penalty at Rs. 2,70,000/- consequent to invalid show cause notice issued on 19/03/2016 by Id. A.O. in standard computer generated form without striking out the inapplicable words and provisions depriving the assessee to present his case in effective, proper and lawful manner in absence of specification of exact default in the show cause notice. 2. That on merit of the case and also in law penalty imposed by Id. A.O. u/s. 271(l)(c) at Rs. 2,70,000/- and upheld by Id. C.I.T.(Appeals) in respect of debatable disallowance which has been upheld on adhoc basis and modified differently by the different appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. Against this order of the Ld.CIT(A), assessee is in appeal before us. 6. Ld. Counsel for the assessee reiterated the submissions made before Ld.CIT(A) and requested to delete the penalty levied made by the Assessing Officer. 7. Ld. DR vehemently supported the orders of the authorities below. 8. We have heard the rival submissions, 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. In the instant case profit element on the alleged bogus purchases was estimated on adhoc basis at 3.13% and brought to tax an amount of ₹.11,99,031/- out of purchases of ₹.3,83,07,709/- by the Assessing Officer and the same was enhanced to 5% by Ld.CIT(A). The Coordinate Bench of the Tribunal in ITA.No. 2059/Mum/2018 dated 08.02.2019 on considering facts restricted the addition to 2% of the alleged bogus purchases. 9. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation. In our view the penalty cannot be imposed where the additions are made on estimate basis. The Tribunal has considered an identical issue in the case of Deepak Popatlal Gala, in ITA No. 5920/M/13 and vide order dated 27.3.2015, it has held as under:- 10. The next issue relates to disallowance made out of purchases and assessed u/s 69C of the Act. We heard the parties and perused the record. The total purchase expenditure claimed by the assessee during the year under consideration was Rs.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 Rs.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 Rs.38.69 lakhs have to be treated as unexplaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late authority has analysed the issue in all angles and applied the ratio laid down by the High Courts and Tribunals in deciding this issue. Hence, we do not find any reason to interfere with his order on this issue. We also find that in the following cases the Tribunal has taken similar view in some of the case that on the basis of third party evidence, addition made by the AO cannot be held as good law and 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 fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (c) of Section 271(1) of the Act, it is necessary that there must be concealment by the assessee of the particulars of his income or if he furnishes inaccurate particulars of such income. What is to be seen is whether the assessee in the present case had concealed his income as held by the Assessing Officer and the Tribunal. He had not maintained any accounts and he filed his return of income 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 Rs. 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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