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TMI Blog2024 (6) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... accurate particulars of income. The orders in case of Stripco Springs Pvt. Ltd. [ 2021 (9) TMI 678 - ITAT MUMBAI ] V.K. Ispat Alloys [ 2023 (2) TMI 1058 - ITAT MUMBAI ] are also in favour of the assessee as those are on identical facts and circumstances holding that where addition of income of the assessee is on estimated percentages of bogus purchases, no penalty u/s 271(1) (c) of the Act can be sustained on such addition. Decided in favour of assessee. Validity of low tax effect appeals by the Revenue - Penalty orders are adverse judgments relating to issues of the proceedings where addition is based on information from specified authority. Therefore, revenue could file an appeal on the issues of addition, as well as penalty or any other issue related to additions made based on specified information from specified agencies. Hence, we reject the argument of the ld. AR that these are low tax effect appeals, which could not have been preferred by the ld. AO. - Shri Prashant Maharishi, AM And Shri Sunil Kumar Singh, JM For the Assessee : Ms. Kinjal Bhuta, AR For the Revenue : Shri Rajesh Meshram, DR ORDER PER PRASHANT MAHARISHI, AM: 01. ITA No. 4370/Mum/2023 and ITA No. 4368/Mum/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sustainable when the purchases were held to be tainted/bogus, and it was only the profit out of this which was estimated? 3. Whether the Ld. CIT(A) erred in holding that penalty levied is not sustainable as the addition was made on estimated basis, whereas the Hon'ble High Court of Delhi in the case of JRD Stock Brokers (P.) Ltd. Vs Commissioner of Income Tax - II (2015) held that levy of penalty on estimated basis is justified if on basis of material discovered, there is determined to be additional income that radically changes the character of income originally declared? 4. Whether the Ld. CIT(A) erred in holding that penalty levied is not sustainable as the addition was made on estimated basis, whereas the Hon'ble High Court of Patna in the case of CIT vs Md. Warasat (1987) held that assessment by estimate is one of the known process in the taxation world, and that, where the assessee conceals relevant material/evidence, the revenue has no option but to make a best judgement by estimate? 5. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. 04. We will first state the facts of A.Y. 2010-11 and facts for A.Y. 2011-12 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition was made for A.Y. 2009-10 and penalty was dropped. On merit, also, the assessee submitted that under facts and circumstances the penalty is not leviable based on reliance placed on several judicial precedents. 011. The learned Assessing Officer rejected such explanation and stated that as assessee has furnished inaccurate particulars of income, as incorrect facts were furnished, penalty is leviable. Accordingly, considering addition confirmed to the extent of ₹6,45,560/-, ld. AO levied penalty under Section 271(1)(c) of the Act of ₹1,94,284/- for furnishing of inaccurate particulars of income. 012. The assessee challenged the penalty order before the learned CIT (A). He considered the written submission furnished by the assessee, wherein it was stated that on estimated addition no penalty can be levied. The learned CIT (A), after discussion and considering the judicial precedents relied upon, held that under facts and circumstances it is evident that addition is made on the estimate basis in this case. He held that in view of several judicial precedents of the co-ordinate Benches, the penalty levied is not justified as addition is made on estimated basis. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023, wherein on identical basis the penalties were deleted for the reason when the additions were made on estimated basis it does not entail penalty under Section 271(1)(c) of the Act. v. She further stated that the decision cited by the learned Departmental Representative in case of JRD Stock Brokers Pvt. Ltd. Vs. CIT dated 4th March, 2015, of Hon'ble Delhi High Court does not apply to the facts of the case as it was a case of penalty levied under Section 158 BFA (2) on undisclosed income determined on the basis of estimation on the application of gross credits to consider as turnover. She submitted that in this case, the facts are distinguishable. vi. On the decision of CIT VS. Warasat Hussain dated 10 th September 1987, the issue was with respect to the concealment of capital gain. She further referred to paragraph no.16 of the order and submitted that in that case the assessee did not produce necessary materials about capital gains, which were in possession of the assessee to dislodge the view of the Income Tax Officer. She submitted that in the present case the assessee has furnished all the details available with assessee in the form of purchase bills, stock register, pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (A) holding that on estimated addition the penalty under Section 271(1)(c) of the Act cannot be sustained. 018. It is a trite law that cannot be universal law that whenever the addition was made on the basis of estimate, penalty under Section 271(1)(c) of the Act cannot be levied. In a case, where addition is made on the basis of information with the learned Assessing Officer that the assessee has purchased merely the invoices from the buyers and assessee does not furnish any information, then perhaps even on the estimated addition, penalty may be levied, if it falls into the specified offence of Section 271(1)(c) of the Act. But the situation would be different, if there is an allegation about bogus purchases, Assessee furnishes all the evidences in its possession, demonstrates that goods in fact have entered in to its stock records and consequent sales are not disputed, despite allegedly bogus suppliers could not be found in response to notices u/s 133 (6) of The Act and the ld. AO merely makes addition of estimated amount of percentages of such bogus purchases. It is the case that the learned Assessing Officer asked the assessee to prove the delivery of goods purchase and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 019. Honourable Gujarat High court in RAMESHCHANDRA A SHAH VERSUS ASSTT. CIT, CIRCLE 3 OR HIS SUCCESSOR TAX APPEAL NO. 800 of 2008 dated August 10, 2016, on the question of law Whether on the facts and circumstances of the case, the Income-tax Appellate Tribunal, was right in law in confirming the penalty under Section 271(1)(c) of the Income-tax Act, 1961 in respect of the addition of ₹ 2,09,150/- being 25% of purchases of ₹ 8,36,601 has held that :- 4. Learned Counsel for the appellant has drawn the attention of this Court to the decision of this Court in the case of Vijay Proteins Ltd. v. Commissioner of Income- tax reported in [2015] 58 taxmann.com 44 (Gujarat) and relevant paragraphs are reproduced as under :- Insofar as T.A. No.243/2002 is concerned, the question of law raised therein is already concluded by a decision of this Court rendered in T.A. No.461/2000 allied matters, as stated herein above. Paras 6 6.1 of the said decision are relevant for our purpose, which read thus. 6. Heard both the parties and gone through the material available on record. In the instant case, we are of the opinion that assessment made is just and proper. The statements made in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the order of penalty may be confirmed. 6. We have heard learned Counsel for the respective parties and perused the records of the case. Taking into consideration the order the Tribunal, the evidence which has surfaced on record as well as the decision of this Court in the case of Vijay Proteins Ltd. v. Commissioner of Income-tax (supra), we are of the view that the issues raised in this Appeal are to be answered in favour of the assessee and against the Department. 020. Thus, respectfully following the orders of the Honourable Gujarat High court and Honourable Rajasthan high court in Commissioner of Income-tax Versus Krishi Tyre Retreading and Rubber Industries - 2014 (2) TMI 21 - RAJASTHAN HIGH COURT, the appellate orders of the ld. CIT (A) deleting the penalty u/s 271 (1) (c) of The Act, are confirmed. 021. Coming to the argument of The Ld. AR that the learned Assessing Officer could not have filed the appeal before the Tribunal in view of low tax effect in case of the penalty proceedings as exceptions mentioned are only with respect to the quantum addition of specified nature relying on paragraph no.10 of the decision of the co-ordinate Bench in case of Stripco Springs Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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