MR. PRAHLAD G PRAJAPATI,MUMBAI vs. ITO-19(2)(5), MUMBAI

O R D E R Per Amarjit Singh (AM): The present appeal filed by the assesse is directed against the order passed by the NFAC, Delhi dated 31.01.2023 for A.Y. 2011-12. 2. The solitary issue in the ground of appeal

of the assessee is directed against the decision of ld. CIT(A) in deleting the penalty levied by the Assessing Officer u/s 271(1)(c) of the Act to the amount of Rs.1,91,593/-.

3. The fact in brief is that the case of the assessee was reopened by issuing of notice u/s 148 of the Act on the basis of information received from the sale tax department that assessee has obtained accommodation bills of purchases from 9 parties as mentioned in the assessment order to the amount of Rs.95,39,118/-. Thereafter, the P a g e | Mr. Prahlad G. Prajapati Vs. The ITO-19(2)(5) assessment u/s 143(3) r.w.s 147 of the Act was completed vide order dated 29.02.2016 by making addition of Rs.11,92,389/- being unexplained expenses on account of non-genuine purchases @ 12% of such total purchases of Rs.95,39,118/-.

4. The assessee filed the appeal before the ld. CIT(A). The CIT(A) has partly allowed the appeal of the assessee by restricting the disallowance of such purchases @ 6% of the alleged non-genuine purchases of Rs.95,39,118/- as against the disallowance made @ 12.5% of such purchases in the assessment order passed u/s 143(3) r.w.s 147 of the Act.

5. Thereafter vide penalty order u/s 271(1)(c) r.w.s 274 of the Act the A.O has levied penalty of Rs.1,91,593/- for furnishing inaccurate particulars of income. The ld. CIT(A) has dismissed the appeal of the assessee.

6. Heard the ld. D.R and perused the material on record. Without reiterating the facts as elaborated above the assessing officer has made estimated addition of profit at 12.5% of the alleged non-genuine purchases as per reassessment order made u/s 143(3) r.w.s 147 of the Act. The ld. CIT(A) has restricted the estimated profit to the extent of 6.5% of the non-genuine purchases by confirming the addition of Rs.6,20,042/-.

7. After perusal of the material on record it is observed that assessing officer has not fully established that assessee has concealed his income and made purchases from the grey market. We consider that determination of income of assessee on certain estimate was not sufficient to conclude that assessee had concealed his income. It is not appropriate to levy penalty merely because of addition made on the basis of estimated profit. We have also considered the decision of Hon’ble Bombay High Court and Tribunal in the case of CIT Vs. Aarkey