SAWAILAL BHATTI ,MUMBAI vs. ITO- 20(3)(2), MUMBAI

The aforesaid appeals have been filed by the assesses against separate impugned order of even date, 19.10.2022 in relation to the penalty proceedings u/s 271 (1)(c) for the AY 2009-10, 2010-11 & 2011-12. On merits facts and issues involved in all the three appeals are common arising out of identical set of facts and 2 & 3192/Mum/2022 SAWAILAL BHATTI LL findings, therefore, same were heard together and appeal is disposed of by way of the consolidated order. In all the year the penalty has been levied on account of adhoc addition of GP rate on bogus purchases.

In the assessment order, the addition have been made by the AO on the basis of certain information received from Sales Tax authorities that assessee had made purchases from various suspicious parties. The Assessing Officer accordingly applied GP rate on adhoc basis at the rate of 12.5% of the bogus purchases and same was also confirmed by the Ld. CIT (Appeals). In Tribunal, in the quantum proceedings for the AY 2009-10 & 2011-12, the Tribunal has reduced the addition by holding that GP rate of 5% should be estimated. Accordingly, the disallowance has restricted to 5% while order dated 10.02.2023 pass in & 3193/Mum/2022. In so far as, appeal for AY 2010-11 is concerned the same has been stated to be pending, even though hearing was concluded on 09.03.2023.

Be that as may be, on the perusal of the relevant finding, we find that the assessee had filed all the details of purchases and 3 & 3192/Mum/2022 SAWAILAL BHATTI LL corresponding sales had not been doubted. The sources of purchases are from the books and overall trading results have been accepted. Only allegation is that assessee has taken accommodation bills for the purchase of items to suppress the profits. Once, the addition has been made on adhoc and estimate which has been reduced by the Tribunal, then it cannot be held that there is any concealment of income so as to warrant any penalty u/s 271(1)(c), Accordingly, on merits the penalty is deleted.

The Ld. Counsel submitted that, the assessee had discontinued the business due to paucity of funds and he was going through serious financial distress and he was struggling to satisfy the basic needs of his large family. It also impacted on his health and had very tough time in this period. Accordingly, he could not file the appeal in time. Thus, on this ground, appeal dismissed by the Ld. CIT(A) on the ground of delay should be set aside and 4 & 3192/Mum/2022 SAWAILAL BHATTI LL appeal should be decided on merits. Looking to the aforesaid circumstances and the fact that we have already deleted the penalty on merits, therefore dismissal of appeal on delay by the Ld. CIT (A) is rejected.

Accordingly, all the appeals filed by the Assesses are allowed.