MAGAN VADHAJI PRAJAPATI ,MUMBAI vs. ITO WARD 19(2)(2), MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH MUMBAI
BEFORE: SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER
Magan Vadhaji Prajapati
Room No. 15, 2nd Floor,
39/41, Kamal Niwas,
Bhandari Street Bhandari
Street, Mumbai- 400004
Vs.
I.T.O. Ward 42(1)(2), Mumbai
Piramal Chambers, Dr SS Rao
Marg, Parel, Mumbai- 400012
PAN: ANWPP 7146 B
(Appellant)
..
(Respondent)
Assessee by Shri. Bharat Kumar -AR
Revenue by Shri. Virabhadra Mahajan, Sr. DR
Date of Hearing
06/10/2025
Date of Pronouncement
06 /10/2025
Order under section 254(1) of Income Tax Act
PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of Learned Commissioner of Income Tax (Ld. CIT(A)) dated 08.08.2025 for A.Y. 2011-12. In the present appeal the assessee has challenged the validity of penalty levied under section 271(c) vide order dated 26.07.2024. 2. Rival submissions of both the parties have been heard and record perused. The Ld. Authorized Representative (Ld.AR) of the assessee submits that assessment was completed under section 147 r.w.s. 254 and 144B of the Income Tax Act (Act) on 26.02.2024. The assessing officer while passing the assessment order made adhoc addition @12.5% of purchases allegedly shown from various entities managed by Bhanwarlal Jain. The assessing officer made total addition of Rs. 5,83,848/- being 12.5@ of aggregate disputed purchase of Rs. 46,70,785/-. The assessing officer levied penalty under section 271(1)(c) at Magan Vadhaji Prajapati the rate of 100% tax shout to be evaded. The assessing officer levied penalty of Rs. 2,17,386/-. The Ld. CIT(A) confirmed the action of the assessing officer. The Ld.AR of the assessee submits that it is settle position under Income Tax proceeding that no penalty under section . 271(1)(c) is liable on addition made merely on estimation basis. Admittedly assessing officer made addition on estimation only thus, penalty order dated 26.07.2024 is not sustainable. To support his estimation he relied upon the decision of Bombay High Court in the case of PCIT vs Colo Colour (P.) Limited [2025] 178 taxman.com 458 (Bombay). 3. On the other hand learned Senior Departmental representative (Ld. Sr. DR) on the revenue supported the order of assessing officer and Ld. CIT(A). 4. We have considered the rival submission of both the parties and had gone through the orders of lower authorities carefully. On perusal of assessment order, we find that assessing officer made adhoc addition/disallowances on account of purchases shown from entities/parties which were allegedly managed by Bhanwarlal Jain. Admittedly the assessing officer made addition of 12.5% of purchases shown from such parties. We find it Hon’ble Bombay High Mumbai; Dated 06/10/2025 Disha Raut, Steno
Copy of the Order forwarded to:
BY ORDER,
(Asstt.