ACTUBE ENTERPRISE,MUMBAI vs. ITO, 34(1)(1), MUMBAI

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: A BEFORE HON’BLE SHRI PAWAN SINGH, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 2592/MUM/2026 िनधा�रणवष�/Assmt. Year: 2011-12) Permanent Account Number: AABFA2570J ITO 34(1)(1) Actube Enterprise Kautilya Bhavan, BKC 27 Laxmi Flat Owners Co Op Society, M.G. Road Vile Parle Bandra East Vs. East, Mumbai-400 057. Mumbai-400 051. (��थ� Respondent) (अपीलाथ� Appellant)

िनधा�रती�ारा/Assessee represented by: Shri V.P. Kothari, CA राज� व�ारा/Revenue represented Shri Surendra Mohan, Sr. DR by:

सुनवाईकीतारीख/Date of conclusion of hearing: 20-May-2026 घोषणाकीतारीख/Date of pronouncement: 02.06.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal is filed by the assessee is against the order of CIT(A)/National Faceless Appeal Centre vide DIN: ITBA/NFAC/S/250/2025-26/1085636262(1) dated 05.02.2026 passed against the penalty order by the Assessment Unit of the Income Tax Department, u/s 271(1)(c) of the Income-tax Act (hereinafter referred to as the “Act”), dated 25.08.2025, for the Assessment Year 2011-12.

The Ld. Assessing Officer has erred in law and on facts in confirming penalty of Rs. 72,148/- levied under section 271(1)(c) of Income Tax Act, 1961 on adhoc addition of gross profit on account of alleged non- genuine purchases. 3. The only issue involved in the present appeal is in respect of imposition of penalty of Rs. 72,148/- under section 271(1)(c) of the Act, which is based on the addition of gross profit of alleged non-genuine purchases made, by adopting rate of 12.50% as additional gross profit.

“20. We also find that the reliance on behalf of the assessee on the decision of the Gujarat High Court in Vijay Proteins Ltd. Vs. Commissioner of Income-tax7 is quite apt. In such decision the Division Bench while referring to the decision in Commissioner of Income Tax vs. Krishi Tyre Retreading and Rubber Industries8 held that penalty could not have been imposed under Section 271(1)(c) of the Act, when the addition was sustained purely on estimate basis or when the addition was made which was on a pure guess work, hence, no penalty under Section 271(1)(c) of the Act could be said to be leviable on such guess work or estimation. The Court accordingly answered the question in favour of the assessee, rejecting levy of penalty under Section 271(1)(c). 21. The aforesaid discussion would make us conclude, that the Assessing Officer could not have come to a conclusion of the present case attracting proceedings for levy of penalty, when the Assessing Officer had already taken a position on materials which were available before him in the course of assessment proceedings, in computing the amount of tax payable by the assessee, by making appropriate additions on the basis of estimates derived in passing of the assessment order. In other words, for the purpose of assessment proceedings, the relevant materials were accepted, to be not amounting to concealment of particulars of income or furnishing of inaccurate particulars of income. In such circumstances, under the garb of penalty proceedings, there ought not to be an occasion that such material again be labelled as amounting to concealment of income or furnishing of inaccurate particulars of income. If such approach is accepted, it would result in taking away the very basis of the assessment, apart from dragging the assessee into unwarranted penalty proceedings. There cannot be two opinions that Section 271(1)(c) of the Act, would be required to be strictly construed, hence in the absence of such clear position of a concealment of particulars of income or furnishing of inaccurate particulars of income, in the facts of the present case, penalty proceedings could not have been initiated. This more particularly when the penalty proceedings are initiated clearly on the basis of additions made in the re-opening proceedings thereby leaving no room for a doubt of the disclosures made by the assessee, warranting penalty proceedings. In the present case such material essentials were completely lacking.”

Order pronounced in the open court on 02.06.2026

Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member Mumbai Dated: 02.06.2026 Copy to:

Actube Enterprise 27 Laxmi Flat Owners Co Op 1 Society, M.G. Road Vile Parle East, Mumbai-400 057. NATIONAL FACELESS ASSESSMENT CENTER (NFAC), DELHI 2 ITO WARD 34(1)(1), Kautilya Bhavan, BKC, Bandra East, Mumbai-400051. 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAIBENCH 5 GUARD FILE