ASST. CIT - 32(1), MUMBAI vs. SHRI VIJAY BHOGILAL SHAH, MUMBAI

Aforesaid appeal by revenue for Assessment Year [AY] 2009-10 arises out of the order of Ld. Commissioner of Income-Tax (Appeals)-44, Mumbai [CIT(A)] dated 31/08/2020 which has deleted the penalty of Rs.7.99 Lacs u/s 271(1)(c) as levied by Ld. AO vide penalty order dated 27/03/2018. At the time of hearing, none appeared for assessee. The Ld. DR, on the other hand, pleaded for restoration of penalty.

Facts leading to imposition of penalty are that in an assessment framed u/s 143(3) r.w.s. 147 on 26/02/2015, the assessee was saddled with addition of alleged bogus purchases on estimated basis at the rate of 12.5% which was confirmed by Ld. CIT(A). Consequently, penalty of Rs.7.99 Lacs was imposed by Ld. AO vide order dated 27/03/2018. However, upon further appeal, Ld. CIT(A) deleted the penalty, inter-alia, on the ground that the additions were estimated additions and Ld AO conclusively failed to establish that the purchases were bogus. The Ld. AO could not prove furnishing of inaccurate particulars of income or concealment of income and therefore, penalty on estimated additions would not be sustainable in terms of decision of Hon’ble Punjab & Haryana High Court in Harigopal Singh V/s CIT (258 ITR 85). Finally, the penalty was deleted which is in further appeal before us.

In our considered opinion, the penalty is not sustainable since the additions are mere estimated additions of unproved purchases and therefore, no case of concealment of income or furnishing of inaccurate particulars of income could be made out against the assessee. Our aforesaid view is duly supported by the order of Hon’ble Chhattisgarh High Court in CIT V/s Vijay Kumar Jain (325 ITR 378; 19/04/2010) as well as the cited decision of Hon’ble Punjab & Haryana High Court. Therefore, we do not find any reason to interfere in the impugned order.