INCOME TAX OFFICER 12(1) |(1), MUMBAI vs. AMI RIDDHI CHEM. PRIVATE LIMITED , MUMBAI

The revenue has filed the above mentioned appeals against the order dated 22.05.2019 passed by the Commissioner of Income Tax (Appeals) - 20, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Ys.2009-10, 2011-12 & 2012-13 in which the penalty levied by the AO has been ordered to be deleted.

The revenue has filed the present appeal against the order dated 22.05.2019 passed by the Commissioner of Income Tax (Appeals) -20, to 5750/M/2019 A.Y.2009-10, 2011-12 & 2012-13 Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2009- 10.

The revenue has raised the following grounds: - "

We have heard the argument advanced by the Ld. Representative of the Revenue and has gone through the case carefully. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record: - “5.1 I have considered the rival contentions. I find that the sum of Rs.28,48,127 in respect of which the penalty was imposed was based on estimate. I find that the AO failed to bring any concrete 'evidence to prove that I the sum of Rs.28,48,127/- actually represented income in respect of which inaccurate particulars had been furnished by the appellant. I find that the facts in the case Shri Deepak Gogri vs. ITO in cited by the appellant is similar to the facts of the appellant's case. In that case, the Hon'ble ITAT held as under: "6. We have heard the rival submissions perused the orders of the authorities below. In so far as the penalty levied on estimation of profit element on purchases is concerned, we are of the view that Assessing Officer had made only adhoc estimation of profit on certain purchases treated as unexplained expenditure. Assessing Officer did not doubt the to 5750/M/2019 A.Y.2009-10, 2011-12 & 2012-13 sales made by the assessee from out of such purchases. Assessing Officer based on the decision of the Hon’ble Gujarat High Court in the case of CIT v. Simit P. Seth [355 ITR 451] estimated the profit element in such purchases at 12.5% and by reducing the Gross Profit already declared by the assessee. In the circumstances, we hold that there is no concealment of income or furnishing of inaccurate particulars as the profit element was determined by way of adhoc estimation. Coming to the interest, the assessee furnished complete details in the return of income and made a claim and simply because the claim is denied and cannot lead to furnishing of inaccurate particulars or concealment of income. No allegation by Assessing Officer that the assessee failed to disclose the particulars relating to its claim in the return of income. Thus we hold that there is no concealment of income or furnishing of inaccurate particulars of income. Thus we direct the Assessing Officer to delete the penalty levied u/s. 271(1)(c) of the Act." 5.2 I also find that the facts in the case of Harigopal Singh vs. CIT (2002) 258 ITR 85 (P&H) is similar to the facts of the appellant's case. In that case, the question of law before the Hon'ble Court was whether penalty is attracted under section 271(1)(c) of the Act where income is assessed purely on estimate basis and additions are made in the declared income on that basis. In that case, the Honible High Court of Punjab & Haryana held as under: "3. In order to attract clause (c) of section 271(1), it is necessary that there must be concealment by the assessee of the particulars of his income or if he furnishes inaccurate particulars of such income. What is to be seen is whether the assessee in the present case had concealed his income as held by the Assessing Officer and the Tribunal. He had not maintained any accounts and he filed his return of income on estimate basis. The Assessing Officer did not agree with the estimate of the assessee and brought his income to tax by increasing it to Rs. 2,07,500. This, too, was on estimate basis. The Tribunal agreed that the income of the assessee had to be assessed on an estimate of the turnover but was of the view that the estimate as made by the Assessing Officer was highly excessive and it fixed the total income of the assessee at Rs. 1,50,000 for the year under appeal. It is, thus, clear that there was a difference of opinion as regards the estimate of the income of the assessee. Since the Assessing Officer and the Tribunal adopted different ITA Nos. 5748 to 5750/M/2019 A.Y.2009-10, 2011-12 & 2012-13 estimates in assessing the income of the assessee, it cannot be said that the assessee had 'concealed the particulars of his income' so as to attract clause (c) of section 271(1). There is not even an iota of evidence on the record to show that the income of the assessee during the year under appeal was more than the income returned by him. Additions in his income were made, the particulars of his income or furnished inaccurate particulars of such income. There has to be a positive act of concealment on his part and the onus to prove this is on the department. We are also of the considered view that the Tribunal grossly erred in law in relying on Explanation 1(8) to section 271(1)(c) to raise a presumption against the assessee. The assessee had justified his estimate of income on the basis of household expenditure and other investments made during the relevant period. It is not the case of the revenue that he had, in fact, incurred expenditure in excess of what he had stated. In this view of the matter, it cannot be said that the explanation furnished by the assessee had not been substantiated or that he had failed to prove that such explanation was not bona fide." 5.3 In view of the decisions discussed above, the penalty imposed is not sustainable. Accordingly, I direct the AO to delete the penalty of Rs. 8,76,981/-. In the result, ground of appeal