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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI S. RIFAUR RAHMAN
O R D E R Per Saktijit Dey (JM) – Captioned appeals by the revenue arise out of two separate orders of learned Commissioner of Income-tax (Appeals)-26, Mumbai, deleting the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961, for the assessment years 2009-10 and 2010-11.
Briefly the facts are, the assessee, an individual, is a wholesaler of iron and steel. For the assessment years under dispute, assessee had filed his returns of income in regular course which were processed under section 143(1) of the Act.
Subsequently, the assessing officer received information from the Sales-tax department through the Investigation Wing that certain purchases made by the assessee in the impugned assessment years are non-genuine, as, concerned selling dealers have been identified as hawala operators and are only providing accommodation bills.On the basis of such information, the assessing officer reopened the assessments under section 147 of the Act and ultimately concluded that purchases in dispute are non-genuine. However, ultimately, he worked out addition on peak basis and made addition of Rs.4,51,64,931/- in assessment year 2009-10 and Rs.4,99,27,760/- in assessment year 2010-11. On the basis of such additions, the assessing officer initiated proceedings for imposition of penalty under section 271(1)(c) of the Act alleging concealment of income and furnishing of inaccurate particulars of income. In the meanwhile, against the assessment orders passed making the aforesaid additions, the assessee preferred appeals before learned Commissioner (Appeals). While considering the issue on merits, learned Commissioner (Appeals) restricted the addition to Rs.13,10,195/- in Assessment Year 2009-10 and Rs.16,79,600/- in Assessment Year 2010-11. On the basis of additions sustained by learned Commissioner (Appeals), the assessing officer proceeded to impose penalty under section 271(1)(c) of the Act amounting to Rs.4,60,130/- in Assessment Year 2009-10 and Rs.5,19,000/- in Assessment Year 2010-11. Against the penalty orders so passed, assessee preferred appeals before the first appellate authority.
In course of appellate proceedings, learned Commissioner (Appeals) found that while the first appellate authority has restricted the addition made by the assessing officer to the gross profit rate declared by the assessee at 2.66% in Assessment Year 2009-10 and 2.44% in Assessment Year 2010-11; on further appeal, the Tribunal has enhanced the addition to 12.5% of the alleged non genuine purchases in both the assessment years. However, considering the fact that the additions on the basis of which penalty has been imposed is purely on estimate basis, learned Commissioner (Appeals) deleted the penalty imposed. Being aggrieved, revenue is before us.
We have considered rival submissions and perused materials on record. Though, the assessing officer, on the basis of information received from outside source has treated certain purchases made by the assessee as non-genuine and has made additions on peak basis, however, the additionsso made have been substantially scaled down by the appellate authorities.Undisputedly,while deciding the issue in quantum proceedings, learned Commissioner (Appeals) has sustained addition to the extent of 2.66% for Assessment Year 2009-10 and at 2.44% in Assessment Year 2010-11. Whereas, on further appeal, the Tribunal has enhanced the disallowance to 12.5% of the alleged non genuine purchases. Thus, ultimately, the additions on the basis of which penalty were imposed, have been made purely on estimate basis. The decision of the appellate authorities in estimating the addition pre-supposes that there is no doubt with regard to the fact that the assessee had purchased the disputed goods. The doubt, if any, is only with regard to the source of such purchases. Therefore, any addition which has been made on certain amount of guess work and estimation by entertaining some amount of doubt regarding assessee’s claim, cannot lead to the conclusion that assessee has either concealed his income or furnished inaccurate particulars of income. That being the case, the provisions of section 271(1)(c) of the Act would not get attracted. Therefore, we do not find any infirmity in the decision of learned Commissioner (Appeals) in deleting the penalty imposed. Grounds are dismissed.
In the result, appeals are dismissed. Order pronounced on 11/03/2021. Sd/- sd/- (S. RIFAUR RAHMAN) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dt : 11/03/2021 Pavanan Copy to : 1. Appellant 2. Respondent 3. The CIT concerned 4. The CIT(A) 5. The DR, ITAT, Mumbai 6. Guard File By Order