YATISH IMPEX P.LTD,MUMBAI vs. ITO 9(3)(4), MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

That the Ld. CIT(A) confirmed the penalty 271(1)(c) of the “1. Act Rs.30,00,000/- is quite illegal.

2. That the Ld. CIT(A) dismissed the appeal without considering the proper facts of the case. A.Y. 2002-03

3. That thus the confirmation of penalty on estimated assessed income is quite illegal, arbitrary, unwarranted unjustified and bad in law.

4. That the appellant further creave, to leave, to add, to alter and/or to amend any of the aforesaid grounds of appeal as and when necessary."

3. The brief facts of the case are that the assessee filed its return of income declaring total income to the tune of Rs.1,95,722/- on 31.10.2002. Thereafter the case was selected for scrutiny on the basis of information received from the Addl. Director of Income Tax (Inv.), Unit V, Mumbai that the assessee company during the captioned assessment year has claimed bogus/non-genuine commission/brokerage paid to one company viz M/s. Moira Steel Ltd. at 103, Laxmi Tower, 576, M. G. Road, Indore. A survey action u/s 133A was carried out at the business premises of M/s. Moira Steels Ltd. During the course of survey, a statement of Shri Vimal Todi, Director of M/s. Moira Steel Ltd. was recorded in which he admitted that the assessee has made the payment to the tune of Rs.33,42,455/- to M/s. Moira Steel Ltd, in the form of bogus/non-genuine commission/brokerage. On the basis of information, a notice u/s 148 of the I. T. Act was issued. In pursuance of notice, the assessee filed the return of income declaring total income at Rs.1,95,722/- on 13.03.2008. The assessee failed to cooperate with the AO, therefore, the AO rejected the books of accounts and assessed the profit @ 1% of the gross turnover to the tune of Rs.77,53,444/- u/s 144 of the Act. Penalty proceeding was initiated. After the notice of penalty, the penalty in sum of Rs.3,00,000/- was levied. A.Y. 2002-03 Feeling aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the penalty, therefore, the assessee has filed the present appeal before us.

4. We have heard the argument advanced by the Ld. Representative of the Department and has gone through the case filed carefully. It is apparent on record that the assessment of the assessee was completed u/s 144 of the Act rejecting the books of accounts and subsequently the net profit of the assessee was assessed @ 1% of the turnover declared. The net profit was determined at Rs. 77,53,444/-. The assessment was completed by estimating the profit. No penalty is leviable where the assessment was completed on the basis of the estimation of profit. In this regard, we find support of the decision of Hon’ble Gujarat High Court in the case of National Textiles Vs. CIT 2001 164 CTR 2009 (Guj) in which it is specifically held that the no penalty is liable to be sustainable where the profit was estimated. Taking into account all the facts and circumstances mentioned above, we set aside the finding of the CIT(A) on this issue and delete the penalty.

5. In the result, the appeal filed by the assessee is hereby allowed. Order pronounced in the open court on 09/02/2021 (RAJESH KUMAR) (AMARJIT SINGH) लेखध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; ददनांक Dated : 09/02/2021 Vijay Pal Singh (Sr. PS)