MR. SHRIPAL RASHMIKANT DAFTARY,MUMBAI vs. ITO 29 (3)(4), MUMBAI

IN IHE INCOME TAX APPELLATE IRIBUNAL "E" BENCH_MUMBAI BEEORE SHRL SAKTHJT DEX_JUDICIAL MEMBER_AND SHRL S_RIFAUR RAHMAN_ACCOUNIANT MEMBER IAnq ,7953MMun [2019 (Assessment _Year 2009-10) Shri Shripal Rashmikant Daftary 5, Rajnesh S.N_ Road , Mulund (W) Mumbai 400 080 PAN AAQPD2146N Appellant v/s Income Tax Officer Ward-29(3)(4), Mumbai Respondent Assessee by Revenue by None Shri Vijay Kumar Menon Date of Hearing 01.06.2021 Date of Order 27.07.2021 ORDER PER S_RIFAUR RAHMANAM The aforesaid appeal preferred by the assessee challenging the impugned order dated 23rd October 2019, passed by the learned CIT(A)-40, Mumbai, confirming penalty of ? 2,22,184, imposed under section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act") by the Assessing Officer which pertains to the assessment year 2009-10. 2. When the appeal was called for hearing neither the assessee nor any of the authorized representatives was present on behalf of the respondent assessee to represent the case: There is no application for 2 Shri Shripal Rashmikant Daftary adjournment of hearing either. Consequently , we deem it fit and appropriate to proceed to dispose off the appeal ex-parte qua the assessee after hearing the learned Departmental Representative and on the basis of material available on record: 3. The assessee is an individual and is the proprietor of M/s: Sirabh Chemical and is trading in chemicals and solvents. The assessee filed its return of income on 25th September 2009, declaring total income of < 2,90,170. The Assessing Officer processed the return of income was processed under section 143(1) of the Act. Meanwhile, the Assessing Officer received information from the Sales Tax Department; Mumbai, through DGIT (Inv.) , Mumbai, regarding suspicious parties who are indulged in accepting bogus purchase bills from the bogus hawala bill providers. As per the information received, the name of the assessee also appeared as one of the beneficiaries of such bogus purchase bills during the previous year relevant to the assessment year under consideration_ Accordingly , it was construed by the Assessing Officer that the income to the extent of purchase from 14 parties to the tune of ? 7,30,070, has escaped assessment within the meaning of section 147 of the Act, which resulted in re-opening of the case. Upon issuance of notice under section 148 of the Act, the assessee requested for treating the return of income filed on 25th September 2009 as return of income filed in response to the notice under section 0 3 Shri Shripal Rashmikant Daftary 148 of the Act: In view of the aforesaid, the assessee was asked to furnish material evidences in support of the purchases made from 14 parties to prove their genuineness. In response, the assessee provided explanation in writing along with the other documentary evidences viz . copy of purchase bills, bank statement marking their payment to the parties, copy of ledger account, purchase bills, etc: The assessee specifically submitted that to buy peace and to avoid litigation the addition may be made on the basis of gross profit ratio only. The Assessing Officer did considered the submissions of the assessee, however , was not satisfied with the submissions: Consequently, the Assessing Officer relying upon certain judicial pronouncements was of the opinion that it will serve the purpose of law and it would be fair and just if the gross profit @ 12.5% is takeron such hawala purchases of 8 58,76,446, made during the year under consideration and the profit to that extent is added back to the income of the assessee for the year under consideration. The Assessing Officer having regard to the decision of the Hon'ble Gujarat High Court in Simit P Sheth, [2013] 356 ITR 451 (Guj ) , he made addition of ? 7,34,556 (being 12.5% of ? 58,76,446_ Penalty proceedings were also initiated under section 271(1)(c) of the Act for concealment of income and furnishing of inaccurate particulars of income vide order dated 27th August 2015, imposing penalty on { 7,34,556, sought to be evaded which worked out to ? 2,22,184, The assessee being aggrieved filed appeal before; Shri Shripal Rashmikant Daftary the first appellate authority for contesting imposition of penalty under section 271(1)(c) of the Act levied on account of addition made for bogus purchase under section 69C of the Act: 4 The learned CIT(A) confirmed the penalty imposed by the Assessing Officer u/s 271(1)(c) of the Act by observing as under: - "