ITO 29(1)(4), MUMBAI vs. M/S GREENGLOBE FUEL SOLUTIONS, MUMBAI

Brief facts are, the assessee, a partnership firm, is engaged in the business of supply of fuel kits, RCC Block, Cement Slabs, etc. For the assessment years under dispute, the assessee filed its returns of 2 Shri Anil Narayan Lokre income in regular course. Initially, the returns of income filed were processed under section 143(1) of the Act. Subsequently, on the basis of information received from the Sales Tax Authorities through the DGIT (Inv.), Mumbai, that the assessee is a beneficiary of accommodation bills provided by the hawala operators, the Assessing Officer re–opened the assessments under section 147 of the Act. In the course of assessment proceedings, the Assessing Officer called upon the assessee to prove purchases worth ` 79,28,981, and ` 12,35,000, claimed to have been made during the relevant assessment years, which according to the information received, were non–genuine. Though, the assessee filed purchase bills and some other documentary evidences to prove the genuineness of the purchases, however, the Assessing Officer was not convinced with the same and concluded that such purchases are non–genuine. Thereafter, rejecting the books of account of the assessee, the Assessing Officer proceeded to disallow 12.5% out of the alleged non–genuine purchases in both the assessment years under dispute and added back an amount of ` 9,91,123 in A.Y. 2010–11 and ` 1,54,421 in A.Y. 2011–12. On the basis of such additions, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income and concealment of income. Though, the assessee filed its explanation objecting to the initiation of penalty proceedings, however, the Assessing Officer

After considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner (Appeals) deleted the penalty imposed under section 271(1)(c) of the Act in both the assessment years under consideration.

I have considered rival submissions and perused the material on record. On a perusal of the assessment orders, it is evident that though the Assessing Officer treated certain purchases made by the assessee in the relevant assessment years to be non–genuine, however, he restricted the disallowance to 12.5% of the alleged non– genuine purchases. This very action of the Assessing Officer makes it clear that the Assessing Officer has entertained doubt only with regard to the source of purchases made and not the purchases itself. It is further relevant to observe, even the disallowance made by the Assessing Officer is purely on estimate basis. Thus, in these circumstances, it cannot be said that the assessee has furnished inaccurate particulars of income leading to concealment of income. That being the case, in my considered opinion, learned Commissioner

In the result, Revenue’s appeals are dismissed. Order pronounced through circulation in the notice board under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 on