ITO - 27 (2)(2), MUMBAI vs. MANISH P. TOLIA, MUMBAI

Brief facts are, the assessee is an individual and engaged in the business of trading in chemicals. For the assessment year under dispute, the assessee filed his return of income on 31st July 2009, declaring total income of ` 9,31,697. On the basis of information received from the Sales Tax Department, Government of Maharashtra, through the office of the DGIT (Inv.), Mumbai, that purchases worth ` 33,862, claimed to have been made during the year from Chemico Industries is non–genuine as the said party has been identified as a hawala operator, the Assessing Officer re–opened the assessment under section 147 of the Act. Ultimately, he passed the assessment order by disallowing the entire purchase of ` 33,862, and adding back to the income of the assessee. Contesting the aforesaid addition, the assessee preferred appeal before learned Commissioner (Appeals), who restricted the addition to the profit element estimated @ 12.5% on the non–genuine purchases. In the meanwhile, the Assessing Officer on the basis of addition made by him had initiated proceedings for imposition of penalty under section 271(1)(c) of the Act and ultimately passed an order on 7th August 2015, imposing penalty of ` 10,460, under section 271(1)(c) of the Act, alleging furnishing of 3 Manish P. Tolia inaccurate particulars of income. Against the penalty order so passed, the assessee preferred appeal before the first appellate authority.

After considering the submissions of the assessee, learned Commissioner (Appeals) deleted the penalty imposed under section 271(1)(c) of the Act.

We have heard the learned Departmental Representative and perused the material on record. It is evident, though, the Assessing Officer has disallowed the purchases in totality and made 100% addition representing such purchases to the income of the assessee, however, while considering assessee’s appeal contesting such addition, learned Commissioner (Appeals) has restricted such addition to the profit element embedded in the alleged non–genuine purchases by estimating it @ 12.5%. Thus, as a result of such order of learned Commissioner (Appeals), the addition has been reduced to ` 4,232. Whereas, the Assessing Officer has imposed penalty under section 271(1)(c) of the Act on the addition of ` 33,862. Be that as it may, the addition ultimately sustained by learned Commissioner (Appeals) is on the basis of estimation of profit. That being the case, we do not find any infirmity in the order of learned Commissioner (Appeals) in deleting the penalty imposed. Grounds raised are dismissed.

In the result, Revenue’s appeal is dismissed. Order pronounced in the open Court on 05.02.2020