MR.ASHIK ALI UNWALA,MUMBAI vs. INCOME TAX OFFICER 20(1)(2), MUMBAI

Aforesaid appeal by assessee for Assessment Year 2009-10 contest the order of Ld. Commissioner of Income-Tax (Appeals)-32, Mumbai, [in short referred to as ‘CIT(A)’], Appeal No. CIT(A)-32/IT-408/ITO- 2 Mr. Ashik Ali Unwala Assessment Year-2009-10 20(1)(2)/2015-16 dated 24/01/2018 qua confirmation of penalty of Rs.2.32 Lacs u/s 271(1)(c) as levied by learned AO vide penalty order dated 27/08/2015.

Facts leading to imposition of penalty are that the assessee has been saddled with estimated additions of 12.5% of alleged bogus purchases of Rs.54.21 Lacs in an assessment framed u/s 143(3) r.w.s. 147 on 27/02/2015. Pursuant to receipt of certain information from Sales Tax Department, Maharashtra, it was alleged that the assessee obtained bogus purchase bills aggregating to Rs.54.21 Lacs from 11 entities. Although the assessee, in defense, produced details of purchase, corresponding sales made against those purchases, bank statements evidencing payment to the stated suppliers, however, it failed to produce any of the supplier for confirmation of accounts. Notices issued u/s 133(6) elicited no satisfactory response. The factual matrix led Ld. AO to believe that full verification of quantity purchased from the stated parties remained unverifiable and therefore, he estimated additions against the same @12.5% to plug the leakage of revenue. 3. Consequently, penalty proceedings were initiated against the assessee u/s 271(1)(c) for filing inaccurate particulars of income. Although the assessee opposed the levy of penalty, however, not satisfied, Ld. AO levied penalty of Rs.2.32 Lacs vide order dated 27/08/2015. Although the assessee agitated the levy of penalty before Ld. CIT(A), however, the assessee’s submissions could not find favor with Ld. CIT(A) who confirmed 3 Mr. Ashik Ali Unwala Assessment Year-2009-10 the penalty since the assessee failed to prove the genuineness and bona- fide of the transactions.

Aggrieved, the assessee is in further appeal before us. We have considered the rival submissions, perused relevant material on record and deliberated on judicial pronouncements as cited before us.

Upon careful consideration of quantum assessment order and penalty order, it is undisputed fact that the assessee has been saddled only with estimated additions of 12.5% in the backdrop of the fact that the assessee could not produce the suppliers for confirmation of transactions. Nevertheless, the assessee was in possession of primary purchases documents and had furnished purchase details and corresponding sales made against those purchases. The payment to the suppliers was through banking channels. Therefore, it is not the case where the claim was completely found to be bogus or non-genuine which is also evident from the fact that Ld.AO, himself, chose to make additions @12.5% instead of making full disallowance. In other words, a substantial claim has been accepted by the revenue. Therefore, the additions on which penalty has been imposed, are purely on estimation basis and the same, in our considered opinion, would no show any mala-fide intention on the part of the assessee to conceal its income. Therefore, by deleting the impugned penalty, we allow the appeal.