JUGAL KISHORE,MUZAFFARNAGAR vs. ITO, MUZAFFARNAGAR

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld CIT(A), Muzaffarnagar dated 24.11.2014, wherein, penalty u/s 271(1)(c) of the Act by the ITO, Ward-1(1) Muzaffarnagar of Rs. 1025100/- was partly confirmed. The assessee has challenged the same raising seven following grounds of appeal, however, the main crux of the grounds are challenged about the above penalty order.

2. The brief facts of the case is that the assessee is engaged in trading of mobile accessories. He filed his return of income on 30.09.2009 declaring income of Rs. 33189/-. The ld AO examined the gross profit of the assessee and held that for Assessment Year 2008-09 the assessee has disclosed GP of 5% wherein, for the current year it is 1.80%. Therefore, explanation was sought. The assessee explained the reason for the downfall in GP. The ld AO rejected the explanation and made an addition of Rs. 2 lac. The assessee also asked to explain the sundry creditors and to verify the same. The ld AO issued notice u/s 133(6) of the Act and Page | 1 Jugal Kishore Vs. ITO Assessment Year: 2009-10 found certain difference in the balance of those creditors. The total difference of Rs. 829832/- was found and explanation of the assessee was called for. However , the ld AO made an addition of the above amount. The ld AO passed assessment ordfer u/s 143(3) of the Act on 26.11.2012 determining total income of the assessee of Rs. 1371720/- against the return income of Rs. 3312891/-. The ld AO also issued penalty notice u/s 274 read with section 271(1)(C) of the Act. The assessee preferred appeal before the ld CIT, Muzaffarnagar who partially deleted the addition of Rs. 653002/- on account of creditors and confirmed the addition on account of gross profit.

3. In penalty proceedings, assessee submitted with respect to the gross profit that assessee was in retail business and further the assessee agreed for adhoc addition of Rs. 2 lakh on gross profit. With respect to the addition of sundry creditors, assessee has explained all the details as well as submitted the reason for difference. In view of this, it was prayed penalty may not levied. However, the ld AO held that the assessee has not disclosed correct profit and further the ld CIT(A) confirmed the addition of Rs. 176830/- with respect to the creditors, he held that assessee has furnished inaccurate particulars of his income and concealed particulars of his income. He therefore, levied a penalty of Rs. 102500/- as per order dated 16.05.2013. The assessee contested the above penalty order before the ld CIT(A), who confirmed the penalty holding that the addition in appeal are concealment of income. He further held that there is no infirmity in the order of the ld AO in levying the penalty. Therefore, assessee is in appeal.