DCIT14(1)(1), MUMBAI vs. OFFSHORE MARINETECH PVT. LTD., MUMBAI

Offshore Marinetech Pvt. Ltd., 3. The ld. Assessing Officer in the course of assessment proceedings had estimated the GP rate of 12.5% of alleged bogus and non-genuine purchases of Rs.1,10,69,853/- and made addition of Rs.13,83,730/-. Since assessee had not preferred any appeal against such estimation of GP rate, the ld. AO has levied the penalty.

The ld. CIT(A) has deleted the penalty after observing as under:- “During the course of assessment, the AO treated purchases from some parties as bogus purchases and passed his assessment order making an addition of Rs 13,83,730/- on adhoc basis, which was 12.5% of the alleged purchases of Rs 1,10,69,853 and penalty us 271(1)(c) of the I Tax act was initiated, and later imposed. I have gone through the facts of the case. The jurisdictional Mumbai ITAT decision in Asstt. Commissioner of Income Tax Circle–13(3)(1), Mumbai v/s Remi Electrotechnik Ltd. (ITA no.6375/Mum. /2019), fits in here perfectly. The ITAT sums up as: Considered the submissions of the learned Departmental Authorities and perused the material on record. As it transpires from the record available before us that the Assessing Officer levied penalty under section 271(1)(c) of the Act on estimate basis without any evidence on record with regard to concealment of income. Penalty under section 271(1)(c) of the Act is leviable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad–hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. We find support from the series of decisions by Offshore Marinetech Pvt. Ltd., different High Courts as well the decision of the Co–ordinate Benches of the Tribunal, wherein it was held that when addition is made on estimate basis, penalty is not sustainable in the eyes of law. Respectfully following the decision of the jurisdictional ITAT, I direct the AO to delete the penalty. APPEAL IS ALLOWED.”