M/S. MANISH METAL,MUMBAI vs. INCOME TAX OFFICER WARD 19(2)(3), MUMBAI

Since the issues are common in the captioned appeals and the underlying facts resulting into the levy of penalty u/s 271(1)(c) of the Act are common, therefore, these appeals were heard together and are disposed off by this common order for the sake of convenience and brevity.

We have given a thoughtful consideration to the orders of the authorities below. The entire quarrel revolves around the purchases made from Manibhadra Metal Industries, Reliable Metal (India), Shree Keshar Impex Metals P. Ltd. and Malwa Metal Corporation. The purchases made from these parties were treated as non-genuine purchases and the AO completed the assessment by estimating the gross profit @12.5% on such non-genuine purchases.

Considering the facts, we are of the opinion that the AO has not fully established that, the assessee has concealed his income and made purchases from the grey market. Merely because the profit has been estimated and the assessee chose not to litigate further, would not amount to concealment of income or filing of inaccurate particulars. 5.1. The Hon’ble Supreme Court in the case of CIT vs. Aarkey Saree Museum reported in [1991] 187 ITR 147 (Bombay), had the occasion to consider the similar situation and held as under:- “5. The Tribunal cancelled the imposition of penalty after recording a finding that the allegation of concealment of income was not proved. The Tribunal rightly recorded in para 8 of its judgement that merely because certain additions were made in the trading account by the Assessing Officer, it did not necessarily follow that the assessee had concealed its income. The above-recorded finding of the Tribunal recorded in para 8 of the judgment is unassailable.” 5.2. Similarly, the Punjab and Haryana High Court in case of CIT vs. Modi Industrial corporation [2010] 195 Taxman 68 (P&H), after considering the similar situation, held as under:- “A perusal of the order of the Tribunal made it clear that the addition of the income was made only on the basis of estimate. Moreover, it was clear that in original assessment order, there was no finding that the assessee had concealed its income and furnished inaccurate particulars of income; but subsequently after the cancellation 3288 & 3289/Mum/2024 3