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Facts
The appeals concern three assessment years (2009-10, 2010-11, 2011-12) and relate to a common issue of penalty levied for non-genuine purchases. The Assessing Officer (AO) treated purchases from certain parties as non-genuine and estimated a gross profit of 12.5%. The assessee contested this, but the AO proceeded to levy penalty.
Held
The Tribunal held that the AO had not sufficiently established concealment of income or filing of inaccurate particulars merely because purchases were estimated. Citing precedents from the Supreme Court and Punjab & Haryana High Court, the Tribunal noted that additions based on estimates alone do not automatically imply concealment, especially when no specific finding of concealment was made in the original assessment.
Key Issues
Whether the penalty under section 271(1)(c) is leviable when additions were made on an estimated basis without a specific finding of concealment of income or furnishing of inaccurate particulars.
Sections Cited
271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SHRI SANDEEP SINGH KARHAIL, HON’BLE
Mr. Akash Prajapati, A/R Assessee by: Revenue by: Smt. Mahita Nair, Sr. D/R सुनवाई की तारीख/Date of Hearing : 14/08/2024 घोषणा की तारीख/Date of Pronouncement : 20/08/2024 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM : 3288 & 3289/Mum/2024, are three separate appeals preferred against the orders of the NFAC, Delhi, [in short ‘ld. CIT(A)’] even dated 16/05/2024, pertaining to Assessment Years 2009- 10, 2010-11 & 2011-12.
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.
I.T.A. No. 3287, 3288 & 3289/Mum/2024 2 3. The common addition in the captioned appeals relates to the addition of 12.5% of non-genuine purchases.
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