GIRISH C. SANGANI,MUMBAI vs. ACIT CEN CIR 23, MUMBAI

During the course of hearing, arguments were made by Shri Anuj Kisnadwala, Authorised Representatives (AR) on behalf of the Assessee and by Shri Prakash Mane, Departmental Representative (DR) on behalf of the Revenue.

First we shall take up in the case of Girish C. Sangani HUF for A.Y. 2009-10 This appeal has been filed by the Assessee against penalty levied by the AO for Rs.45148/- which was confirmed by the Ld. CIT(A).

The brief facts as brought out before us are that during the year under consideration the assessee was proprietor of M/s. Isha Trade Links engaged in the business of trading in Iron and steel. Search action was done u/s 132 on 29.03.2011 in the case of Kanakia group. During the course of search, the premises of the assessee were also covered. During the course of search on the said group it was noted by the revenue officials that certain bogus accommodation bills of purchase were obtained through assessee. Under these circumstances, the assessee was asked to justify entire purchases and sales. But, the assessee made an offer to pay additional tax @ 1% Girish C. Sangani 3 over & above the amount of Gross Profit shown in the books of accounts, to buy peace & avoid protracted litigation, as the assessee was not able to produce the parties to confirm the all the transactions of purchases and sales. Under these circumstances, the AO accepted offer of the assessee and assessed the GP @ 1% over and above the GP rate recorded in the regular books by the assessee. The aforesaid addition was accepted by the assessee and no appeal was filed. Subsequently, AO initiated penalty proceedings u/s 271(1)(c). During the course of penalty proceedings, the assessee replied that though an offer was made to pay additional tax , but actually there was no concealed income and the offer was made to buy peace and avoid litigation only. The AO did not agree with the submission of the assessee, and thus he levied penalty of Rs.45,148/-. The penalty was confirmed by the Ld. CIT(A). Thus, being aggrieved, the assessee filed appeal before the Tribunal.

During the course of hearing, Ld. Counsel of the assessee submitted that it was a case of estimated addition only and there was no concealed income actually and the offer was made to buy peace and avoid litigation. It was also submitted that in the individual case of Karta namely Shri Girish C. Gangani for A.Y. 2011-12 wherein penalty was levied u/s 271AAA in identical circumstances, the matter had reached before the Tribunal, and Tribunal deleted the penalty vide its order dated 25.10.2016 in inter-alia on the ground that all the facts have been fairly disclosed by the assessee and nothing has been concealed and therefore Girish C. Sangani 4 penalty was deleted after making detailed discussion in the order. Under these circumstances, request was made to delete the penalty in this case also. It was submitted that in A.Y. 2010-11, also no penalty on this issue was levied by the AO in assessee’s own case. Under these circumstances, levy of the penalty in the impugned year was not justified. Thus, penalty levied should be deleted. Per contra, Ld. DR relied upon the orders of the lower authorities.

We have gone through the orders of the lower authorities. It is an admitted case that no evidences have been found by any authority with regard to any concealment of income by the assessee. The Income was assessed purely on the basis of offer made by the assessee on estimate basis. The income was computed by making an estimate of 1% over and above the Gross Profit declared by the assessee. During the course of penalty proceedings, assessee had clarified that in fact no income was concealed, and the offer was made only to buy peace and avoid protracted litigation. It is noted that no penalty was levied in the similar circumstances by the AO in A.Y. 2010-11 in assessee’s own case. It is also noted that in the individual case of Karta, the Tribunal had deleted the penalty which was levied u/s 271AAA after taking into account all the facts and circumstances of the case in its order dated 25.10.2016 in ITA No.828/Mum/2015. During the course of hearing, Ld. DR was not able to justify the levy of penalty in any manner. Under these circumstances, we find that levy of penalty was not justified and was not in Girish C. Sangani 5 accordance with law. Thus, penalty levied by the AO of Rs.45148/- is hereby directed to be deleted. 6. In other appeals also it is noted by us that penalty has been levied in the similar circumstances. There was no concealed income detected by the AO. Addition was made purely on the basis of estimate. Ld. DR also agreed that facts are identical in all the cases. Thus, respectfully following our earlier order, we herby delete the penalty in all the cases.

In the result, these appeals filed by the assessee are allowed. Order was pronounced in the open court at the conclusion of hearing.