NAEEM EBRAHIM KHAN,MUMBAI vs. ITO 19(3)(3), MUMBAI

The only issue in this appeal of assessee is against the order of CIT(Appeals) confirming the levying of penalty by the Assessing Officer under section 271(1)(c) of the Act .

Briefly stated, the facts are that the Assessing Officer during the course of assessment proceedings noticed that there is difference in purchase account i.e. purchases made from M/s. Atlas Enterprises and M/s.Kemp Trading Corporation as per books of accounts of the assessee and as per information received under section 133(6) of the Act. According to Assessing Officer, there is a difference of Rs.1,48,338/-. This difference was added and penalty proceedings for furnishing of inaccurate particulars of income under section 271(1)(c) of the Act was initiated. Similarly, the assessee has received interest from UCO Bank amounting to Rs.35,691/-, which was not offered for tax. The Assessing Officer taxed the same and initiated penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income. During the penalty proceedings, assessee requested the Assessing Officer to keep the penalty proceedings in abeyance till the decision of appellate authorities and did not reply to the notice on merits. However, Assessing Officer levied penalty on the following two counts:- (i) Difference of purchase of Rs. 1,48,338/- (ii) Undisclosed interest income from UCO Bank of Rs.35,691/- Finally, the Assessing Officer levied penalty @100% on the tax sought to be evaded at Rs.1,09,315/-. Aggrieved, the assessee preferred an appeal before CIT(Appeals), who also confirmed the action of the Assessing Officer. Aggrieved, assessee is in second appeal before the Tribunal.

We have heard the rival contentions and gone through the facts and circumstances of the case. We find that now before us, Ld. Counsel for the assessee filed reconciliation of purchases from M/s. Atlas Enterprise and also M/s. Kemp Trading Corporation in its Paper Book at pages 8 -9 and10-11. Ld. Counsel for the assessee demonstrated before us that there is no difference in purchases from these two parties. When these were confronted to Ld. DR, he fairly agreed that there is no difference in purchases but these documents were not placed before the Assessing Officer during the assessment proceedings or during the penalty proceedings. We find that due to smallness of the amount of difference in purchases i.e. to the extent of Rs.1,48,338/-, particularly when the assessee has now explained before us there is no need for sending back the issue to file of Assessing Officer because it will not serve any purpose. In view of above reconciliation, we felt that penalty on this count cannot survive and therefore, the same is deleted.

However, the penalty qua the interest from UCO Bank amounting to Rs.35,691/-, Ld. Counsel for the assessee fairly conceded that this amount was not disclosed and to that extent penalty can be sustained. In view of the above concession given by the Ld. Counsel for the assessee, we sustain the penalty on the addition of undisclosed interest from UCO Bank. We order accordingly.

In the result, appeal of the assessee is partly allowed, as above. Order pronounced in the open court on 18/05/ 2016.