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Income Tax Appellate Tribunal, “J”, BENCH MUMBAI
Before: SHRI PRAMOD KUMAR, AM & SHRI PAWAN SINGH, JM
Date of Hearing : 11/01/2016 Date of Pronouncement: 13/01/2016 O R D E R
PER PAWAN SINGH, JM:
In this appeal, the assessee has challenged the correctness of order of CIT(A)-35, Mumbai dated 06.05.2014 in the matter of order of penalty u/s 271(1)(c) of the I.T. Act dated 30.03.2012 ,for Assessment Year (AY) 2006-07.
The brief facts of the case are that the assessee filed his return of income for AY- 2006-07, on 31.12.2008 declaring total income of Rs. 6,98,380/-. After selecting the return of income for scrutiny and serving the statutory notice, the income of assessee was assessed at Rs. 13,95,600/- by the Assessing Officer (AO) vide order dated 31.12.2008. During the assessment, the book result of the assessee was rejected by invoking the provision of section 145 of the Act and the addition was made on the basis of estimated net profit of 4% on the total transport receipt and thus disallowance of Rs. 6,97,218/- was calculated on total receipt of Rs. 3,40,52,168/-. Against the quantum, the appeal was preferred before the CIT(A), however, the same was withdrawn as not pressed.
The penalty notice u/s 274 r.w.s. 271(1)© dated 31.12.2008 was issued and the assessee filed reply to the notice served upon him vide reply dated 12.07.2010. The AO inflicted minimum penalty on the basis of alleged evaded tax at Rs. 1,50,954/- in his order dated 30.03.2012 against the order of penalty, the assessee
preferred an appeal before the CIT(A) and the penalty order was confirmed by the CIT(A) on the basis that the assessee has withdrawn the quantum of appeal in its order dated 06.05.2014 against which the present appeal is filed before us.
We have heard the Authorized Representative (AR) of the assessee and Departmental Representative (DR) for the revenue, AR of the assessee has argued before us that the addition in the assessment order was made on the basis of estimation and that the assessee has neither concealed the income nor filed inaccurate particulars and the assessment order by making addition on the basis of estimation and not on the basis of the list of outstanding sundry creditors. We have noticed that the AO had not disallowed the amount mentioned/ claimed outstanding against the sundry creditors, rather concluded that nobody found at the given address when the notices sent and that the failed to produce the creditors.
Ld. DR for the revenue has relied upon and supported the finding of authorities below.
In Star International Pvt. Ltd. Vs. ACIT, the co-ordinate bench of Lucknow Tribunal had held that:
“By merely disbelieving on explanation by the assessee, there has to be some positive material collected and referred by the Assessing Officer which would show that either the assessee has concealed the particulars of income or furnished inaccurate particulars. There has to be something for comparison to prove that what was claimed by the assessee was false or inaccurate. Mere disbelieving on the claim made by the assessee is not sufficient. The Assessing Officer could have in the present case enquired and shown that the addresses of the artisans are not correct, or they have not received the payment or that they have denied to have rendered any services, or money on bearer cheques have not gone to the artisans/mechanics or has been received back by the assessee or things similar to this highlighting the inaccuracy in the story or explanation furnished by the assessee. In the absence of such finding and material relating to these, it is not possible to hold that the assessee had concealed particulars of his income by way of claiming expenses on commission or has filed inaccurate particulars relating thereto. As a result, penalty so confirmed by the learned CIT(A) cannot be upheld. It is accordingly cancelled.”
We have considered the rival contention of the parties and perused the material available on record. In principal the fact of the present case are similar to the Star International and thus the finding rendered therein came in rescue to the assessee.
The Hon’ble Apex Court in CIT vs. Reliance Petro Product has held: the word ‘inaccurate’ means that the detailed supplied in the return are neither correct, nor exact or correct, not according to truth or erroneous but mere making of claim which is not sustainable in law by itself will not amount to furnish inaccurate particulars regarding the income of the assessee.
In the present case, the assessee has given the list of sundry creditor and stress during the assessment that the creditors were genuine and had been regularly having business with them. Moreover, the addition was not on the basis of the amount shown against the names of list of sundry creditors and the same were made on the basis of estimation, hence there was no concealment on the part of assessee which may attract the penalty as envisaged u/s 271(1) ( c) of the Act.
In the result, appeal filed by the assessee is accepted.
Order pronounced in the open court on this 13/01/2016.