DCIT CC-7(2), MUMBAI, MUMBAI V. MAN INDUSTRIES (I) LTD., MUMBAI

ITA 617/MUM/2025

AI Insights

The case involves two appeals by the Revenue against Man Industries (I) Ltd. concerning the assessment years 2012-13 and 2015-16. The primary issues revolved around the deletion of additions made under Section 68 of the Income-tax Act, 1961, which pertained to unexplained cash credits and the deletion of penalties under Section 271(1)(c) related to estimated profits from alleged bogus purchases. The Tribunal examined the submissions, evidence, and previous rulings, including those of the ITAT and various High Courts, which supported the view that penalties should not be levied on estimated additions. The Tribunal upheld the CIT(A)'s decisions, emphasizing that the additions were made on an estimated basis without concrete evidence of actual concealment or inaccuracies in the tax returns.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396566 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Other Referred Cases: Supertech Construction Co. Vs. ACIT, CIT vs. Krishi Tyre Retreading and Rubber Industries, Fancy Diamonds India Pvt. Ltd. Vs. DCIT, M/s. Deputy Commissioner of Income Tax & 4304/Mum/2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.R. MAKWANA
• Assessee Lawyers: K. GOPAL
• Keywords: Set aside; Reassessment proceedings; Unexplained cash credit; Bogus purchase; Principle of natural justice; Accommodation entries; Bogus
• Section: 148; 143(3); 271(1)(c); 132; 153A; 68; 115JB

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA Nos. 617 and 618 /MUM/2025 Assessment Years: 2012-13 & 2015-16 DCIT CC-7(2), Room No. 637, Aayakar Bhavan, MK Road, Mumbai-400020. Vs. Man Industries (I) Ltd., 101, Man House, S.V. Road, Vile Parle West, Mumbai-400056. PAN NO. AAACM 2675 G Appellant Respondent Assessee by : Mr. K. Gopal Revenue by : Mr. R.R. Makwana, Addl. CIT Date of Hearing : 14/05/2025 Date of pronouncement : 28/05/2025 ORDER PER OM PRAKASH KANT, AM These two appeals by the Revenue are directed against two separate orders, both dated 29/11/2024, passed by the Ld. Commissioner of Income-tax (Appeals) – 49, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2012-13 and 2015-16 respectively. As both the appeals being connected with one assessee, same were heard together and disposed off by way o for the sake of convenience. 2. Firstly, we take up the appeal of the Revenue having ITA No. 617/Mum/2025 for assessment year 2012 in the appeal are reproduced as 1. \"Whether on the facts and law, the Ld. CIT (A) erred in deleting the addition of Rs.2,60,61,006/ Act, without appreciating the facts of the case. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the total income of the appellant at Rs. 1,55,13,50,398/ determined by the AO of Rs. 1,57,74,11,400, without properly appreciating the facts of the case. 3. The order of the Ld. CIT(A) is erroneo of the case and is liable to be set aside and the order of the AO be restored? 3. Briefly stated facts of the case are that was engaged in the business of manufacturing and export of large diameter carbon steel l applications. The assessee filed its return of income electronically on 29.09.2012 declaring total income at Rs.154,94,33,700/ was subsequently revised on 30.12.2013 Rs.148,93,31,110/-. The assessment u/s 143(3) r.w.s. 153A of the Income-tax Act, 1961 (in short ‘the Act’) was completed on 28.12.2017 assessing the total income at Rs.155,13,50,398/ Subsequently, information was received from the Investigation Wing of the Income-tax Department, Mumbai regarding deposit of ITA Nos. 617, 618 heard together and disposed off by way of this consolidated order for the sake of convenience. Firstly, we take up the appeal of the Revenue having ITA No. 617/Mum/2025 for assessment year 2012-13. The grounds raised in the appeal are reproduced as under: 1. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition of Rs.2,60,61,006/- as unexplained cash credit u/s 68 of the Act, without appreciating the facts of the case. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the total income of the appellant at Rs. 1,55,13,50,398/- as against the income determined by the AO of Rs. 1,57,74,11,400, without properly appreciating the facts of the case. 3. The order of the Ld. CIT(A) is erroneous in law and on facts of the case and is liable to be set aside and the order of restored? Briefly stated facts of the case are that the assessee company was engaged in the business of manufacturing and export of large diameter carbon steel line pipes for various high pressure transport assessee filed its return of income electronically on 29.09.2012 declaring total income at Rs.154,94,33,700/ was subsequently revised on 30.12.2013, declaring total income . The assessment u/s 143(3) r.w.s. 153A of the tax Act, 1961 (in short ‘the Act’) was completed on 28.12.2017 assessing the total income at Rs.155,13,50,398/ Subsequently, information was received from the Investigation Wing tax Department, Mumbai regarding deposit of Man Industries (I) Ltd. 2 ITA Nos. 617, 618/MUM/2025 f this consolidated order Firstly, we take up the appeal of the Revenue having ITA No. 13. The grounds raised circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition of as unexplained cash credit u/s 68 of the 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the total income of the as against the income determined by the AO of Rs. 1,57,74,11,400, without properly us in law and on facts of the case and is liable to be set aside and the order of the assessee company was engaged in the business of manufacturing and export of large ine pipes for various high pressure transport assessee filed its return of income electronically on 29.09.2012 declaring total income at Rs.154,94,33,700/- which declaring total income at . The assessment u/s 143(3) r.w.s. 153A of the tax Act, 1961 (in short ‘the Act’) was completed on 28.12.2017 assessing the total income at Rs.155,13,50,398/-. Subsequently, information was received from the Investigation Wing tax Department, Mumbai regarding deposit of Rs.2.50 crores in the bank account of the assessee source which, the assessee failed to explain during inquiry conducted by the Investigation Wing. In view of the information, the Assessing Officer recorded reasons to believe that income escaped assessment and accordingly issued notice u/s 148 of the Act on 29.03.2019. The assessee filed return of income in response to notice u/s 148 of the Act on 04.10.2019 and thereafter statutory notices under the Act were issued and complied with. During the course of reassessment proceedings, the Assessing Officer asked the assessee to explain the deposit of Rs.2,60,61,006/ Bank Account No. 019 Rs.2,55,61,006/- was Rs.5,00,000/- was transferred from other bank account company maintained with the ICICI Bank, but t the assessee were not accepted by the Assessing Officer and he made addition u/s 68 of the Act holding the credit as unexplained cash credit. 4. On further appeal, the Ld. CIT(A) forwarded the submission of the assessee calling for his comment but despite three reminders no comments were furnished by the Assessing Officer. The Ld. C considering the submission of the assessee deleted the addition made by the Assessing Officer observing as under: “9. I have considered the facts of the case, discussion made in the order of assessment and the submission of the appellant. Sole issue in the appeal is the addition of Rs.2,60,61,006/ ITA Nos. 617, 618 Rs.2.50 crores in the bank account of the assessee , the assessee failed to explain during inquiry conducted by the Investigation Wing. In view of the information, the ecorded reasons to believe that income escaped assessment and accordingly issued notice u/s 148 of the Act on 29.03.2019. The assessee filed return of income in response to notice u/s 148 of the Act on 04.10.2019 and thereafter statutory Act were issued and complied with. During the course of reassessment proceedings, the Assessing Officer asked the assessee to explain the deposit of Rs.2,60,61,006/ Bank Account No. 019-860063-001. The assessee explained that was received by way of proceeds of was transferred from other bank account company maintained with the ICICI Bank, but the explanations of the assessee were not accepted by the Assessing Officer and he s 68 of the Act holding the credit as unexplained On further appeal, the Ld. CIT(A) forwarded the submission of the assessee calling for his comment but despite three reminders no comments were furnished by the Assessing Officer. The Ld. C considering the submission of the assessee deleted the addition made by the Assessing Officer observing as under: 9. I have considered the facts of the case, discussion made in the order of assessment and the submission of the appellant. Sole issue in the appeal is the addition of Rs.2,60,61,006/ Man Industries (I) Ltd. 3 ITA Nos. 617, 618/MUM/2025 Rs.2.50 crores in the bank account of the assessee, nature and , the assessee failed to explain during inquiry conducted by the Investigation Wing. In view of the information, the ecorded reasons to believe that income escaped assessment and accordingly issued notice u/s 148 of the Act on 29.03.2019. The assessee filed return of income in response to notice u/s 148 of the Act on 04.10.2019 and thereafter statutory Act were issued and complied with. During the course of reassessment proceedings, the Assessing Officer asked the assessee to explain the deposit of Rs.2,60,61,006/- in HSBC 001. The assessee explained that of export bill and was transferred from other bank account of assessee he explanations of the assessee were not accepted by the Assessing Officer and he s 68 of the Act holding the credit as unexplained On further appeal, the Ld. CIT(A) forwarded the submission of the assessee calling for his comment but despite three reminders no comments were furnished by the Assessing Officer. The Ld. CIT(A) considering the submission of the assessee deleted the addition 9. I have considered the facts of the case, discussion made in the order of assessment and the submission of the appellant. Sole issue in the appeal is the addition of Rs.2,60,61,006/ made u/s 68 of the Act. The case of the appellant was reopened on the basis of information received from Investigation wing that there were credit entries of the said amount in the bank account of the appellant followed by another account. In the assessment proceedings, the explanation for the cr entire amount of was 68 of the Act, which is being contested in Appellant has challenged the addition on merits. It has also raised legal grounds challeng reopening and notice issue on merits. 9.1. The amounts in question are two credit entries of Rs 5,00,000 and Rs. HSBC bank account no. explained that the Rs. 5,00,000/ Bank A/c No. 000451000358 to HSBC Bank A/c No. 019 860063-001 on 7/6/2011. It has statement of both the banks as evidence. I have perused th bank statement and find that the name of the appellant and bank account no. of ICICI statement against the credit entry of Rs. 07.06.2011. The explanation of the appellant is found to be in order. 9.2. The other amount of Rs 2,55,61,006/ the Appellant M/s. Al Zahem International Group USD 5,20,740.76, vide Export Invoice no. 207 dated 09.02.2012. The relevant No.207/EXP/Anj/Saw/11 Al Zahem International Group, Packing List, Certificate of Shipping Bill and Bill of Lading were submitted to the Assessing officer. The export sales have been accounted and o revenue in Audited Books of received the export proceeds of USD 5,20,740.76 from Zahem International Group on 02.03.2012 being converted into INR Rs. 2,55,61,006/ on 06.03.2012 on account of HSBC Bank A/c No. 019 channel. The bank realization certificate and bank payment advice for the along with the reply to the s 21.12.2019. ITA Nos. 617, 618 made u/s 68 of the Act. The case of the appellant was reopened sis of information received from Investigation wing that there were credit entries of the said amount in the bank account of the appellant followed by immediate transfer of funds to another account. In the assessment proceedings, the explanation for the credits was not accepted by the AO and the entire amount of was added to the income of the appellant u/s 68 of the Act, which is being contested in the present appeal. Appellant has challenged the addition on merits. It has also raised legal grounds challenging the validity of the reasons for reopening and notice u/s 148 of the Act. I proceed to decide the issue on merits. 9.1. The amounts in question are two credit entries of Rs 5,00,000 and Rs. 2,55,61,006/- transferred to appellant’s HSBC bank account no. 019-860063001. Appellant has explained that the Rs. 5,00,000/- was transferred from its ICICI A/c No. 000451000358 to HSBC Bank A/c No. 019 001 on 7/6/2011. It has submitted the account statement of both the banks as evidence. I have perused th bank statement and find that the name of the appellant and bank account no. of ICICI Bank is mentioned on the HSBC bank statement against the credit entry of Rs. 5,00,000/ 07.06.2011. The explanation of the appellant is found to be in other amount of Rs 2,55,61,006/-, it is explained that the Appellant had made an export sale to its overseas customer M/s. Al Zahem International Group for a sale consideration of USD 5,20,740.76, vide Export Invoice no. 207 dated 09.02.2012. The relevant Export Invoice No.207/EXP/Anj/Saw/11-12 dated 09.02.2012 raised to M/s. Al Zahem International Group, Packing List, Certificate of Shipping Bill and Bill of Lading were submitted to the Assessing export sales have been accounted and o revenue in Audited Books of Account. The appellant had received the export proceeds of USD 5,20,740.76 from Zahem International Group on 02.03.2012 being converted into 2,55,61,006/- (which includes Rs. 4,94,561/ 3.2012 on account of currency exchange difference) in HSBC Bank A/c No. 019-860063001 through proper channel. The bank realization certificate and bank payment advice for the same was submitted to the assessing officer along with the reply to the show-cause notice filed on Man Industries (I) Ltd. 4 ITA Nos. 617, 618/MUM/2025 made u/s 68 of the Act. The case of the appellant was reopened sis of information received from Investigation wing that there were credit entries of the said amount in the bank account immediate transfer of funds to another account. In the assessment proceedings, the edits was not accepted by the AO and the added to the income of the appellant u/s the present appeal. Appellant has challenged the addition on merits. It has also ing the validity of the reasons for u/s 148 of the Act. I proceed to decide the 9.1. The amounts in question are two credit entries of Rs transferred to appellant’s Appellant has was transferred from its ICICI A/c No. 000451000358 to HSBC Bank A/c No. 019- submitted the account statement of both the banks as evidence. I have perused the bank statement and find that the name of the appellant and Bank is mentioned on the HSBC bank 5,00,000/- on 07.06.2011. The explanation of the appellant is found to be in , it is explained that had made an export sale to its overseas customer for a sale consideration of USD 5,20,740.76, vide Export Invoice no. 207 dated Export Invoice 09.02.2012 raised to M/s. Al Zahem International Group, Packing List, Certificate of Origin, Shipping Bill and Bill of Lading were submitted to the Assessing export sales have been accounted and offered as Account. The appellant had received the export proceeds of USD 5,20,740.76 from M/s. Al Zahem International Group on 02.03.2012 being converted into (which includes Rs. 4,94,561/- received currency exchange difference) in 860063001 through proper banking channel. The bank realization certificate and bank payment same was submitted to the assessing officer notice filed on 9.3. Thus, the source of credit entries of Rs. 2,60,61,006/ HSBC Bank A/c No. Date 07.06.2011 02.03.2012 06.03.2012 Total During the appellate proceedings, appellant had produced the 1. Statement of HSBC Account No. 019 financial year 2. Statement of ICICI Account No. 000451000358 reflecting the transfer /debit entry of Rs. 5,00,000/ 3. Copy of Export documents that includes Export Invoice No.207/EXP/Anj/Saw/11 Al Zahem International Group, Packing List, Certificate of Origin, Shipping Bill and Bill 4. Copy of letter addressed to and submission of export documents. 5. Copy of bank advice towards money received showing reference of our 12 6. Bank certificate for export realisation certifying the inward remittance of 7. Ledger account of M/s. Al Zaheem International Group of FY 2011-12 reflecting the export turnover duly accounted in the books of the appellant 9.4. I have considered the submissions o the same, it is evident is received against the export sales. The received through banking channels for which the appellant has submitted the Bank certificate. The sale proceeds accounted for as sales ITA Nos. 617, 618 9.3. Thus, the source of credit entries of Rs. 2,60,61,006/ HSBC Bank A/c No. 019-860063-001 is as follows: Amount Source Rs.5,00,000.00 Transfer from ICICI Bank A/c No. 000451000358 Rs.2,50,66,445.09 Export proceeds of USD 5,20,740.76 from M/s AI Zahem International Group against Export Sale Rs.4,94,561.22 Receipt on account of exchange rate difference w.r.t. export proceeds received on 02.03.2012 Rs.2,60,61,006.31 During the appellate proceedings, appellant had produced the 1. Statement of HSBC Account No. 019-860063-001 for the financial year 2011-12 2. Statement of ICICI Account No. 000451000358 reflecting the transfer /debit entry of Rs. 5,00,000/- on 07.06.2011 3. Copy of Export documents that includes Export Invoice No.207/EXP/Anj/Saw/11-12dated 09.02.2012 raised to M/s. International Group, Packing List, Certificate of Origin, Shipping Bill and Bill of Lading. 4. Copy of letter addressed to HSBC Bank Ltd for negotiation submission of export documents. 5. Copy of bank advice towards money received showing reference of our Commercial Invoice No. 207/EXP/Anj/Saw/11 6. Bank certificate for export realisation certifying the inward USD 5,20,740.76 7. Ledger account of M/s. Al Zaheem International Group of FY reflecting the export turnover duly accounted in the books of the appellant and export realisation against the sam. 9.4. I have considered the submissions of the appellant. From the same, it is evident that the said amount of Rs. 2,55,61,006 is received against the export sales. The amount has been received through banking channels for which the appellant has submitted the Bank certificate. The sale proceeds have been accounted for as sales turnover. Further, Rs 5,00,000/ Man Industries (I) Ltd. 5 ITA Nos. 617, 618/MUM/2025 9.3. Thus, the source of credit entries of Rs. 2,60,61,006/- in Transfer from ICICI Bank A/c Export proceeds of USD M/s AI Zahem International Group against Export Sale Receipt on account of exchange rate difference w.r.t. export proceeds received on 02.03.2012 During the appellate proceedings, appellant had produced the 001 for the 2. Statement of ICICI Account No. 000451000358 reflecting the 3. Copy of Export documents that includes Export Invoice 12dated 09.02.2012 raised to M/s. International Group, Packing List, Certificate of Origin, HSBC Bank Ltd for negotiation 5. Copy of bank advice towards money received showing Commercial Invoice No. 207/EXP/Anj/Saw/11- 6. Bank certificate for export realisation certifying the inward 7. Ledger account of M/s. Al Zaheem International Group of FY reflecting the export turnover duly accounted in the and export realisation against the sam. f the appellant. From that the said amount of Rs. 2,55,61,006 amount has been received through banking channels for which the appellant has have been turnover. Further, Rs 5,00,000/- represents the interbank transfer. In view of the provided by the appellant, the said entire credits of Rs 2,60,61,006.31 / section 68 of the Act are not applicable 9.5. It is also seen that the entire amount was transferred from HSBC bank account No. 000451000358, which is held by Man Limited as under 1. Rs.4,12,550/ year 2011-12. 2. Rs.4,50,000/ 3. Rs. 2,50,00,000/ 000451000358 on 05/03/2012. 4. Rs. 5,30,000/ 14/03/2012. Therefore, it is very clear that the funds are transferred to from HSBC bank account by the Company itself and not to any appellant has explained the source of the funds as destination of the funds. 9.6. The above explanation was also provided during the assessment proceedings. appellant’s contention. Para 3.2 of the which carried the AOs comments on the submis the appellant is reproduced as under “3.2 The assessee's submission is considered but the same is not found to be acceptable. The transactions entered into by the assessee are not vague credit entries. T or not the afore bank account are genuine or otherwise. In these circumstances, the onus lies on the assessee to establish along evidences that th account are genuine. However, furnish the cogent evidences in respect of the claim It has, therefore, failed to satisfactorily explain the nature and genuineness of the With these observations, the AO has proceeded to invoke the provisions of section 68 of the Act. ITA Nos. 617, 618 represents the interbank transfer. In view of the submission provided by the appellant, the said entire credits of Rs 2,60,61,006.31 /- stands explained. Therefore, the provisions of 68 of the Act are not applicable in this case. 9.5. It is also seen that the entire amount was transferred from HSBC bank account to the bank account at ICICI Bank Account No. 000451000358, which is held by Man Industries (India) Limited as under- ,12,550/-bank charges debited by bank during financial 12. 2. Rs.4,50,000/-transferred to ICICI Bank on 17/02/2012. 3. Rs. 2,50,00,000/- transferred to ICICI Bank Account No. 000451000358 on 05/03/2012. 4. Rs. 5,30,000/- transferred to Corporation Bank on 14/03/2012. Therefore, it is very clear that the funds are transferred to from HSBC bank account to other bank accounts held and operated by the Company itself and not to any outsider. Thus, the appellant has explained the source of the funds as well as the destination of the funds. 9.6. The above explanation was also provided during the assessment proceedings. However, the AO had rejected the appellant’s contention. Para 3.2 of the assessment order in which carried the AOs comments on the submissions made by the appellant is reproduced as under “3.2 The assessee's submission is considered but the same is be acceptable. The transactions entered into by the assessee are not vague but specific with reference to certain credit entries. Therefore, the basic issue in question is whether or not the afore-mentioned credit entries into the assessee's bank account are genuine or otherwise. In these circumstances, the onus lies on the assessee to establish along-with supporting that the credit entries into the assessee's bank account are genuine. However, the assessee has failed to furnish the cogent evidences in respect of the claim made by it. It has, therefore, failed to satisfactorily explain the nature and genuineness of the aforesaid transactions”. With these observations, the AO has proceeded to invoke the section 68 of the Act. Man Industries (I) Ltd. 6 ITA Nos. 617, 618/MUM/2025 submission provided by the appellant, the said entire credits of Rs stands explained. Therefore, the provisions of 9.5. It is also seen that the entire amount was transferred from to the bank account at ICICI Bank Account Industries (India) bank charges debited by bank during financial transferred to ICICI Bank on 17/02/2012. transferred to ICICI Bank Account No. n Bank on Therefore, it is very clear that the funds are transferred to from to other bank accounts held and operated outsider. Thus, the well as the 9.6. The above explanation was also provided during the However, the AO had rejected the assessment order in sions made by “3.2 The assessee's submission is considered but the same is be acceptable. The transactions entered into by the but specific with reference to certain in question is whether assessee's bank account are genuine or otherwise. In these circumstances, with supporting e credit entries into the assessee's bank the assessee has failed to made by it. It has, therefore, failed to satisfactorily explain the nature and With these observations, the AO has proceeded to invoke the 9.7 On perusal of the Para 3.2. of the order, it appears that the explanation provided by the appellant was rejected without assigning any specific reasons. AO other evidence was required to prove that the said credit were genuine sale proceeds. I feel that the Appellant had duly discharged its was on the AO to conduct further appellant, if he was not satisfied with the explanation. AO not carried out any such enquiry. The information received by the Investigation the submission made proceedings. 9.8 From the overall facts of the case, it is seen that the appellant has explained bank account with documentary evidences. The 2,60,61,006/ directed to delete allowed.” 5. We have heard rival submissions of the parties and perused the relevant materials on record in respect of source of explained that United Rupees 2,55,61,006/ against the material supplied vide export invoice 09.02.2012. The assessee filed all the documentary evidence in support of export documents List, Certificate of Origin, Shipping Bill and Bill of Lading bank advise, copy of bank certificate etc Rs.5,00,000/- (Rs.2,60,61,006 explained that same was transferred from the company’s other bank account maintained with the ICICI bank. Thus that assessee has explained source of the ITA Nos. 617, 618 9.7 On perusal of the Para 3.2. of the order, it appears that the provided by the appellant was rejected without any specific reasons. AO has not elaborated on what other evidence was required to prove that the said credit were genuine sale proceeds. I feel that the Appellant had duly discharged its onus in explanting the source of credits. The onus he AO to conduct further enquiries to disprove the appellant, if he was not satisfied with the explanation. AO not carried out any such enquiry. The information received by the Investigation wing has been adopted without considering the submission made by the appellant in the assessment 9.8 From the overall facts of the case, it is seen that the appellant has explained the credits of Rs 2,60,61,006/ bank account with documentary evidences. The addition Rs 2,60,61,006/- u/s 68 of the Act cannot be upheld .AO is directed to delete the said addition. Ground nos 1 and 3 are We have heard rival submissions of the parties and perused the relevant materials on record. We find that the issue in dispute is in respect of source of the credit of Rs.2,60,61,006/ United State dollar (USD) 5,20,74 55,61,006/-) was received from overseas customers against the material supplied vide export invoice 09.02.2012. The assessee filed all the documentary evidence in documents interalia- Commercial Invoice, Packing of Origin, Shipping Bill and Bill of Lading bank advise, copy of bank certificate etc. With respect to amount of (Rs.2,60,61,006 – Rs.2,55,61,006) the assessee explained that same was transferred from the company’s other bank account maintained with the ICICI bank. Thus that assessee has explained source of the total amount of Man Industries (I) Ltd. 7 ITA Nos. 617, 618/MUM/2025 9.7 On perusal of the Para 3.2. of the order, it appears that the provided by the appellant was rejected without has not elaborated on what other evidence was required to prove that the said credit entries were genuine sale proceeds. I feel that the Appellant had duly onus in explanting the source of credits. The onus enquiries to disprove the appellant, if he was not satisfied with the explanation. AO has not carried out any such enquiry. The information received by wing has been adopted without considering the assessment 9.8 From the overall facts of the case, it is seen that the the credits of Rs 2,60,61,006/- in the addition Rs Act cannot be upheld .AO is Ground nos 1 and 3 are We have heard rival submissions of the parties and perused . We find that the issue in dispute is the credit of Rs.2,60,61,006/-. The assessee 5,20,740.76 (Indian received from overseas customers against the material supplied vide export invoice No. 207 dated 09.02.2012. The assessee filed all the documentary evidence in Commercial Invoice, Packing of Origin, Shipping Bill and Bill of Lading, copy of . With respect to amount of Rs.2,55,61,006) the assessee explained that same was transferred from the company’s other bank account maintained with the ICICI bank. Thus, it is evident total amount of Rs.2,60,61,006/-. Before the Ld. CIT(A) also the assessee reiterated the source of the deposit and file support thereof. In our opinion, order of the Ld. CIT(A) on the issue in dispute is well reasoned and same. Accordingly, we uphold the same. The grounds of appeal of the Revenue are accordingly dismissed. 6. Now, we take up the appeal of the Revenue having ITA No. 618/Mum/2025 for assessment year 2015 by the Revenue in its appeal are reproduced as under: 1. Whether, on the facts and circumstances of the case and in law, the Learned CIT(A) erred in allowing the appeal of the assessee solely on the basis of natural justice. 2. Whether, on the facts a law, the Learned CIT(A) erred in deleting penalty of Rs. 15,54,634/- u/s. 271(1)(c) of the Act at the rate of 100% of tax sought to be evaded on the addition of Rs. 45,73,796/ confirmed by the Hon'ble ITAT i.e. estima of impugned bogus purchases of Rs. 9,14,75,919 M/s. Harmony Exim Pv margin from alleged bogus purchases rather than concrete evidence of concealment or furnishing of inaccurate particulars. 3. Whether, on the facts and circumstances of the case and in law, the Learned CIT(A) erred in deleting the penalty stating that penalty levying arise out of any incriminating materials found during the search proceedi statement on third party, without appreciating the facts on addition made by Assessing Officer basis of an estimated profit margin from alleged bogus purchases rather than concrete evidence of concealment or furnishing of particulars. ITA Nos. 617, 618 . Before the Ld. CIT(A) also the assessee reiterated the source of the deposit and filed all the documentary evidence in support thereof. In our opinion, order of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any infirmity in the same. Accordingly, we uphold the same. The grounds of appeal of the Revenue are accordingly dismissed. we take up the appeal of the Revenue having ITA No. 618/Mum/2025 for assessment year 2015-16. The grounds ra by the Revenue in its appeal are reproduced as under: 1. Whether, on the facts and circumstances of the case and in law, the Learned CIT(A) erred in allowing the appeal of the assessee solely on the basis of natural justice. 2. Whether, on the facts and circumstances of the case and in law, the Learned CIT(A) erred in deleting penalty of Rs. u/s. 271(1)(c) of the Act at the rate of 100% of tax sought to be evaded on the addition of Rs. 45,73,796/ confirmed by the Hon'ble ITAT i.e. estimated profit margin 5% of impugned bogus purchases of Rs. 9,14,75,919/-made from M/s. Harmony Exim Pvt. Ltd., basis of an estimated profit margin from alleged bogus purchases rather than concrete evidence of concealment or furnishing of inaccurate 3. Whether, on the facts and circumstances of the case and in law, the Learned CIT(A) erred in deleting the penalty stating that penalty levying on impugned addition which did not arise out of any incriminating materials found during the search proceedings and which was merely based on statement on third party, without appreciating the facts on addition made by Assessing Officer basis of an estimated profit margin from alleged bogus purchases rather than concrete evidence of concealment or furnishing of inaccurate Man Industries (I) Ltd. 8 ITA Nos. 617, 618/MUM/2025 . Before the Ld. CIT(A) also the assessee reiterated all the documentary evidence in support thereof. In our opinion, order of the Ld. CIT(A) on the issue we do not find any infirmity in the same. Accordingly, we uphold the same. The grounds of appeal of we take up the appeal of the Revenue having ITA No. 16. The grounds raised by the Revenue in its appeal are reproduced as under: 1. Whether, on the facts and circumstances of the case and in law, the Learned CIT(A) erred in allowing the appeal of the nd circumstances of the case and in law, the Learned CIT(A) erred in deleting penalty of Rs. u/s. 271(1)(c) of the Act at the rate of 100% of tax sought to be evaded on the addition of Rs. 45,73,796/-as ted profit margin 5% made from Ltd., basis of an estimated profit margin from alleged bogus purchases rather than concrete evidence of concealment or furnishing of inaccurate 3. Whether, on the facts and circumstances of the case and in law, the Learned CIT(A) erred in deleting the penalty stating addition which did not arise out of any incriminating materials found during the ngs and which was merely based on statement on third party, without appreciating the facts on addition made by Assessing Officer basis of an estimated profit margin from alleged bogus purchases rather than inaccurate 4. The order of the Ld. CIT(A) is erroneous in law and on facts of the case and is liable to be set aside and the order of the AO be restored. 5. The appellant craves leave to add to alter, amend, modify and/ or delete any or all of The appellant reserves its right to file further submission in 6.1 Briefly stated, facts of the case are that the assessee file original return of income on 30.11.2015 declaring total income at Rs.32,38,23,920/-. Thereafter the assessee was selected for scrutiny and notice u/s 143(2) of the Act was issued and served upon the assessee. Subsequently, a search was conducted u/s 132 of the Act on 10.12.2014. Thereafter, the assessment was completed u/s 143(3) of the Act on 29.12.2016 determining total income at Rs.78, provisions of the Act and book profit of Rs.87,74,75,621/ 115JB of the Act after for the bogus purchases of Rs.9,14,75,919/ initiated penalty proceedings u/s 271(1)(c) of the Act. On further appeal against the quantum addition, the Ld. CIT(A) partly allowed the appeal of the assessee against which both the Revenue and the assessee preferred appeal before the Income (ITAT). The ITAT vide its order dated 25.11.2021 restricted the addition made on account of bogus purchases to 5% of the amount of Rs.9,14,75,919/-. In view of addition to the extent of 5% in respect of bogus purchases confirmed by the Tribunal, the Assessing Officer issue a show cause notice dated 12.07.2022 to the ITA Nos. 617, 618 4. The order of the Ld. CIT(A) is erroneous in law and on facts of the case and is liable to be set aside and the order of the AO 5. The appellant craves leave to add to alter, amend, modify and/ or delete any or all of the above said grounds of appeal. The appellant reserves its right to file further in the appeal. Briefly stated, facts of the case are that the assessee file original return of income on 30.11.2015 declaring total income at . Thereafter the return of income filed by the assessee was selected for scrutiny and notice u/s 143(2) of the Act was issued and served upon the assessee. Subsequently, a search was conducted u/s 132 of the Act on 10.12.2014. Thereafter, the ment was completed u/s 143(3) of the Act on 29.12.2016 determining total income at Rs.78,27,92,610/- provisions of the Act and book profit of Rs.87,74,75,621/ after making various additions including addition for the bogus purchases of Rs.9,14,75,919/-. The Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act. On further appeal against the quantum addition, the Ld. CIT(A) partly allowed of the assessee against which both the Revenue and the assessee preferred appeal before the Income-tax Appellate Tribunal (ITAT). The ITAT vide its order dated 25.11.2021 restricted the addition made on account of bogus purchases to 5% of the amount . In view of addition to the extent of 5% in respect of bogus purchases confirmed by the Tribunal, the Assessing Officer issue a show cause notice dated 12.07.2022 to the Man Industries (I) Ltd. 9 ITA Nos. 617, 618/MUM/2025 4. The order of the Ld. CIT(A) is erroneous in law and on facts of the case and is liable to be set aside and the order of the AO 5. The appellant craves leave to add to alter, amend, modify the above said grounds of appeal. The appellant reserves its right to file further Briefly stated, facts of the case are that the assessee filed its original return of income on 30.11.2015 declaring total income at turn of income filed by the assessee was selected for scrutiny and notice u/s 143(2) of the Act was issued and served upon the assessee. Subsequently, a search was conducted u/s 132 of the Act on 10.12.2014. Thereafter, the ment was completed u/s 143(3) of the Act on 29.12.2016 under normal provisions of the Act and book profit of Rs.87,74,75,621/- u/s making various additions including addition . The Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act. On further appeal against the quantum addition, the Ld. CIT(A) partly allowed of the assessee against which both the Revenue and the tax Appellate Tribunal (ITAT). The ITAT vide its order dated 25.11.2021 restricted the addition made on account of bogus purchases to 5% of the amount . In view of addition to the extent of 5% in respect of bogus purchases confirmed by the Tribunal, the Assessing Officer issue a show cause notice dated 12.07.2022 to the assessee asking as why the penalty u/s 271(1)(c) of the Act not be levied in respect of addition sustained by the ITAT. The assessee contested that there was no concealment of the income or furnishing inaccurate particulars of the income and disallowance was merely made on the a Assessing Officer rejected the contention of the assessee a penalty at the rate of which was worked out to Rs.15,54,634/ Ld. CIT(A) deleted the penalty for the reason that same was l respect of addition sustained on the estimate basis relying on the decision of the Co-ordinate Bench of the Mumbai ITAT. Aggrieved, the Revenue is in appeal before the Tribunal by way of raising the grounds as reproduced above. 7. We have heard r the relevant materials on record proceedings addition was made in respect of purchases from M/s Harmony Exim Pvt. Ltd. amounting to Rs.9,14,75,919/ statement of the suppl However, the said addition has been restricted to 5% by the Tribunal. The relevant finding of the Tribunal is reproduced as under: “126. We have heard the rival parties and perused the materials on records. Undisput M/S Harmoney Exim Pvt. Ltd have admitted to fact that these were accommodation entries only and no physical delivery of materials were made to the assessee. However the assesse filed ITA Nos. 617, 618 as why the penalty u/s 271(1)(c) of the Act levied in respect of addition sustained by the ITAT. The assessee contested that there was no concealment of the income or furnishing inaccurate particulars of the income and disallowance was merely made on the ad-hoc estimation of the profit. T ng Officer rejected the contention of the assessee at the rate of 100% of the tax evaded on the said addition which was worked out to Rs.15,54,634/-. On further appeal, the Ld. CIT(A) deleted the penalty for the reason that same was l respect of addition sustained on the estimate basis relying on the ordinate Bench of the Mumbai ITAT. Aggrieved, the Revenue is in appeal before the Tribunal by way of raising the grounds as reproduced above. We have heard rival submissions of the parties and perused the relevant materials on record. In the course of assessment proceedings addition was made in respect of purchases from M/s Harmony Exim Pvt. Ltd. amounting to Rs.9,14,75,919/ statement of the supplier manager and director of the company. However, the said addition has been restricted to 5% by the Tribunal. The relevant finding of the Tribunal is reproduced as 126. We have heard the rival parties and perused the materials on records. Undisputed facts are that the assessee as well as M/S Harmoney Exim Pvt. Ltd have admitted to fact that these were accommodation entries only and no physical delivery of materials were made to the assessee. However the assesse filed Man Industries (I) Ltd. 10 ITA Nos. 617, 618/MUM/2025 as why the penalty u/s 271(1)(c) of the Act might levied in respect of addition sustained by the ITAT. The assessee contested that there was no concealment of the income or furnishing inaccurate particulars of the income and disallowance hoc estimation of the profit. The ng Officer rejected the contention of the assessee and levied 100% of the tax evaded on the said addition, . On further appeal, the Ld. CIT(A) deleted the penalty for the reason that same was levied in respect of addition sustained on the estimate basis relying on the ordinate Bench of the Mumbai ITAT. Aggrieved, the Revenue is in appeal before the Tribunal by way of raising the ival submissions of the parties and perused . In the course of assessment proceedings addition was made in respect of purchases from M/s Harmony Exim Pvt. Ltd. amounting to Rs.9,14,75,919/-, in view of ier manager and director of the company. However, the said addition has been restricted to 5% by the Tribunal. The relevant finding of the Tribunal is reproduced as 126. We have heard the rival parties and perused the materials ed facts are that the assessee as well as M/S Harmoney Exim Pvt. Ltd have admitted to fact that these were accommodation entries only and no physical delivery of materials were made to the assessee. However the assesse filed various documents viz. Ledger a copy of Store issue report wherein HR coil purchase from M/s Harmony Exim Pvt. Ltd. were shown to be issued for production / manufacturing of spiral pipes, copy of inspection report was also filed before AO, copy of lorry r transported from Mumbai to Anjar and stock register showing month wise receipt and consumption of HR Coil. Under these circumstances the only possibility is that though the purchases are held to be bogus but certainly the purchas some other source in the grey market. Such purchases can not be ruled out as the materials were used in the manufacturing process, the inspection report whereof was on the records and stock register showing monthwise receipt and consumpti materials. So under these circumstances it is settled position now that entire alleged bogus purchases can not added to the income of the assessee as it would affect the profits of the assesse unrealistically and unreasonably. Therefore under such circumstances only profit margin on those bogus purchases can at the most be added. Accordingly we set aside the order of id CIT(A) on this issue and direct the AO to apply a profit rate of 5% on the bogus purchases of Rs.9,14,75,919/ assesse is partly 7.1 The Ld. CIT(A) deleted the penalty observing mainly for reason that addition was upheld on the estimation basis. The relevant finding of the Ld. CIT(A) is reproduced as under: “7.2.1 Decision During the search action, evid suggested that the purchases amounting to Rs M/s Harmony Exim Pvt ltd. Based on this purchases of Rs 9,14,75,919 were added to the in appellant. The said addition was confirmed by the CIT(A). Hon’ble ITAT while 5% of the purchases. The relevant extract reproduced as under: “126. We have heard the rival on records. Undisputed facts are that the assesse as well as M/S Harmoney Exim Pvt. Ltd have accommodation entries only and no physical delivery were made to the assesse. Howev documents viz. Ledger account of Harmony Exim Pvt. Ltd, copy of ITA Nos. 617, 618 various documents viz. Ledger account of Harmony Exim Pvt. Ltd, copy of Store issue report wherein HR coil purchase from M/s Harmony Exim Pvt. Ltd. were shown to be issued for production / manufacturing of spiral pipes, copy of inspection report was also filed before AO, copy of lorry receipt in respect of goods transported from Mumbai to Anjar and stock register showing month wise receipt and consumption of HR Coil. Under these circumstances the only possibility is that though the purchases are held to be bogus but certainly the purchases were made from some other source in the grey market. Such purchases can not be ruled out as the materials were used in the manufacturing process, the inspection report whereof was on the records and stock register showing monthwise receipt and consumpti materials. So under these circumstances it is settled position now that entire alleged bogus purchases can not added to the income of the assessee as it would affect the profits of the assesse unrealistically and unreasonably. Therefore under such rcumstances only profit margin on those bogus purchases can at the most be added. Accordingly we set aside the order of id CIT(A) on this issue and direct the AO to apply a profit rate of 5% on the bogus purchases of Rs.9,14,75,919/-. The appeal of the partly allowed.” The Ld. CIT(A) deleted the penalty observing mainly for that addition was upheld on the estimation basis. The relevant finding of the Ld. CIT(A) is reproduced as under: “7.2.1 Decision- During the search action, evidences were gathered which suggested that the appellant had taken accommodation entries of purchases amounting to Rs 9,14,75,919- from a concern named M/s Harmony Exim Pvt ltd. Based on this evidences, entire purchases of Rs 9,14,75,919 were added to the income of the appellant. The said addition was confirmed by the CIT(A). Hon’ble ITAT while deciding the issue restricted the addition to 5% of the purchases. The relevant extract of the order of ITAT is reproduced as under: “126. We have heard the rival parties and perused the materials Undisputed facts are that the assesse as well as M/S Harmoney Exim Pvt. Ltd have admitted to fact that these were accommodation entries only and no physical delivery of materials were made to the assesse. However the assesse filed various documents viz. Ledger account of Harmony Exim Pvt. Ltd, copy of Man Industries (I) Ltd. 11 ITA Nos. 617, 618/MUM/2025 ccount of Harmony Exim Pvt. Ltd, copy of Store issue report wherein HR coil purchase from M/s Harmony Exim Pvt. Ltd. were shown to be issued for production / manufacturing of spiral pipes, copy of inspection report was also eceipt in respect of goods transported from Mumbai to Anjar and stock register showing month wise receipt and consumption of HR Coil. Under these circumstances the only possibility is that though the purchases es were made from some other source in the grey market. Such purchases can not be ruled out as the materials were used in the manufacturing process, the inspection report whereof was on the records and stock register showing monthwise receipt and consumption of materials. So under these circumstances it is settled position now that entire alleged bogus purchases can not added to the income of the assessee as it would affect the profits of the assesse unrealistically and unreasonably. Therefore under such rcumstances only profit margin on those bogus purchases can at the most be added. Accordingly we set aside the order of id CIT(A) on this issue and direct the AO to apply a profit rate of 5% . The appeal of the The Ld. CIT(A) deleted the penalty observing mainly for the that addition was upheld on the estimation basis. The relevant finding of the Ld. CIT(A) is reproduced as under: ences were gathered which appellant had taken accommodation entries of from a concern named evidences, entire come of the appellant. The said addition was confirmed by the CIT(A). deciding the issue restricted the addition to of the order of ITAT is parties and perused the materials Undisputed facts are that the assesse as well as M/S admitted to fact that these were of materials er the assesse filed various documents viz. Ledger account of Harmony Exim Pvt. Ltd, copy of Store issue report Exim Pvt. Ltd. were shown to be issued manufacturing of spiral pipes, copy of inspec filed before AO, copy of lorry receipt in respect of goods transported from Mumbai to Anjar month wise receipt and consumption of HR Coil. Under circumstances the only possibility is that though the pur are held to be some other source in the grey ruled out as the materials were used in the process, the inspection report whereof was on the records and stock register showing monthwise receipt and consumption of materials. So under these that entire alleged bogus purchases can not of the assessee as it would affect the profits of the assesse unrealistically and unreasonably. Therefore under such circumstances only profit at the most be added. Accordingly we set CIT(A) on this issue and direct the AO to apply a profit rate of 5% on the bogus assesse is partly Hon’ble ITAT has observed that the purchases form Ms Harmony Exim Pvt ltd were bogus, but the purchases would have been made from some other source in has shown consumption of the material and the profit margin was worked out at 5% of such purchases. 7.2.2 As regards filing of inaccurate particulars, I am of the view that the appellant in its books of account. However, it has purchases were made, not from the parties shown by the appellant but from the grey market. Further, the income arising out of such purchases has been purchases. Appella pronouncements including that of Jurisdictional Mumbai ITAT, wherein it is held that estimated additions. I find that the present case the case laws relied upon by the appe 7.3 Considering the overall facts of the case, I hold that the penalty u/s 271(1)(c) penalty is calculated on estimated income. 7.2 Before us, the Ld. counsel for the assessee has relied on the Tribunal in the case of ITO v. IORA Diamonds Pvt. Ltd. in ITA Nos. ITA Nos. 617, 618 Store issue report wherein. HR coil purchase from M/s Harmony Exim Pvt. Ltd. were shown to be issued for production / manufacturing of spiral pipes, copy of inspection report was also before AO, copy of lorry receipt in respect of goods transported from Mumbai to Anjar and stock register showing month wise receipt and consumption of HR Coil. Under circumstances the only possibility is that though the pur are held to be bogus but certainly the purchases were made from some other source in the grey market. Such purchases can not be ruled out as the materials were used in the manufacturing process, the inspection report whereof was on the records and register showing monthwise receipt and consumption of materials. So under these circumstances it is settled position now that entire alleged bogus purchases can not added to the income of the assessee as it would affect the profits of the assesse alistically and unreasonably. Therefore under such circumstances only profit margin on those bogus purchases can at the most be added. Accordingly we set aside the order of ld CIT(A) on this issue and direct the AO to apply a profit rate of 5% purchases of Rs.9,14,75,919/-. The appeal of the assesse is partly allowed.” Hon’ble ITAT has observed that the purchases form Ms Harmony ltd were bogus, but the purchases would have been made from some other source in grey market. Since the appe has shown consumption of the material and corresponding sales, the profit margin was worked out at 5% of such purchases. 7.2.2 As regards filing of inaccurate particulars, I am of the view that the appellant had filed inaccurate particulars of purcha in its books of account. However, it has been held that the purchases were made, not from the parties shown by the but from the grey market. Further, the income arising out of such purchases has been estimated at 5% of such purchases. Appellant has cited number of judicial pronouncements including that of Jurisdictional Mumbai ITAT, wherein it is held that the penalty should not be levied on estimated additions. I find that the present case gets covered by the case laws relied upon by the appellant. 7.3 Considering the overall facts of the case, I hold that the penalty u/s 271(1)(c) cannot be sustained in this case as the penalty is calculated on estimated income.” Before us, the Ld. counsel for the assessee has relied on the e case of ITO v. IORA Diamonds Pvt. Ltd. in ITA Nos. Man Industries (I) Ltd. 12 ITA Nos. 617, 618/MUM/2025 wherein. HR coil purchase from M/s Harmony for production / tion report was also before AO, copy of lorry receipt in respect of goods and stock register showing month wise receipt and consumption of HR Coil. Under these circumstances the only possibility is that though the purchases bogus but certainly the purchases were made from market. Such purchases can not be manufacturing process, the inspection report whereof was on the records and register showing monthwise receipt and consumption of circumstances it is settled position now added to the income of the assessee as it would affect the profits of the assesse alistically and unreasonably. Therefore under such margin on those bogus purchases can aside the order of ld CIT(A) on this issue and direct the AO to apply a profit rate of 5% . The appeal of the Hon’ble ITAT has observed that the purchases form Ms Harmony ltd were bogus, but the purchases would have been grey market. Since the appellant corresponding sales, the profit margin was worked out at 5% of such purchases. 7.2.2 As regards filing of inaccurate particulars, I am of the view had filed inaccurate particulars of purchases been held that the purchases were made, not from the parties shown by the but from the grey market. Further, the income arising estimated at 5% of such nt has cited number of judicial pronouncements including that of Jurisdictional Mumbai ITAT, the penalty should not be levied on gets covered by 7.3 Considering the overall facts of the case, I hold that the cannot be sustained in this case as the Before us, the Ld. counsel for the assessee has relied on the e case of ITO v. IORA Diamonds Pvt. Ltd. in ITA Nos. 6396, 6395 & 6397/Mum/2024 for assessment years 2008 2010-11 wherein the Tribunal has deleted the penalty levied on estimation of the addition. The relevant para is reproduced as under : “5. We have heard both the sides and perused the material on record. We find that the CIT(A) has deleted the penalty by following the decision of the Tribunal in the case of Supertech Construction Co. Vs. ACIT [ITA No. 910/Mum/2023, dated 05/12/2023] and ju in the case of CIT vs. Krishi Tyre Retreading and Rubber Industries [360 ITR 580]. The relevant extract of the decision of CIT(A) reads as under: \"8. Decision: 8.1. The instant appeal has been filed against the u/s.271(1)(c) dated 05 assessment order the AO had made addition of Rs. 3,42,644/ being 12.5% of bogus purchases. The above estimated addition was reduced by CIT(A) by reducing the percentage of estimation from 12.5% to 8%. The above order was confirmed by Hon. ITAT. The AO has levied penalty of Rs. 67,762/ above addition, against which the appellant has filed the instant appeal. 8.2 I have considered the submissions filed by the appellant Assessment Year 2008 the appellate proceedings, which have been extracted in the preceding para. In the case of Supertech Construction Co. Vs. ACIT, In ITA No. 910/Mum/2023, Hon. ITAT, Mumbai vide order dated 05.12.2023 has h imposable on bogus purchase addition. The Hon. Rajasthan High Court in the case of CIT Vs. Krishi Tyre Retreading and Rubber Industry has held that, where addition estimation basis, no penalty There are catena of decisions by different High Courts and various benches of ITAT wherein penalty levied on the basis of estimated addition has been held to be unsustainable. Thus, in the facts of the instant case, penalty levied u/s 271(1 of bogus purchases is unsustainable. The assessing officer is directed to delete the penalty. The grounds of appeals are allowed. 9. In the result, the appeal is allowed. ITA Nos. 617, 618 6396, 6395 & 6397/Mum/2024 for assessment years 2008 11 wherein the Tribunal has deleted the penalty levied on estimation of the addition. The relevant para is reproduced as 5. We have heard both the sides and perused the material on record. We find that the CIT(A) has deleted the penalty by following the decision of the Tribunal in the case of Supertech Construction Co. Vs. ACIT [ITA No. 910/Mum/2023, dated 05/12/2023] and judgment of the Hon'ble Rajasthan High Court in the case of CIT vs. Krishi Tyre Retreading and Rubber Industries [360 ITR 580]. The relevant extract of the decision of CIT(A) reads as under: 8.1. The instant appeal has been filed against the u/s.271(1)(c) dated 05- 01-2022 for A.Y.2008-09. In the assessment order the AO had made addition of Rs. 3,42,644/ being 12.5% of bogus purchases. The above estimated addition was reduced by CIT(A) by reducing the percentage of estimation % to 8%. The above order was confirmed by Hon. ITAT. The AO has levied penalty of Rs. 67,762/- u/s 271(1)(c) on the above addition, against which the appellant has filed the instant 8.2 I have considered the submissions filed by the appellant ssment Year 2008-2009, 2009-2010 & 2010-2011 during the appellate proceedings, which have been extracted in the preceding para. In the case of Supertech Construction Co. Vs. ACIT, In ITA No. 910/Mum/2023, Hon. ITAT, Mumbai vide order dated 05.12.2023 has held that penalty u/s 271(1)(c) imposable on bogus purchase addition. The Hon. Rajasthan High Court in the case of CIT Vs. Krishi Tyre Retreading and Rubber Industry has held that, where addition is made purely on estimation basis, no penalty u/s 271(1)(c) of the Act is leviable. There are catena of decisions by different High Courts and various benches of ITAT wherein penalty u/s 271(1)(c) levied on the basis of estimated addition has been held to be unsustainable. Thus, in the facts of the instant case, penalty u/s 271(1)(c) of the Act levied based on estimated addition of bogus purchases is unsustainable. The assessing officer is directed to delete the penalty. The grounds of appeals are allowed. 9. In the result, the appeal is allowed. Man Industries (I) Ltd. 13 ITA Nos. 617, 618/MUM/2025 6396, 6395 & 6397/Mum/2024 for assessment years 2008-09 to 11 wherein the Tribunal has deleted the penalty levied on estimation of the addition. The relevant para is reproduced as 5. We have heard both the sides and perused the material on record. We find that the CIT(A) has deleted the penalty by following the decision of the Tribunal in the case of Supertech Construction Co. Vs. ACIT [ITA No. 910/Mum/2023, dated dgment of the Hon'ble Rajasthan High Court in the case of CIT vs. Krishi Tyre Retreading and Rubber Industries [360 ITR 580]. The relevant extract of the decision of 8.1. The instant appeal has been filed against the order 09. In the assessment order the AO had made addition of Rs. 3,42,644/- being 12.5% of bogus purchases. The above estimated addition was reduced by CIT(A) by reducing the percentage of estimation % to 8%. The above order was confirmed by Hon. ITAT. u/s 271(1)(c) on the above addition, against which the appellant has filed the instant 8.2 I have considered the submissions filed by the appellant 2011 during the appellate proceedings, which have been extracted in the preceding para. In the case of Supertech Construction Co. Vs. ACIT, In ITA No. 910/Mum/2023, Hon. ITAT, Mumbai vide order u/s 271(1)(c) is not imposable on bogus purchase addition. The Hon. Rajasthan High Court in the case of CIT Vs. Krishi Tyre Retreading and Rubber is made purely on of the Act is leviable. There are catena of decisions by different High Courts and u/s 271(1)(c) of the Act levied on the basis of estimated addition has been held to be unsustainable. Thus, in the facts of the instant case, penalty of the Act levied based on estimated addition of bogus purchases is unsustainable. The assessing officer is directed to delete the penalty. The grounds of appeals are 9. In the result, the appeal is a 6. There is nothing on record to persuade us to take a view different from the above view taken by the CIT(A). The Learned Authorized Representative for the Appellant has also placed on record the decisions of Mumbai Bench of the Tribunal in the of (a) Fancy Diamonds India Pvt. Ltd. Vs. DCIT [ITA No.961 to 963/Mum/2023, Assessment Years 2010 2012-13, dated 20/06/2023] and (b) M/s. Deputy Commissioner of Income Tax & 4304/Mum/2024, Assessment Years 2012 dated 03/10/2024] whereby, in identical facts and circumstances, the Tribunal had deleted penalty levied u Section 271(1)(c) on estimate basis. In view of the above, we decline to interfere with the order passed by the CIT(A) deleting the penalty levied under Section 271(1)(c) and 3 raised by the Revenue are dismissed.” 7.3 Respectfully following the finding of the Tribunal (supra), we uphold the finding of the T ground of appeal of the Revenue are accordingly dismissed. 12. In the result, both the Order pronounced under Rule 34(4) of the ITAT Rules, 1963 by way of placing result on Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 28/05/2025 Rahul Sharma, Sr. P.S. ITA Nos. 617, 618 9. In the result, the appeal is allowed.\" 6. There is nothing on record to persuade us to take a view different from the above view taken by the CIT(A). The Learned Authorized Representative for the Appellant has also placed on record the decisions of Mumbai Bench of the Tribunal in the a) Fancy Diamonds India Pvt. Ltd. Vs. DCIT 5(1)(1), Mumbai [ITA No.961 to 963/Mum/2023, Assessment Years 2010 13, dated 20/06/2023] and (b) M/s. Vijay Jewellers Vs. Deputy Commissioner of Income Tax 19(3), Mumbai [ITA No.4203 & 4304/Mum/2024, Assessment Years 2012-13 & 2011 dated 03/10/2024] whereby, in identical facts and circumstances, the Tribunal had deleted penalty levied u Section 271(1)(c) of the Act on the ground that addition was made on estimate basis. In view of the above, we decline to interfere with the order passed by the CIT(A) deleting the penalty levied Section 271(1)(c) of the Act, and therefore, Ground No.1, 2 d by the Revenue are dismissed.” Respectfully following the finding of the Tribunal (supra), we uphold the finding of the Tribunal on the issue in dispute, the ground of appeal of the Revenue are accordingly dismissed. both the appeal of the Revenue are dismissed. Order pronounced under Rule 34(4) of the ITAT Rules, 1963 by way of placing result on notice board on Sd/- Sd/ (KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Man Industries (I) Ltd. 14 ITA Nos. 617, 618/MUM/2025 6. There is nothing on record to persuade us to take a view different from the above view taken by the CIT(A). The Learned Authorized Representative for the Appellant has also placed on record the decisions of Mumbai Bench of the Tribunal in the case 5(1)(1), Mumbai [ITA No.961 to 963/Mum/2023, Assessment Years 2010-11 to Vijay Jewellers Vs. 19(3), Mumbai [ITA No.4203 13 & 2011-12, dated 03/10/2024] whereby, in identical facts and circumstances, the Tribunal had deleted penalty levied under of the Act on the ground that addition was made on estimate basis. In view of the above, we decline to interfere with the order passed by the CIT(A) deleting the penalty levied of the Act, and therefore, Ground No.1, 2 Respectfully following the finding of the Tribunal (supra), we ribunal on the issue in dispute, the ground of appeal of the Revenue are accordingly dismissed. l of the Revenue are dismissed. Order pronounced under Rule 34(4) of the ITAT Rules, notice board on 28.05.2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// ITA Nos. 617, 618 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Man Industries (I) Ltd. 15 ITA Nos. 617, 618/MUM/2025 BY ORDER, (Assistant Registrar) ITAT, Mumbai "