CSANGO, MUMBAI V. ITO 12(2)(2), MUMBAI

ITA 3904/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4084 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-03-2015
• Assessment Year: 1996-1997
• Appeal Filed On: 16-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DIFFERENT S PASSED
• Keywords: Gross profit estimation
• Section: 143(3); 147; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.3903/M/13, I.T.A.3904/M/13 & I.T.A.3905/M /13 ( %' ( / ASSESSMENT YEAR: 1994-95, 1996-97 & 1998-99) M/S. CSANGO GROUND FLOOR, NARANG MANOR, PLOT NO.96-B, 15 TH ROAD, BANDRA (WEST), MUMBAI-400050 ' / VS. INCOME TAX OFFICER 12(2)2 ROOM NO.123B, AAYAKAR BHAWAN, M.K.ROAD, MUMBAI-400020 ./ ./ PAN/GIR NO. : AACFC4614L ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 28.09.2015 !' /DATE OF PRONOUNCEMENT: 03.02.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE ABOVE MENTIONED APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE DIFFERENT ORDERS PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-10, MUMBAI [HEREINAFTER REFERR ED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 1994-95, 1996-97 & 1 998-99. THE ASSESSEE HAS CHALLENGED THE QUANTUM OF ASSESSMENT F OR THE YEAR OF ASSESSEE BY: SHRI K.GOPAL & JITENDRA SINGH DEPARTMENT BY: SHRI AJAY MODI ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 2 1998-99 WHEREAS IN OTHER APPEALS THE ASSESSEE HAS C HALLENGED THE PENALTY ORDER OF ASSESSING OFFICER CONFIRMED BY THE CIT(A) UNDER ORDER CHALLENGED. 2. AT THE VERY OUTSET THE LEARNED DEPARTMENTAL REPR ESENTATIVE HAS ARGUED THAT ALL THE APPEALS HAVE BEEN FILED BY 104 DAYS DELAYS THEREFORE THESE APPEALS ARE LIABLE TO BE DISMISSED ON THIS SCORE ALONE. ON THE OTHER HAND LEARNED REPRESENTATIVE OF THE ASS ESSEE ASSAILED THE SAID CONTENTIONS. TO CONDONE THE DELAY, ASSESSEE F ILED AN AFFIDAVIT STATING THEREIN THAT AFTER THE ADJUDICATION BY THE CIT(A), THE TAX CONSULTANT PREPARED THE APPEAL AND FORWARDED TO TH E ACCOUNTANT BUT THE ACCOUNTANT LEFT THE OFFICE WITHOUT INFORMING AN YBODY. THE PAPERS WERE LYING WITH THE ACCOUNTANT TILL HE CAME BACK FR OM LEAVE. ACCOUNTANT ALSO FORGETS TO FILE THE APPEAL, HOWEVER HANDED OVER THE PAPER ABOUT THE ASKING OF MANAGEMENT. NO DOUBT THE RE IS NO PROPER EXPLANATION FOR FILING THE APPEAL DELAYED BUT BY GO ING THROUGH THE CASE ON MERIT WE ARE OF THE VIEW THAT THE MATTER OF CONTROVERSY IS REQUIRED TO BE ADJUDICATED ON MERITS IN THE INTERES T OF JUSTICE. THEREFORE, IN THE SAID CIRCUMSTANCES THE DELAY IS H EREBY CONDONED. ITA NO. 3905/M/13:- 3. IN ITA NO. 3905 THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS LD. ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 3 CIT(A)] ERRED IN PASSING THE ORDER DATED 17 TH OCTOBER, 2012 UPHOLDING THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] DATED 20 TH NOVEMBER, 2009 WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. IN MAKING ADDITION OF RS.5,08,890/- UNDER SECTION 50 OF THE ACT TREATING THE SAME AS SHORT TERM CAPITAL GAINS WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT, THEREFORE PRAYS THAT THE ADDITION MADE BY THE LD. A.O. IS NOT AT ALL JUSTIFI ED AND THE SAME MAY BE DELETED. 3. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE NET WORTH OF THE FIRM WAS RS.1,55,45,380/- AND THE PURCHASE CONSIDERATION RECEIVED WAS THE SAME. HENCE, THERE IS NO DIFFERENCE IN THE PURCHAS E CONSIDERATION RECEIVED AND THE NET WORTH OF THE FIRM. THEREFORE, THE ADDITION OF RS.5,08,890/- UNDER SECTION 50 OF THE ACT IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. 4. THE ASSESSEE DID NOT FILE THE RETURN OF INCOME F OR A.Y. 1998-99. IT WAS ASCERTAINED FROM THE ASSESSMENT REC ORD THAT THE ASSESSEE FIRM WAS CONVERTED INTO PRIVATE LIMITED CO MPANY. THEREAFTER THE NOTICE U/S.148 OF THE INCOME TAX ACT , 1961( IN SHORT THE ACT) WAS ISSUED ON 29.10.2001. IN RESPONSE T O THIS NOTICE ASSESSEE DID NOT FILE ANY RETURN OF INCOME. THEREF ORE THE ASSESSMENT WAS COMPLETED U/S 144 R.W.S 147 OF THE ACT ON 24.03 .2003 DETERMINING THE TOTAL INCOME OF THE ASSESSEE TO THE TUNE OF ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 4 RS.5,08,890/-. IT WAS ALSO OBSERVED THAT THE ASSES SEE FIRM WAS CORPORATISED WITH THE NAME OF M/S. CSANGO INDUSTRIE S PVT. LTD FOR AN ASSIGNED CONSIDERATION OF RS.1,55,00,000/-. THE AS SESSING OFFICER FOUND THAT THE NET WORTH OF THE FIRM WAS TO THE TUN E OF RS.1,49,91,115/- AS PER THE CAPITAL ACCOUNTS OF THE PARTNERS. THUS THE DIFFERENCE AMOUNT TO THE TUNE OF RS.5,08,885/- WAS ASSESSED AS THE INCOME OF THE ASSESSEE FIRM UNDER THE HEAD OF SHOR T TERM CAPITAL GAIN AS PER PROVISIONS OF SECTION 50 OF THE ACT. T HEREAFTER, THE MATTER WENT UPTO THE INCOME TAX APPELLATE TRIBUNAL AND UND ER THE DIRECTION OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL THE AS SESSEE WAS GIVEN AN OPPORTUNITY TO ATTEND ON 24.08.2009 AND SHRI ANI L MANDAVAT C.A. ATTENDED THE PROCEEDINGS BEFORE THE ASSESSING OFFIC ER BUT DID NOT FILE THE DETAILS OF WORKING AS TO HOW THE CONSIDERATION FOR THE ASSIGNMENT OF BUSINESS TO THE TUNE OF RS.1,55,00,000/- WAS ARR IVED AT. HE WAS AGAIN CALLED BUT DID NOT APPEAR HENCE THE ASSESSING OFFICER ASSESSED THE INCOME TO THE TUNE OF RS.5,08,890/- AND CIT(A) CONFIRMED THE SAID ORDER. THEREFORE, THE ASSESSEE IS BEFORE US. 5. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR DS. THE APPELLANT HAS TAKEN THE FOUR ISSUES BUT THE MAIN ISSUE OF THE APPELLANT IS IN CONNECTION WITH THE ADDITION OF RS.5,08,890/- ON AC COUNT OF THE DIFFERENCE BETWEEN THE NET WORTH OF THE FIRM I.E. R S.1,49,91,115/- WHICH CONVERTED UPTO NET WORTH OF THE COMPANY TO TH E TUNE OF ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 5 RS.1,55,45,380/-. THE ASSESSEE WAS A FIRM WHICH WA S CONVERTED IN TO COMPANY FOR A CONSIDERATION OF RS.1,55,00,000/-. THE NET WORTH OF THE FIRM WAS WORKED OUT TO THE TUNE OF RS.1,49,91,1 15/- AS PER THE DETAILS PRODUCED BEFORE THE DEPARTMENT. THUS, THER E WAS A DIFFERENCE OF RS.5,08,885/- WHICH WAS ASSESSED AS SHORT TERM C APITAL GAIN BY THE ASSESSING OFFICER. THE EXPLANATION OF THE ASSE SSEE WAS THAT THE LOAN AMOUNT OF RS.5,55,715/- WAS NOT CONSIDERED WHI LE DETERMINING THE NET WORTH OF THE FIRM. HOWEVER, AGREEMENT WITH REGARD TO CONVERSION OF THE FIRM TO THE COMPANY WAS PRODUCED AND ACCORDING TO THE CLAUSE 6 OF THE AGREEMENT ALL LIABILITIES OF TH E FIRM WERE TO BE TAKEN OVER BY THE COMPANY. THE ASSESSEE HAS EXPLAINED TH AT THE LOAN AMOUNT WAS IN CONNECTION OF THE CAR WHICH WAS NOT T HE ASSET OF THE FIRM. APPARENTLY, THE LOAN HAS BEEN SHOWN IN THE F IRMS BOOKS OF ACCOUNT AND THE INTEREST ON SAID LOAN WAS DEBITED I N THE FIRMS ACCOUNTS AND CLAIMED AS DEDUCTION. THEREFORE, IN T HE SAID CIRCUMSTANCES HOW IT CAN BE SEGREGATED FROM THE FIR M IS NOT UNDERSTANDABLE. NOTHING CAME IN TO THE NOTICE THA T THE LOAN LIABILITY DOES NOT BELONG TO THE FIRM AND THE LIABILITY IS NO T REQUIRED TO BE TAKEN UP BY THE NEWLY CONVERTED COMPANY. THEREFORE, IN THE SAID CIRCUMSTANCES THE MATTER WAS CONSIDERED BY THE LEA RNED CIT(A) RIGHTLY THEREFORE, IN THE SAID CIRCUMSTANCES WE FOU ND NO GROUND TO INTERFERE WITH THE ORDER PASSED BY THE CIT(A) IN QU ESTION HENCE DISMISS THE APPEAL OF THE ASSESSEE. ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 6 ITA NO.3903/M/13 & ITA 3904/M/13:- 6. IN ITA NO. 3903 THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS LD. CIT(A)] ERRED IN PASSING THE ORDER DATED 22.10.2012 UPHOLDING THE ORDER DATED 21.04.2010 PASSED BY LD. A.O. LEVYING CONCEALMENT PENALTY OF RS.4,36,365/- UNDER SECTION 271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT JUSTIFIED AND SAME MAY BE DELETED. 2. THE LD.CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT NEITHER CONCEALED ANY PARTICULAR OF INCOME NOR HE HAS FURNISHED ANY INCORRECT PARTICULARS OF INCOME. THEREFORE, THE LEVY OF PENALTY ERRED IN CONFIRMING THE ACTION OF THE LD. A.O. IN LEVYING CONCEALMENT PENALTY OF RS.4,36,365/- UNDER SECTION 271(1)(C) OF THE ACT IS WITHOUT ANY BASIS AND THE SAME MAY BE DELETED. 3. THE LD. CIT(A) ERRED IN LEVYING CONCEALMENT PENALTY OF RS.4,36,365/- UNDER SECTION 271(1)(C) OF THE ACT WITHOUT APPRECIATING FACT THAT THE ADDITION WAS MADE BY ESTIMATING THE G.P. RATE DURING THE YEAR. HENCE THE LEVY OF CONCEALMENT PENALTY IS NOT JUSTIFIED AND SAME MAY BE DELETED. 4. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE APPELLANT HAS SHOWN TRUE AND CORRECT GROSS PROFIT IN ITS BOOKS OF ACCOUNT AND TH E LD. A.O. HAS NOT REJECTED THE BOOKS OF ACCOUNT OF THE APPELLANT WHILE MAKING THE ADDITIONS ON ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 7 ACCOUNT OF THE GROSS PROFIT RATE. THEREFORE, CONFIRMING THE ADDITION MADE BY THE LD. A.O. ESTIMATING THE GROSS PROFIT RATE IS NOT JUSTIFIED A ND THEREFORE THE SAME MAY BE DELETED. 7. IN ITA NO. 3904 THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS LD. CIT(A)] ERRED IN PASSING THE ORDER DATED 22.10.2012 UPHOLDING THE ORDER DATED 21.04.2010 PASSED BY LD. A.O. LEVYING CONCEALMENT PENALTY OF RS.8,74,706/- UNDER SECTION 271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT JUSTIFIED AND SAME MAY BE DELETED. 2. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT NEITHER CONCEALED ANY PARTICULAR S OF INCOME NOR HE HAS FURNISHED ANY INCORRECT PARTICULARS OF INCOME. THEREFORE, THE LEVY OF PENALTY ERRED IN CONFIRMING THE ACTION OF THE LD. A.O. IN LEVYING CONCEALMENT PENALTY OF RS.8,74,706/- UNDER SECTION 271(1)(C) OF THE ACT IS WITHOUT ANY BASIS AND THE SAME MAY BE DELETED. 3. THE LD. CIT(A) ERRED IN LEVYING CONCEALMENT PENALTY OF RS.8,74,706/- UNDER SECTION 271(1)(C) OF THE ACT WITHOUT APPRECIATING FACT THAT THE ADDITION WAS MADE BY ESTIMATING THE G.P. RATE DURING THE YEAR. HENCE THE LEVY OF CONCEALMENT PENALTY IS NOT JUSTIFIED AND SAME MAY BE DELETED. 4. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE APPELLANT HAS SHOWN TRUE AND CORRECT GROSS PROFIT IN ITS BOOKS OF ACCOUNT AND TH E LD. A.O. HAS NOT REJECTED THE BOOK OF ACCOUNT OF TH E APPELLANT WHILE MAKING THE ADDITIONS ON ACCOUNT OF ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 8 THE GROSS PROFIT RATE. THEREFORE, CONFIRMING THE ADDITION MADE BY THE LD. A.O. ESTIMATING THE GROSS PROFIT RATE IS NOT JUSTIFIED AND THEREFORE THE SAME MAY BE DELETED. 8. NOW COMING TO THE PENALTY APPEALS FOR THE A.Y.19 94-95 AND 1996-97 WHEREIN THE PENALTY LEVIED BY THE ASSESSING OFFICER TO THE TUNE OF RS.4,36,365/- & RS.8,74,706/- HAVE BEEN CON FIRMED BY THE CIT(A) ARE CONCERNED. BOTH THE ORDERS WERE PASSED BY THE ASSESSING OFFICER SPEAKS THAT THE QUANTUM ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR HAS BEEN CONFIRMED BY THE INCOME TA X APPELLATE TRIBUNAL, MUMBAI BENCH IN ITA NO.1862&1863/M/2001 D ATED 12.08.2009. THEREFORE, THE PENALTY PROCEEDING WERE INITIATED AGAINST THE ASSESSEE AND THE ASSESSING OFFICER LEVIED THE P ENALTY MENTIONED ABOVE IN ACCORDANCE WITH LAW. WE HAVE PERUSED THE ORDER DATED 12.08.2009 ON RECORD WHICH SPEAKS ABOUT THE CONFIRM ATION OF ORDER PASSED BY THE CIT(A) WHICH SPEAKS ABOUT THE DISMISS AL OF THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE FINDING OF THE CIT(A) HAS ALREADY BEEN CONFIRMED BY THE INCOME TAX APPELLATE TRIBUNAL IN ITA NOS. 2763/M/01 FOR A.Y.1994-95 AND ITA NO.2765/M/01 FOR A.Y.1996-97 WHILE DISPOSING THE APPEAL OF THE REVEN UE. THE REASONS FOR DISMISSED OF APPEAL DATED 12.08.2009 IS BASED U PON THE FINDINGS OF THE REVENUE APPEALS IN ITA NOS. 2763/M/01 FOR A.Y.1 994-95 AND ITA NO.2765/M/01 FOR A.Y.1996-97 DECIDED ON 31.10.2007. THE RELEVANT ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 9 PARAGRAPH NUMBER 23 OF THE SAID JUDGEMENT IS HEREBY REPRODUCED AS UNDER FOR READY REFERENCE:- 23. FROM THE ABOVE, WE FIND THAT LEARNED CIT(A) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE TRIBUNAL JUDGEMENT IN THE CASE OF M/S. METRO SH OES LTD. AS PER ITA NOS.1668,1751,2015 AND 2016/MUM/99 DATED 17.1.2000. LEARNED CIT(A) HAS REPRODUCED RELEVANT PARAS OF THIS TRIBUNAL JUDGEMENT IN HIS ORDER, WHICH HAS BEEN REPRODUCED BY US ALSO AS ABOVE. IT IS ALSO NOTED B Y LEARNED CIT(A) THAT ULTIMATELY, HONBLE MINISTER OF COOPERA TION, MAHARASHTRA STATE PASSED AN ORDER DATED 1.10.99 ALL OWING THE APPEAL OF SHRAMIK LEATHER EQUIPMENT AND HAND GL OVES INDUSTRIAL CO-OPERATIVE SOCIETY LTD., AGAINST THE O RDER OF DE-REGISTRATION AND THUS, AT LEAST THIS SOCIETY IS FOUND TO HAVE BEEN ABSOLVED OF THE CHARGE OF ISSUING BOGUS B ILLS. IT IS ALSO OBSERVED BY LEARNED CIT(A) THAT THE ASSESSE E SOMETIMES MADE PURCHASES DIRECTLY FROM THE WORKERS WHILE IT ASKED THEM TO OBTAIN THE BILLS FROM THE SOCIETY AND CHEQUE WAS ALSO ISSUED IN THE NAME OF THE SOCIETY; AND IN THIS REGARD, IT IS HELD BY LEARNED CIT(A) THAT IT D OES NOT ESTABLISH THAT BOGUS OR INFLATED BILLS WERE OBTAINE D THAT THE PURCHASE IS MADE DIRECTLY FROM THE WORKERS AND IF S UCH WORKERS PROCURED BILLS FROM THEIR RESPECTIVE SOCIET Y AND THE ASSESSEE HAS MADE PAYMENT DIRECTLY TO THE SOCIETY B Y CHEQUE, IT CANNOT BE SAID THAT IT OBTAINED BOGUS OR FICTITIOUS BILL. WE ALSO FIND THAT LEARNED CIT(A) HAS CONSIDE RED GP RATE SHOWN BY THE ASSESSEE IN VARIOUS YEARS AND IT IS OBSERVED BY HIM IN PARA NO.3.3 OF HIS ORDER THAT TH E ASSESSEE ITSELF HAS SHOWN GP RATE OF 29.5% TO 32.40 % DURING A.Y.1988-89 TO 1990-91. IT IS ALSO OBSERVED BY LEARNED CIT(A) THAT GP RATE OF 22.66% HAS BEEN ACCE PTED BY THE DEPARTMENT IN THE ORIGINAL ASSESSMENT ORDER AFTER NECESSARY SCRUTINY FOR A.Y. 1992-93. ON THIS BASIS LEARNED CIT(A) HAS CAME TO THE CONCLUSION THAT NO ADDITION IS CALLED FOR IN THE GP RATE FOR THESE YEARS WHERE GP RATE DECLARED BY THE ASSESSEE IS 22.66% OR MORE, AND ON THIS BASIS, IT WAS HELD BY HIM THAT NO ADDITION ON ACCOU NT OF LOW GP IS CALLED FOR IN A.Y.1989-90 TO 1992-93 AND IN A.Y.1995-96 AND FOR A.Y.1997-98, RATE OF GP DECLARE D BY ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 10 THE ASSESSEE WAS 20.98%, BUT THE SAME WAS ALSO ACCE PTED BY LEARNED CIT(A) AS REASONABLE IN VIEW OF THE FACT THAT IN THIS YEAR, THE BUSINESS HAS INCREASED BY 8 TIMES. FOR A.Y.S 1993-94, 1994-95 AND 1996-97, LEARNED CIT(A) HAS NO T ACCEPTED GP RATE DECLARED BY THE ASSESSEE; AND HENC E HAS DIRECTED THE ASSESSING OFFICER TO ADOPT GP RATE OF 20% FIR A.Y.1996-97. AFTER CONSIDERING FACTS OF THE PRESEN T CASE IN ITS ENTIRETY, PARTICULARLY THE FACT THAT THE SAME O F THE ASSESSEE IS NOT APPEARING IN ANNEXURE-III OF THE LE TTER DATED 18.10.1996 ISSUED BY DY. COMMISSIONER OF POLICE ADDRESSED TO COMMISSION, CITY-13, MUMBAI AND ALSO I N VIEW OF THE FACT THAT IT IS ADMITTED POSITION THAT THE ENTIRE SALES OF THESE TAINTED SOCIETIES WERE NOT FOUND BOG US AND NO DIRECT EVIDENCE WAS FOUND THAT BOGUS OR INFLATED BI LLS WERE PROCURED BY THE ASSESSEE IN THE PRESENT CASE WE ARE OF THE CONSIDERED OPINION THAT NO INFERENCE IS CALLED FOR IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE ALSO BECA USE HE HAS DECIDED THE ISSUE AFTER EXAMINING FULL FACTS IN PROPER PERSPECTIVE. WE, THEREFORE, UPHOLD THE ORDER OF LE ARNED CIT(A) ON THIS ISSUE ALSO IN ALL THESE YEARS. 9. THE ABOVE SAID FINDINGS SPEAKS THAT THE ASSESSIN G OFFICER ASSESSED THE INCOME OF THE ASSESSEE ON GP RATE ON T HE BASIS OF ESTIMATION AND THE CASE OF THE ASSESSEE WAS REOPENE D ON THE BASIS OF LETTER DATED 18.10.1996 ISSUED BY DY. COMMISSIONER OF POLICE, MUMBAI AND ACCORDING TO THE ANNEXURE III THE NAME O F THE ASSESSEE WAS NOT APPEARED. OBSERVATIONS HAS ALSO BEEN RECOR DED THAT THE ENTIRE SALE OF THE TAINTED SOCIETY WERE NOT FOUND BOGUS AN D NO DIRECT EVIDENCE WAS FOUND THAT THE ASSESSEE COLLECTED THE BOGUS OR INFLATED BILLS. IN THE PRESENT CASE REOPENING OF THE ASSESS MENT OF RELEVANT YEARS I.E.1994-95 AND 1996-97 ARE NOT UNDER CHALLEN GE HOWEVER THE PENALTY ORDERS ARE UNDER CHALLENGE. THEREFORE, LAW RELIED BY THE ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 11 REPRESENTATIVE OF THE ASSESSEE CITED AS [2008] 6 DT R (MUMBAI) (TRIB) 297 HAS TO NO USE. MOREOVER, WITH REGARD TO THE SI MILAR FACTS AND CIRCUMSTANCE OF THE PRESENT CASE THE CO-ORDINATE BE NCH OF MUMBAI IN ITA NO. 93/M/2011 DATED 10.04.2015 TITLED AS RISHAB H IMPEX IS OF THE VIEW THAT THE ASSESSMENT PASSED ON PURELY ESTIM ATION BASIS DOES NOT ATTRACT THE PENALTY PROVISION U/S. 271(1)(C) OF THE ACT. IN THIS REGARD WE ALSO FOUND SUPPORT OF LAW SETTLED IN [201 4] 360 ITR 385 TITLED AS WHITELENE CHEMICALS (HONBLE GUJARAT HIGH COURT) WHEREIN IT IS HELD THAT THE REJECTION OF BOOKS OF ACCOUNT O N THE BASIS OF FAIR GROSS PROFIT RATE DOES NOT AMOUNT THE CONCEALMENT O F INCOME AND CONCEALMENT OF PARTICULARS TO EVADE THE TAX AND NO PENALTY IS LEVIABLE ON THE BASIS OF SUCH GROUNDS. IN AN ANOTHER CASE C ITED AS [2014] 44 TAXMANN.COM 9 (RAJASTHAN) CITED AS COMMISSIONER OF INCOME TAX VS. KRISHI TYRE RETREADING & RUBBER INDUSTRIES, THE HON BLE HIGH COURT OF RAJASTHAN IS OF THE VIEW THAT WHERE ADDITION HAD BEEN SUSTAINED PURELY ON ESTIMATE BASIS AND NO POSITIVE FACT AND F INDING WAS FOUND SO AS TO EVEN MAKE SUCH ADDITION, NO PENALTY IS LEVIAB LE UNDER SECTION 271(1)(C). IN VIEW OF THE OBSERVATIONS MADE ABOVE WE ARE OF THE VIEW THAT THE ORDER DATED 22.10.2012 FOR A.Y.1994-95 & 1996-97 IN QUESTION ARE WRONG AGAINST LAW AND FACTS AND ARE NO T LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW THEREFORE THESE ORDE RS ARE HEREBY ORDERED TO BE SET ASIDE. THEREFORE THE SAID APPEAL S ARE HEREBY ALLOWED. ITA NO. 3903/M/13, ITA 3904/M/13 & ITA 3905/M/13 A.Y. 1994-95, 1996-97 & 1998-99 12 10. IN RESULT THE PENALTY APPEALS FOR 1994-95 & 199 6-97 ARE HEREBY ORDERED TO BE ALLOWED AND APPEAL FOR A.Y.1998-99 IS HEREBY ORDERED DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD FEBRUARY , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 3 RD FEBRUARY, 2016 MP MP MP MP * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! / (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI