THE INCOME-TAX OFFICER -41(2)(2), MUMBAI V. MR JAIPRAKASH DHIRAJLAL BARBHAYA, MUMBAI

ITA 475/MUM/2023

AI Insights

The case involves an appeal by the Income Tax Officer against the order of the Learned Commissioner of Income Tax (Appeals), which had deleted the penalty imposed on Jaiprakash Dhirajlal Barbhaya for alleged concealment of income and furnishing inaccurate particulars. The penalty was originally levied following a reassessment that treated certain purchases as non-genuine based on information from the Sales Tax Department. The Tribunal found that the notice for the penalty was vague and did not clearly specify the charge, leading to the dismissal of the revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123536 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 19-04-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 16-02-2023
• Other Referred Cases: Mr. Mohd. Farhan A. Shaikh v. ACIT [434 ITR 1], Dilip N. Shroff, Sudhir Kumar Singh, Harigopal Singh v. CIT [258 ITR 85], CIT v. Aero Traders Pvt. Ltd., [322 ITR 316]
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Opportunity of being heard; Principle of natural justice; Question of law; Difference of opinion; Accommodation entries; Onus to prove; Set aside
• Section: 148; 271(1)(c); 69C; 143(3); 143(1); 274; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F”, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND MS KAVITHA RAJAGOPAL, HON’BLE JUDICIAL MEMBER ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Income Tax Officer – 41(2)(2) Room No. 636, 6 th Floor Kautilya Bhavan Bandra Kurla Complex Bandra(E), Mumbai - 400051 v. Jaiprakash Dhirajlal Barbhaya 301, Mahavir Apartment Nahur Road, Sarvodaya Nagar Mumbai – 400080 PAN: AGPPB9599J (Appellant) (Respondent) Assessee Represented by : None Department Represented by : Vranda U. Matkari Date of Conclusion of Hearing : 20.04.2023 Date of Pronouncement : 12.07.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the revenue against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] dated 21.12.2022 for the A.Y.2010-11. ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 2 2. Brief facts of the case are, assessee is an individual and engaged in the business of trading in Aluminium extrusions and profiles. Assessee filed return of income on 14.10.2010 declaring total income as ₹. Nil and the return was processed u/s. 143(1) of the Income-tax Act, 1961 (in short “Act”). Subsequently, Assessing Officer had received information from the Investigation Wing that, the assessee had made purchases from the parties whose name appeared as 'hawala dealers' on the sales tax department website. Therefore, the case of the assessee was reopened for reassessment u/s. 148 of the Act and reassessment was completed u/s. 143(3) r.w.s 147 of the Act on 21.03.2014 determining the income at ₹.2,46,52,190/-. While completing the reassessment the Assessing Officer treated the purchases of ₹.2,46,46,744/- made from various dealers as non-genuine on the basis of the information received from Sales Tax Department, Government of Maharashtra that assessee has received accommodation entries from those parties’ without making any purchases. Thus, the Assessing Officer treated entire purchases made from the parties as non-genuine purchases and brought to tax. On appeal Ld.CIT(A) restricted the disallowance made by the Assessing Officer by estimation of profit element from non-genuine purchases at 20% of the alleged bogus purchases i.e., 20% of ₹.2,46,46,744/-. Subsequently, Assessing Officer initiated the penalty proceedings and levied penalty ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 3 u/s.271(1)(c) of the Act stating that the assessee has deliberately furnished inaccurate particulars of its income and concealed its income within the meaning of section 271(1)(c) r.w. Explanation 1 of the Act. 3. Aggrieved, assessee preferred an appeal before the Ld.CIT(A) and filed detailed submissions challenging the penalty order passed by the Assessing Officer u/s. 271(1)(c) of the Act. After considering the detailed submissions, Ld.CIT(A) deleted the penalty since non-striking of irrelevant limb in the notice issued u/s. 274 r.w.s. 271(1)(c) of the Act and also considering that disallowance was made by making estimation of Gross Profit on the alleged bogus purchases. Against this order of the Ld.CIT(A), revenue is in appeal before us. 4. Revenue has raised following grounds in its appeal: - "1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in law in deleting the penalty knowing the fact that the penalty u/s 271(1)(c) of the Act was imposed and levied on the addition of bogus purchase where information was received from external sources in nature of law enforcement agencies i.e. Sales Tax Department of Govt. Of Maharashtra." 2. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred and ignored the fact that Non-striking off specific charge is only manual mistake committed from the end of the AO and mere mistake in language used or mere non- striking of inaccurate portion cannot by itself invalidate the notice." 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred and ignored the fact that in the ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 4 quantum appeal of the assessee, the Ld. CIT(A) has confirmed the 20% of the addition of Bogus purchase on which this penalty u/s 271(1)(c) of the Act was imposed and levied and there were no estimation from the part of the AO to determine purchase as Bogus.” 5. In spite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought. Therefore, we proceed to dispose of this appeal with the assistance of Ld.DR. 6. Ld. DR brought to our notice relevant facts of the case and he submitted that Non-striking off specific charge is only manual mistake committed from the end of the Assessing Officer and mere mistake in language used or mere non- striking of inaccurate portion cannot by itself invalidate the notices and he relied on the order of the Assessing Officer. Ld. DR prayed that this bench may set-aside the order of the Ld.CIT(A). 7. Considered the submissions of Ld.DR and material placed on record, on a perusal of the notice issued u/s. 274 r.w.s. 271(1)(c) of the Act, we observe that the Assessing Officer has not specified any limb for which the notices were issued i.e., either for concealment of particulars of income or for furnishing inaccurate particulars of such income. Assessing Officer did not strike off irrelevant limb in the notices specifying the charge for which notices were issued. It can be seen from the notice issued u/s.271(1)(c) of the Act it appears that the charge was for both the limbs. ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 5 8. An identical issue came up before Hon'ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh v. ACIT [434 ITR 1] and the Hon'ble Jurisdictional High Court held as under: - “Question No.1: If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Section 271(1)(c), does a mere defect in the notice—not striking off the irrelevant matter—vitiate the penalty proceedings? 181. It does. The primary burden lies on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 182. More particularly, a penal provision, even with civil consequences, must be construed strictly. And ambiguity, if any, must be resolved in the affected assessee’s favour. 183. Therefore, we answer the first question to the effect that Goa Dourado Promotions and other cases have adopted an approach more in consonance with the statutory scheme. That means we must hold that Kaushalya does not lay down the correct proposition of law. Question No.2: Has Kaushalya failed to discuss the aspect of 'prejudice'? 184. Indeed, Kaushalya did discuss the aspect of prejudice. As we have already noted, Kaushalya noted that the assessment orders already contained the reasons why penalty should be initiated. So, ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 6 the assessee, stresses Kaushalya, “fully knew in detail the exact charge of the Revenue against him”. For Kaushalya, the statutory notice suffered from neither non-application of mind nor any prejudice. According to it, “the so-called ambiguous wording in the notice [has not] impaired or prejudiced the right of the assessee to a reasonable opportunity of being heard”. It went onto observe that for sustaining the plea of natural justice on the ground of absence of opportunity, “it has to be established that prejudice is caused to the concerned person by the procedure followed”. Kaushalya closes the discussion by observing that the notice issuing “is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done”. 185. No doubt, there can exist a case where vagueness and ambiguity in the notice can demonstrate non-application of mind by the authority and/or ultimate prejudice to the right of opportunity of hearing contemplated under section 274. So asserts Kaushalya. In fact, for one assessment year, it set aside the penalty proceedings on the grounds of non-application of mind and prejudice. 186. That said, regarding the other assessment year, it reasons that the assessment order, containing the reasons or justification, avoids prejudice to the assessee. That is where, we reckon, the reasoning suffers. Kaushalya’s insistence that the previous proceedings supply justification and cure the defect in penalty proceedings has not met our acceptance. Question No.3: What is the effect of the Supreme Court’s decision in Dilip N. Shroff on the issue of non-application of mind when the irrelevant portions of the printed notices are not struck off ? 187. In Dilip N. Shroff, for the Supreme Court, it is of "some significance that in the standard Pro-forma used by the assessing officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done". Then, Dilip N. Shroff, on facts, has felt that the assessing officer himself was not sure whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. 188. We may, in this context, respectfully observe that a contravention of a mandatory condition or requirement for a ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 7 communication to be valid communication is fatal, with no further proof. That said, even if the notice contains no caveat that the inapplicable portion be deleted, it is in the interest of fairness and justice that the notice must be precise. It should give no room for ambiguity. Therefore, Dilip N. Shroff disapproves of the routine, ritualistic practice of issuing omnibus show-cause notices. That practice certainly betrays nonapplication of mind. And, therefore, the infraction of a mandatory procedure leading to penal consequences assumes or implies prejudice. 189. In Sudhir Kumar Singh, the Supreme Court has encapsulated the principles of prejudice. One of the principles is that "where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, “except in the case of a mandatory provision of law which is conceived not only in individual interest but also in the public interest". 190. Here, section 271(1)(c) is one such provision. With calamitous, albeit commercial, consequences, the provision is mandatory and brooks no trifling with or dilution. For a further precedential prop, we may refer to Rajesh Kumar v. CIT[74], in which the Apex Court has quoted with approval its earlier judgment in State of Orissa v. Dr. Binapani Dei[ 75]. According to it, when by reason of action on the part of a statutory authority, civil or evil consequences ensue, principles of natural justice must be followed. In such an event, although no express provision is laid down on this behalf, compliance with principles of natural justice would be implicit. If a statue contravenes the principles of natural justice, it may also be held ultra vires Article 14 of the Constitution. 191. As a result, we hold that Dilip N. Shroff treats omnibus show cause notices as betraying non-application of mind and disapproves of the practice, to be particular, of issuing notices in printed form without deleting or striking off the inapplicable parts of that generic notice. Conclusion: We have, thus, answered the reference as required by us; so we direct the Registry to place these two Tax Appeals before the Division Bench concerned for further adjudication.” ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 8 9. As could be seen from the above the Hon'ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh v. ACIT [(2021) 434 ITR 1 (Bom)] while dealing with the issue of non-strike off of the irrelevant part in the notice issued u/s.271(1)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. Ratio of this full bench decision of the Hon'ble Bombay High Court (Goa) squarely applies to the facts of the assessee’s case as the notices u/s. 274 r.w.s. 271(1)(c) of the Act were issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. 10. Further, we observe from the finding of the Ld.CIT(A) that he has elaborately discussed this issue by following various judicial pronouncements and deleted the penalty imposed by the Assessing Officer. Accordingly, we find no infirmity in the order of the Ld.CIT(A) in deleting the penalty made by Assessing Officer for non-striking of irrelevant limb in the notice issued u/s. u/s. 274 r.w.s. 271(1)(c) of the Act. Accordingly, Ground Nos. 1 and 2 raised by the revenue are dismissed. ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 9 11. With regard to Ground No. 3 which is in respect of deletion of penalty on estimation basis, it is a settled position of law that penalty cannot be levied when an adhoc estimation is made. In this case an adhoc estimation was made by the Ld.CIT(A) by restricting the profit element in the alleged purchases @20%. On identical situations the Coordinate Bench in the case of Shri Deepak Gogri v. Income Tax Officer in ITA.No. 1396/MUM/2017 dated 23.11.2017 held that no penalty is leviable observing as under: - “6. We have heard the rival submissions, perused the orders of the authorities below. In so far as the penalty levied on estimation of profit element on purchases is concerned, we are of the view that Assessing Officer had made only adhoc estimation of profit on certain purchases treated as unexplained expenditure. Assessing Officer did not doubt the sales made by the assessee from out of such purchases. Assessing Officer based on the decision of the Hon'ble Gujarat High Court in the case of CIT v. Simit P. Seth [356 ITR 451] estimated the profit element in such purchases at 12.5% and by reducing the Gross Profit already declared by the assessee. In the circumstances, we hold that there is no concealment of income or furnishing of inaccurate particulars as the profit element was determined by way of adhoc estimation. Coming to the interest, the assessee furnished complete details in the return of income and made a claim and simply because the claim is denied and cannot lead to furnishing of inaccurate particulars or concealment of income. No allegation by Assessing Officer that the assessee failed to disclose the particulars relating to its claim in the return of income. Thus we hold that there is no concealment of income or furnishing of inaccurate particulars of income. Thus we direct the Assessing Officer to delete the penalty levied u/s. 271(1)(c) of the Act.” ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 10 12. Similarly, in the case of DCIT v. Manohar Manak, Alloys Pvt. Ltd in ITA No. 5586/MUM/2015 dated 16.01.2017 the Coordinate Bench held as under: - “9. We have heard the rival parties and carefully considered material placed before us including the order of the authorities below. We find from the assessment order that the AO has made an addition of Rs.45,76,587/- being 5% on total purchases on estimated basis in order to bring the bogus purchases to tax on the basis of information received from the third party i.e. State Sales Tax Department and DDIT(Inv) V(I), Mumbai which was not challenged by the assessee before the FAA and attained finality. Thereafter the AO levied penalty u/s 271(1)( c ) of the Act on the ground that the assessee did not challenge the assessment order and accepted additions so made thereby accepting the concealment of income. We find from the record that the additions as made by the AO was a pure estimate and nothing concrete as to bogus purchases were brought on records by the AO by making any further enquiries or investigation. In our view the penalty cannot be imposed where the additions are made on estimate basis. The Tribunal has considered an identical issue in the case of Deepak Popatlal Gala, in ITA No. 5920/M/13 and vide order dated 27.3.2015, it has held as under:- “10. The next issue relates to disallowance made out of purchases and assessed u/s 69C of the Act. We heard the parties and perused the record. The total purchase expenditure claimed by the assessee during the year under consideration was Rs.7,36,27,555/-. The AO noticed that the Sales Tax Department of Government of Maharashtra has listed out names of certain dealers, who were alleged to have been providing accommodation entries without doing actual business. The AO noticed that the assessee made purchases to the tune of Rs.38.69 lakhs from two parties named M/s Umiya Sales Agency Pvt Ltd and M/s Mercury Enterprises, whose names found place in the list provided by the Sales Tax Department. The AO placed full reliance on the enquiries conducted by Sales Tax Department in respect of the parties, referred above. Accordingly, the AO took the view that the purchases to the tune of Rs.38.69 lakhs have to be treated as unexplained expenditure. Accordingly, he assessed the same u/s 69C of the Act. 11. The ld. CIT(A) deleted the addition and hence the Revenue is in appeal before the Tribunal. 12. The ld. DR strongly placed reliance on the order of Assessing Officer. 13. On the other hand, the ld. AR submitted that the additions made in the case of some other assesses on identical reasons have been deleted by the Co-ordinate Benches of the Tribunal in the following cases : ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 11 a) Ramesh Kumar and Co V/s ACIT in ITA No.2959/Mum/2014 (AY-2010-11) dated 28.11.2014; b) DCIT V/s Shri Rajeev G Kalathil in ITA No.6727/Mum/2012 (AY-2009-10) dated 20.8.2014; and c) Shri Ganpatraj A Sanghavi V/s ACIT in ITA No. 2826/Mum/2013 (AY-2009-10) dated 5.11.2014 In all the above said cases, the Co-ordinate Benches of the Tribunal has held that the AO was not justified in making the addition on the basis of statements given by the third parties before the Sales Tax Department, without conducting any other investigation. In the instant case also, the assessing officer has made the impugned addition on the basis of statements given by the parties before the Sales tax department. We notice that the ld.CIT(A) has taken note of the fact that no sales could be effected without purchases. He has further placed reliance on the decision rendered by Hon’ble Gujarat High Court in the case of CIT Vs. M.K. Brothers (163 ITR 249). He has further relied upon the decision rendered by the Tribunal in the case of ITO Vs. Premanand (2008)(25 SOT 11)(Jodh), wherein it has been held that where the AO has made addition merely on the basis of observations made by the Sales tax dept and has not conducted any independent enquiries for making the addition especially in a case where the assessee has discharged its primary onus of showing books of account, payment by way of account payee cheque and producing vouchers for sale of goods, such an addition could not be sustained. The Ld CIT(A) has also appreciated the contentions of the assessee that he was not provided with an opportunity to cross examine the sellers, which is required to be given as per the decision of Hon’ble Kerala High Court in the case of Ponkunnam Traders (83 ITR 508 & 102 ITR 366). Accordingly, the Ld CIT(A) has deleted the impugned addition. On a careful perusal of the decision rendered by Ld CIT(A) would show that the first appellate authority has analysed the issue in all angles and applied the ratio laid down by the High Courts and Tribunals in deciding this issue. Hence, we do not find any reason to interfere with his order on this issue. “ We also find that in the following cases the Tribunal has taken similar view in some of the case that on the basis of third party evidence, addition made by the AO cannot be held as good law and deleted the addition which are as under: - a) Ramesh Kumar and Co V/s ACIT in ITA No.2959/Mum/2014 (AY-2010-11) dated 28.11.2014; b) DCIT V/s Shri Rajeev G Kalathil in ITA No.6727/Mum/2012 (AY-2009-10) dated 20.8.2014; and c) Shri Ganpatraj A Sanghavi V/s ACIT in ITA No. 2826/Mum/2013 (AY-2009-10) dated 5.11.2014 10. In all the above said cases, the Co-ordinate Benches of the Tribunal has held that the AO was not justified in making the addition on the basis of statements given by the third parties before the Sales Tax Department, without conducting any other investigation. In the instant case also, the assessing officer has made the impugned addition on the basis of statements given by the parties before the ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 12 Sales tax department. Considering the facts as discussed hereinabove, we are of the considered opinion that in view of the ratio in the various decisions as above penalty cannot be sustained. It is also a settled legal position of law that penalty cannot be levied wherein the assessment is made on estimation basis. Accordingly, we are inclined to uphold the order passed by the ld.CIT(A) by dismissing the appeal of the revenue.” 13. Further, the Hon'ble Punjab & Haryana High Court in the case of Harigopal Singh v. CIT [258 ITR 85] held as under: - “3. On further appeal, the Tribunal reduced the addition to Rs. 1,50,000. Hence, the income was finally assessed at Rs. 1,50,000 against the declared income of Rs. 52,000. The Assessing Officer initiated penalty proceedings against the assessee by invoking Section 271(1)(c) along with the Explanation 1(B) of the Act on the plea that he had concealed the particulars of his income. A show-cause notice was issued to him under Section 274 read with Section 271(l)'(c) of the Act. In reply thereto, the assessee pleaded that since no positive concealment had been detected by the Department and the addition was made in his income only on estimate basis, no penalty under Section 271(1)(c) of the Act could be imposed because the assessee's income on estimate basis keeping in view his household expenses as well as the statement of accretion to his assets during the year under consideration, was bona fide. The Assessing Officer did not accept the reply and found that since the assessee had not filed any fresh evidence in penalty proceedings to prove that there was no attempt on his part to conceal his income, he, by his order dated March 10, 1992, imposed a penalty of Rs. 50,000. Feeling aggrieved by this order, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), Patiala, who allowed the same holding that there was indeed no positive evidence whatever to show that the appellant's income during the year in question was, in fact, more than the income returned by him and that estimated additions in the returned income do not attract penalty under Section 271(1)(c)of the Act. The Revenue went up in appeal before the Income-tax Appellate Tribunal which was allowed by order dated May 30, 2001. It is against this order that the present appeal has been filed which raises the aforesaid question of law. 4. In order to attract Clause (c) of Section 271(1) of the Act, it is necessary that there must be concealment by the assessee of the particulars of his income or if he furnishes inaccurate particulars of such income. What is to be seen is whether the assessee in the present case had concealed his income as held by the Assessing Officer and the Tribunal. He had not maintained any accounts and he filed his return of income on estimate basis. The Assessing Officer did not agree with the estimate of the assessee and brought his income to tax by increasing it to Rs. 2,07,500. This, too, was on estimate basis. The Tribunal agreed that the income of the assessee had to be assessed on an estimate of the turnover but was of the view that the estimate as made by the Assessing Officer was highly excessive and it fixed the total income of the assessee at Rs. 1,50,000 for the year ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 13 under appeal. It is, thus, clear that there was a difference of opinion as regards the estimate of the income of the assessee. Since the Assessing Officer and the Tribunal adopted different estimates in assessing the income of the assessee, it cannot be said that the assessee had "concealed the particulars of his income" so as to attract Clause (c) of Section 271(1) of the Act. There is not even an iota of evidence on the record to show that the income of the assessee during the year under appeal was more than the income returned by him. Additions in his income were made, as already observed, on estimate basis and that by itself does not lead to the conclusion that the assessee either concealed the particulars of his income or furnished inaccurate particulars of such income. There has to be a positive act of concealment on his part and the onus to prove this is on the Department. We are also of the considered view that the Tribunal grossly erred in law in relying on Explanation 1(B) to Section 271(1)(c) of the Act to raise a presumption against the assessee. The assessee had justified his estimate of income on the basis of household expenditure and other investments made during the relevant period. It is not the case of the Revenue that he had, in fact, incurred expenditure in excess of what he had stated. In this view of the matter, it cannot be said that the explanation furnished by the assessee had not been substantiated or that he had failed to prove that such explanation was not bona fide. 5. In the result, the appeal is allowed and the question posed in the earlier part of the order is answered in the negative holding that the provisions of Section 271(1)(c) of the Act are not attracted to cases where the income of an assessee is assessed on estimate basis and additions are made therein on that basis.” 14. Similar view has been taken by the Hon'ble Delhi High Court in the case of CIT v. Aero Traders Pvt. Ltd., [322 ITR 316] wherein the Hon'ble High Court affirmed the order of the Tribunal in holding that estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars. 15. In the case on hand the Ld.CIT(A) has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the ITA NO. 475/MUM/2023 (A.Y: 2010-2011) Jaiprakash Dhirajlal Barbhaya Page No. 14 order passed by the Ld.CIT(A) in deleting the penalty u/s. 271(1)(c) of the Act levied by the Assessing Officer. Ground No.3 raised by the revenue is dismissed. 16. In the result, appeal filed by the revenue is dismissed. Order pronounced in the open court on 12 th July, 2023. Sd/- Sd/- (KAVITHA RAJAGOPAL) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 12.07.2023 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum