Shravan Kumar Mohta, Faridabad V. ITO, Ward-2(3), Faridabad

ITA 5602/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2763 (ITAT-DELHI)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 26-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c)

Judgement Text

I.T.A. No. 5602/Del/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH “S.M.C.” NEW DELHI ] BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER, S.M.C. आ.अ.स ं ./I.T.A No. 5602/Del/2019 िनधाªरणवषª/Assessment Year: 2008-09 Shravan Kumar Mohta, 2776A, Housing Board Colony, Sector : 3, Ballabgarh, Faridabad. बनाम Vs. Income Tax Officer, Ward : 2 (3) Faridabad. PAN No. AIXPM8923F अपीलाथê/Appellant ÿÂयथê/Respondent िनधाªåरतीकìओरसे /Assessee by : N o n e; राजÖवकìओरसे /Revenue by : Shri Sumesh Swani, Sr. D. R.; स ु नवाईकìतारीख/ Date of hearing: 27/06/2022 उĤोषणाकìतारीख/Pronouncement on : 27/06/2022 आदेश /O R D E R PER C. N. PRASAD, J.M. : 1. This appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals), Faridabad [hereinafter referred to CIT (Appeals)] dated 29.04.2019 in sustaining the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 (the Act) for the assessment year 2008-09. I.T.A. No. 5602/Del/2019 2 2. In spite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought. From the record placed before me it is observed that the notice sent through Speed Post fixing the date of hearing on 13.10.2021 was served on the assessee and assessee did not present on that date. Notices were also issued thereafter fixing the date of hearing on several dates but the assessee could not present. The notice issued fixing the date of hearing on 18.04.2022 returned un-served by postal authorities with the remark “Left”. Therefore, this appeal is disposed of on hearing the ld. DR. 3. The ld. DR submits that while completing the assessment the Assessing Officer required the assessee to prove the genuineness of purchases made from M/s. Maa Durga Trading Company. However, the assessee could not prove the genuineness of the purchases made. The Assessing Officer treated the said purchases as un-proved. However, the Assessing Officer estimated the profit element from such purchases @ 30% and brought to tax an amount of Rs.45,70,500/-. The ld. DR submits that on appeal by the assessee the ld. CIT (Appeals) estimated the profit element from the purchases at 12.5% as against 30% made by the Assessing Officer. The ld. DR submits that the Assessing Officer levied penalty of Rs.6,47,297/- for concealment of particulars of income as the assessee could not prove the genuineness of the purchases made by the assessee. The ld. CIT (Appeals) sustained the penalty. 4. On hearing the ld. DR and perusing the orders of the authorities below it is noticed that while completing the assessment the Assessing Officer treated purchases made by the assessee from M/s. Maa Durga Trading Company as not genuine. I.T.A. No. 5602/Del/2019 3 However, he estimated the profit element from such purchases at 30% and disallowed an amount of Rs.45,70,500/-. The assessee preferred appeal before the ld. CIT (Appeals) and the ld. CIT (Appeals) restricted the disallowance to 12.5% of the said purchases. It is observed that both the Assessing Officer and also the ld. CIT (Appeals) estimated the profit element from purchases made by the assessee on ad-hoc basis. 5. It is settled position of law that penalty can not be levied when an ad-hoc estimation is made. In the case of Shri Deepak Gogri Vs. ITO, the Mumbai Bench of the Tribunal in ITA. 1396/Mum/2017 dated 23.11.2017 held that no penalty is leviable on estimate of profit element on alleged non-genuine purchases while completing the assessment. Similar view has been taken in the case of DCIT Vs. Manohar Manak Pvt. Ltd. in ITA. 5586/Mum/2015 dated 16.01.2017. 6. The Hon’ble Punjab & Haryana High Court in the case of Hari Gopal Singh Vs. CIT [258 ITR 85] held that when an income is assessed on estimate basis on turnover there is no concealment of income or furnishing of inaccurate particulars by the assessee. Similar view has been taken by the Hon’ble Delhi High Court in the case of CIT Vs. 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. 7. In the case on hand, the Assessing Officer and the ld. CIT (Appeals) has only estimated the profit element on the non- genuine purchases without there being any conclusive proof of I.T.A. No. 5602/Del/2019 4 concealment of income or furnishing inaccurate particulars of such income. Thus, respectfully following the above said decisions the Assessing Officer is directed to delete the penalty levied under Section 271(1)(c) of the Act for the assessment year under consideration. Grounds raised by the assessee are allowed. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open court on : 27/06/2022. Sd/- ( C. N. PRASAD ) JUDICIAL MEMBER Dated : 27/06/2022. *MEHTA* Copy forwarded to 1. Appellant; 2. Respondent; 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, New Delhi. Date of dictation 27.06.2022 Date on which the typed draft is placed before the dictating member 27.06.2022 Date on which the typed draft is placed before the other member 27.06.2022 Date on which the approved draft comes to the Sr. PS/ PS 27.06.2022 Date on which the fair order is placed before the dictating 27.06.2022 I.T.A. No. 5602/Del/2019 5 member for pronouncement Date on which the fair order comes back to the Sr. PS/ PS 27.06.2022 Date on which the final order is uploaded on the website of ITAT 27.06.2022 Date on which the file goes to the Bench Clerk 27.06.2022 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the order