ACIT 13 (3)(1) MUMBAI, MUMBAI V. WELD TECH ENGINEERS INDIA PRIVATE LIMITED `, MUMBAI

ITA 6027/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2099 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 23-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Keywords: Bogus purchase; Unexplained expenditure; Difference of opinion; Accommodation entries; Tax effect
• Section: 271(1)(c); 69C; 143(3); 143(1); 274; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT ) G BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AN D SHRI MANOJ KUMAR AGGARWAL, HON'BLE ACCOUNTANT MEMBE R ITA.NOS.6027 & 6028/MUM/2019 (A.Y: 2009-10& A.Y. 2010-11) ACIT - 13(3)(1) ROOM NO. 229/219, 2 ND FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400020 V. M/S. WELD - TECH ENGINEERS (I) PVT. LTD., 1/7-B, SONAL APARTMENTS JAI PRAKASH NAGAR ROAD NO.2, GOVANDI (E) MUMBAI - 400050 PAN: AAACW3839Q (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI T.S. KHALSA DATE OF HEARING : 22.06.2021 DATE OF PRONOUNCEMENT : 22.06.2021 O R D E R PER MANOJ KUMAR AGGARWAL (AM) 1. THESEAPPEALS ARE FILED BY THE REVENUE AGAINST DIFFE RENT ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-21 , MUMBAI [HEREINAFTER FOR SHORT 'LD. CIT(A)] DATED 25.06.201 9 FOR THE A.YS.2009- 10 AND A.Y. 2010-11 IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT MADE BY THE ASSESSING OFFICER. 2 ITA.NOS. 6027 & 6028/MUM/2019 (A.Y: 2009-10 & A.Y. 2010-11) M/S. WELD-TECH ENGINEERS (I) PVT. LTD., 2. BRIEFLY STATED THE FACTS ARE THAT, ASSESSEE ENGAGED IN THE BUSINESS OF FABRICATION/DEALING IN ENGINEERING GOODS FILED R ETURN OF INCOME ON 25.09.2009 AND 12.10.2010 DECLARING INCOME OF .1,3 1,80,630/- AND .88,49,003/- FOR THE A.Y: 2009-10 AND A.Y. 2010-11 RESPECTIVELY. THE RETURNS WERE PROCESSED U/S. 143(1) OF THE ACT.SUBSE QUENTLY, ASSESSMENTS WEREREOPENED U/S. 147 OF THE ACT AND CO MPLETED THE REASSESSMENT ON 25.02.2015U/S. 143(3) R.W.S 147 OF THE ACT DETERMINING THE INCOME AT .1,55,59,025/- AND .1,03,13,010 FOR THE A.Y: 2009-10 AND A.Y.2010-11 RESPECTIVELY. WHILE COMPLETING THE REASSESSMENT THE ASSESSING OFFICER TREATED PURCHASES OF .23,78,395/ - AND .14,64,008/- FOR THE A.Y:2009-10 AND A.Y. 2010-11 RESPECTIVELY,M ADE FROM VARIOUS DEALERSAS NON-GENUINE ON THE BASIS OF THE INFORMATI ON RECEIVED FROM DGIT (INV.,), MUMBAI THAT ASSESSEE HAS RECEIVED ACC OMMODATION ENTRIES FROM VARIOUS DEALERS WITHOUT MAKING ANY PURCHASES B UT MADE PURCHASES ONLY IN GRAY MARKET. THE ASSESSING OFFICER TREATED SUCH PURCHASES AS NON-GENUINE AS THE ASSESSEE COULD NOT PRODUCE ANY D ELIVERY CHALLAN TO PROVE THAT THE DELIVERY OF GOODS HAS BEEN ACTUALLY RECEIVED BY THE ASSESSEE FROM THE ALLEGED SUPPLIERS. HOWEVER, THE ASSESSING OFFICER ESTIMATED THE PROFIT ELEMENT FROM NON-GENUINE PURCH ASES AT 10% AND BROUGHT TO TAX AN AMOUNT OF .23,78,395/-OUT OF PUR CHASES OF 3 ITA.NOS. 6027 & 6028/MUM/2019 (A.Y: 2009-10 & A.Y. 2010-11) M/S. WELD-TECH ENGINEERS (I) PVT. LTD., .2,37,83,952/- FOR THE A.Y.2009-10 AND AMOUNT OF .14,64,008/- OUT OF PURCHASES OF .1,46,40,086/- FOR A.Y. 2010-11. ON FURTHER APPEAL THE LD.CIT(A) RESTRICTED THE GROSS PROFIT ELEMENT TO 5% OF THE ALLEGED NON-GENUINE PURCHASES. SUBSEQUENTLY, ASSESSING OFF ICER INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY OF .4,00,00 0/-AND .2,50,000/- U/S.271(1)(C) OF THE ACT FOR THE A.Y.2009-10 AND A. Y. 2010-11 RESPECTIVELY, STATING THAT THE ASSESSEE HAS FURNISH ED INACCURATE PARTICULARS OF ITS INCOME AND CONCEALED ITS INCOME WITHIN THE MEANING OF SECTION 271(1)(C) R.W. EXPLANATION 1 OF THE ACT. O N APPEAL THE LD.CIT(A) DELETED THE PENALTY SINCE THE DISALLOWANCE WAS MADE BY MAKING ESTIMATION OF GROSS PROFIT ON THE PURCHASES. AGAIN ST THIS ORDER OF THE LD.CIT(A), REVENUE IS IN APPEAL BEFORE US. 3. INSPITE OF ISSUE OF NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT BY THE ASSESSEE. THE REFORE, WE PROCEED TO DISPOSE OFF THESE APPEALS ON HEARING THE LD. DR ON MERITS. 4. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSES SING OFFICER. 5. WE HAVE HEARD LD. DR, PERUSED THE ORDERS OF THE AUT HORITIES BELOW. IT IS A SETTLED POSITION OF LAW THAT PENALT Y CANNOT BE LEVIED WHEN 4 ITA.NOS. 6027 & 6028/MUM/2019 (A.Y: 2009-10 & A.Y. 2010-11) M/S. WELD-TECH ENGINEERS (I) PVT. LTD., AN ADHOC ESTIMATION IS MADE. INBOTH THESE CASES AN ADHOC ESTIMATION WAS MADE BY THE ASSESSING OFFICER RESTRICTING THE P ROFIT ELEMENT IN THE PURCHASES @10% AND THE LD.CIT(A) SCALED DOWN THE PE RCENTAGE OF PROFIT ELEMENT IN SUCH PURCHASES TO 5%. ON IDENTIC AL 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 TH E ORDERS OF THE AUTHORITIES BELOW. IN SO FAR AS THE PENALTY LE VIED ON ESTIMATION OF PROFIT ELEMENT ON PURCHASES IS CONCERNED, WE ARE OF THE VIEW THAT ASSESSING OFFICER HAD MADE ONLY ADHOC ESTIMATI ON OF PROFIT ON CERTAIN PURCHASES TREATED AS UNEXPLAINED EXPENDITUR E. ASSESSING OFFICER DID NOT DOUBT THE SALES MADE BY THE ASSESSE E FROM OUT OF SUCH PURCHASES. ASSESSING OFFICER BASED ON THE DEC ISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SI MIT P. SETH [356 ITR 451] ESTIMATED THE PROFIT ELEMENT IN SUCH PURCH ASES AT 12.5% AND BY REDUCING THE GROSS PROFIT ALREADY DECLARED B Y THE ASSESSEE. IN THE CIRCUMSTANCES, WE HOLD THAT THERE IS NO CONC EALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS AS T HE PROFIT ELEMENT WAS DETERMINED BY WAY OF ADHOC ESTIMATION. COMING TO THE INTEREST, THE ASSESSEE FURNISHED COMPLETE DETAILS I N THE RETURN OF INCOME AND MADE A CLAIM AND SIMPLY BECAUSE THE CLAI M IS DENIED AND CANNOT LEAD TO FURNISHING OF INACCURATE PARTICU LARS OR CONCEALMENT OF INCOME. NO ALLEGATION BY ASSESSING OFFICER THAT THE ASSESSEE FAILED TO DISCLOSE THE PARTICULARS RELATIN G TO ITS CLAIM IN THE RETURN OF INCOME. THUS WE HOLD THAT THERE IS NO CO NCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THUS WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 6. SIMILARLY, IN THE CASE OF DCIT V. MANOHAR MANAK, ALLOYS PVT. LTD IN ITA NO. 5586/MUM/2015 DATED 16.01.2017 THE COORDINA TE BENCH HELD AS UNDER: - 5 ITA.NOS. 6027 & 6028/MUM/2019 (A.Y: 2009-10 & A.Y. 2010-11) M/S. WELD-TECH ENGINEERS (I) PVT. LTD., 9. WE HAVE HEARD THE RIVAL PARTIES AND CAREFULLY C ONSIDERED MATERIAL PLACED BEFORE US INCLUDING THE ORDER OF TH E AUTHORITIES BELOW. WE FIND FROM THE ASSESSMENT ORDER THAT THE A O HAS MADE AN ADDITION OF RS.45,76,587/- BEING 5% ON TOTAL PUR CHASES ON ESTIMATED BASIS IN ORDER TO BRING THE BOGUS PURCHAS ES 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 W AS NOT CHALLENGED BY THE ASSESSEE BEFORE THE FAA AND ATTAI NED FINALITY. THEREAFTER THE AO LEVIED PENALTY U/S 271(1)(C) OF T HE ACT ON THE GROUND THAT THE ASSESSEE DID NOT CHALLENGE THE ASSE SSMENT ORDER AND ACCEPTED ADDITIONS SO MADE THEREBY ACCEPTING TH E CONCEALMENT OF INCOME. WE FIND FROM THE RECORD THA T THE ADDITIONS AS MADE BY THE AO WAS A PURE ESTIMATE AND NOTHING C ONCRETE AS TO BOGUS PURCHASES WERE BROUGHT ON RECORDS BY THE AO B Y MAKING ANY FURTHER ENQUIRIES OR INVESTIGATION. IN OUR VIEW THE PENALTY CANNOT BE IMPOSED WHERE THE ADDITIONS ARE MADE ON E STIMATE BASIS. THE TRIBUNAL HAS CONSIDERED AN IDENTICAL IS SUE 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 OU T 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 H AS LISTED OUT NAMES OF CERTAIN DEALERS, WHO WERE ALLEG ED TO HAVE BEEN PROVIDING ACCOMMODATION ENTRIES WITHOUT D OING ACTUAL BUSINESS. THE AO NOTICED THAT THE ASSESSEE M ADE PURCHASES TO THE TUNE OF RS.38.69 LAKHS FROM TWO PA RTIES NAMED M/S UMIYA SALES AGENCY PVT LTD AND M/S MERCUR Y ENTERPRISES, WHOSE NAMES FOUND PLACE IN THE LIST PR OVIDED BY THE SALES TAX DEPARTMENT. THE AO PLACED FULL RELIAN CE 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 LAK HS HAVE TO BE TREATED AS UNEXPLAINED EXPENDITURE. ACCORDING LY, HE ASSESSED THE SAME U/S 69C OF THE ACT. 11. THE LD. CIT(A) DELETED THE ADDITION AND HENCE T HE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 12. THE LD. DR STRONGLY PLACED RELIANCE ON THE ORDE R OF ASSESSING OFFICER. 13. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT TH E ADDITIONS MADE IN THE CASE OF SOME OTHER ASSESSES O N 6 ITA.NOS. 6027 & 6028/MUM/2019 (A.Y: 2009-10 & A.Y. 2010-11) M/S. WELD-TECH ENGINEERS (I) PVT. LTD., IDENTICAL REASONS HAVE BEEN DELETED BY THE CO-ORDIN ATE BENCHES OF THE TRIBUNAL IN THE FOLLOWING CASES : A) RAMESH KUMAR AND CO V/S ACIT IN ITA NO.2959/MUM/201 4 (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 GANPATRAJASANGHAVI V/S ACIT IN ITA NO. 2826/MU M/2013 (AY-2009-10) DATED 5.11.2014 IN ALL THE ABOVE SAID CASES, THE CO-ORDINATE BENCHE S OF THE TRIBUNAL HAS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION ON THE BASIS OF STATEMENTS GIVEN BY TH E THIRD PARTIES BEFORE THE SALES TAX DEPARTMENT, WITHOUT CO NDUCTING 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 PU RCHASES. HE HAS FURTHER PLACED RELIANCE ON THE DECISION REND ERED BY HONBLE 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 IT O VS. PREMANAND (2008)(25 SOT 11)(JODH), WHEREIN IT HAS B EEN HELD THAT WHERE THE AO HAS MADE ADDITION MERELY ON THE BASIS OF OBSERVATIONS MADE BY THE SALES TAX DEPT AN D HAS NOT CONDUCTED ANY INDEPENDENT ENQUIRIES FOR MAKING THE ADDITION ESPECIALLY IN A CASE WHERE THE ASSESSEE HA S DISCHARGED ITS PRIMARY ONUS OF SHOWING BOOKS OF ACC OUNT, PAYMENT BY WAY OF ACCOUNT PAYEE CHEQUE AND PRODUCIN G 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 PROVIDE D WITH AN OPPORTUNITY TO CROSS EXAMINE THE SELLERS, WHICH IS REQUIRED TO BE GIVEN AS PER THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF PONKUNNAM TRADERS (83 ITR 508 & 102 ITR 366). ACCORDINGLY, THE LD CIT(A) HAS DELETE D THE IMPUGNED ADDITION. ON A CAREFUL PERUSAL OF THE DECI SION RENDERED BY LD CIT(A) WOULD SHOW THAT THE FIRST APP ELLATE 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 INT ERFERE WITH HIS ORDER ON THIS ISSUE. WE ALSO FIND THAT IN THE FOLLOWING CASES THE TRIBUN AL 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: - 7 ITA.NOS. 6027 & 6028/MUM/2019 (A.Y: 2009-10 & A.Y. 2010-11) M/S. WELD-TECH ENGINEERS (I) PVT. LTD., 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/M UM/2012 (AY-2009-10) DATED 20.8.2014; AND C) SHRI GANPATRAJASANGHAVI 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 BE NCHES OF THE TRIBUNAL HAS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION ON THE BASIS OF STATEMENTS GIVEN BY THE TH IRD PARTIES BEFORE THE SALES TAX DEPARTMENT, WITHOUT CONDUCTING ANY OTHER INVESTIGATION. IN THE INSTANT CASE ALSO, THE ASSES SING OFFICER HAS MADE THE IMPUGNED ADDITION ON THE BASIS OF STATEMEN TS GIVEN BY THE PARTIES BEFORE THE SALES TAX DEPARTMENT. CONSI DERING 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 O RDER PASSED BY THE LD.CIT(A) BY DISMISSING THE APPEAL OF THE REVEN UE. 7. 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 ADD ITION TO RS.1,50,000. HENCE, THE INCOME WAS FINALLY ASSESSED AT RS.1,50,000 AGAINST THE DECLARED INCOME OF RS. 52,0 00. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AGA INST THE ASSESSEE BY INVOKING SECTION 271(1)(C) ALONG WITH THE EXPLAN ATION 1(B) OF THE ACT ON THE PLEA THAT HE HAD CONCEALED THE PARTI CULARS OF HIS INCOME. A SHOW-CAUSE NOTICE WAS ISSUED TO HIM UNDER SECTION 274 READ WITH SECTION 271(L)(C) OF THE ACT. IN REPL Y THERETO, THE ASSESSEE PLEADED THAT SINCE NO POSITIVE CONCEALMENT HAD BEEN DETECTED BY THE DEPARTMENT AND THE ADDITION WAS MAD E IN HIS INCOME ONLY ON ESTIMATE BASIS, NO PENALTY UNDER SEC TION 271(1)(C) OF THE ACT COULD BE IMPOSED BECAUSE THE A SSESSEE'S INCOME ON ESTIMATE BASIS KEEPING IN VIEW HIS HOUSEH OLD EXPENSES AS WELL AS THE STATEMENT OF ACCRETION TO HIS ASSETS DURING THE YEAR UNDER CONSIDERATION, WAS BONA FIDE. THE ASSESSING O FFICER 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, B Y HIS ORDER DATED MARCH 10, 1992, IMPOSED A PENALTY OF RS. 50,0 00. FEELING AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED AN APPE AL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), PATIALA, WHO ALLOWED THE 8 ITA.NOS. 6027 & 6028/MUM/2019 (A.Y: 2009-10 & A.Y. 2010-11) M/S. WELD-TECH ENGINEERS (I) PVT. LTD., SAME HOLDING THAT THERE WAS INDEED NO POSITIVE EVID ENCE 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 A TTRACT 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 QU ESTION 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 INACCU RATE PARTICULARS OF SUCH INCOME. WHAT IS TO BE SEEN IS WHETHER THE ASSE SSEE IN THE PRESENT CASE HAD CONCEALED HIS INCOME AS HELD BY TH E ASSESSING OFFICER AND THE TRIBUNAL. HE HAD NOT MAINTAINED ANY ACCOUNTS AND HE FILED HIS RETURN OF INCOME ON ESTIMATE BASIS. TH E ASSESSING OFFICER DID NOT AGREE WITH THE ESTIMATE OF THE ASSE SSEE 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 T URNOVER BUT WAS OF THE VIEW THAT THE ESTIMATE AS MADE BY THE AS SESSING OFFICER WAS HIGHLY EXCESSIVE AND IT FIXED THE TOTAL INCOME OF THE ASSESSEE AT RS. 1,50,000 FOR THE YEAR UNDER APPEAL. IT IS, T HUS, CLEAR THAT THERE WAS A DIFFERENCE OF OPINION AS REGARDS THE ES TIMATE OF THE INCOME OF THE ASSESSEE. SINCE THE ASSESSING OFFICER AND THE TRIBUNAL ADOPTED DIFFERENT ESTIMATES IN ASSESSING T HE 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 EVI DENCE ON THE RECORD TO SHOW THAT THE INCOME OF THE ASSESSEE DURI NG THE YEAR UNDER APPEAL WAS MORE THAN THE INCOME RETURNED BY H IM. ADDITIONS IN HIS INCOME WERE MADE, AS ALREADY OBSERVED, ON ES TIMATE BASIS AND THAT BY ITSELF DOES NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE EITHER CONCEALED THE PARTICULARS OF HIS INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME. THERE HAS TO BE A POSITIVE ACT OF CONCEALMENT ON HIS PART AND THE ONUS TO PROV E 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 O N THE BASIS OF HOUSEHOLD EXPENDITURE AND OTHER INVESTMENTS MADE DU RING 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 EXPL ANATION FURNISHED BY THE ASSESSEE HAD NOT BEEN SUBSTANTIATED OR THAT HE HAD FAILED TO PROVE THAT SUCH EXPLANATION WAS NOT BONA FIDE. 9 ITA.NOS. 6027 & 6028/MUM/2019 (A.Y: 2009-10 & A.Y. 2010-11) M/S. WELD-TECH ENGINEERS (I) PVT. LTD., 5. IN THE RESULT, THE APPEAL IS ALLOWED AND THE QUE STION 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 ASSESSE D ON ESTIMATE BASIS AND ADDITIONS ARE MADE THEREIN ON THAT BASIS. 8. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE DELHI HI GH 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 HO LDING THAT ESTIMATED RATE OF PROFIT APPLIED ON THE TURNOVER OF THE ASSES SEE DOES NOT AMOUNT TO CONCEALMENT OR FURNISHING INACCURATE PARTICULARS . 9. IN THE CASESON HAND THE ASSESSING OFFICER HAS ONLY ESTIMATED THE GROSS PROFIT ON THE ALLEGED NON-GENUINE PURCHASES W ITHOUT THERE BEING ANY CONCLUSIVE PROOF OF CONCEALMENT OF INCOME OR FU RNISHING INACCURATE PARTICULARS OF SUCH INCOME. THUS, WE DO NOT OBSERV E ANY INFIRMITY IN THE ORDERS PASSED BY THE LD.CIT(A) IN DELETING THE PENA LTY U/S.271(1)(C) OF THE ACT LEVIED BY THE ASSESSING OFFICER FORTHE ASSE SSMENT YEARS UNDER CONSIDERATION. GROUNDS RAISED BY THE REVENUE ARE R EJECTED. 10. EVEN OTHERWISE ALSO WE FIND THAT THE TAX EFFECT IN THESE APPEALS IS .4,00,000/- AND .2,50,000/- FOR THE A.Y. 2009-10 AND A.Y. 2010-11 RESPECTIVELY WHICH IS LESS THAN .50 LAKHS AND THER EFORE THE APPEALS OF THE REVENUE ARE NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF 10 ITA.NOS. 6027 & 6028/MUM/2019 (A.Y: 2009-10 & A.Y. 2010-11) M/S. WELD-TECH ENGINEERS (I) PVT. LTD., THE CBDT CIRCULAR NO. 17/2019 DATED 08.08.2019. WH EN THIS WAS POINTED OUT LD. DR SUBMITTED THAT IT IS COVERED UND ER EXCEPTIONS PROVIDED UNDER CLAUSE 10(E) OF THE CIRCULAR WHICH P ROVIDES THAT WHEN ADDITIONS ARE MADE BASED ON THE INFORMATION RECEIVE D FROM EXTERNAL SOURCES THE REVENUE APPEALS CANNOT BE DISMISSED ON MONETARY GROUNDS. LD. DR SUBMITTED THAT THIS IS A CASE WHERE INFORMATION HAS BEEN RECEIVED FROM DGIT (INV.) BASED ON WHICH RE-AS SESSMENT WAS MADE U/S. 147 OF THE ACT AND THUS FALLS UNDER THE E XCEPTION AS THE INFORMATION WAS RECEIVED FROM EXTERNAL SOURCES. 11. ON A PERUSAL OF THE RE-ASSESSMENT ORDER, WE OBSERVE THAT THE RE-ASSESSMENT U/S. 143 R.W.S. 147 OF THE ACT WAS MA DE BASED ON THE INFORMATION RECEIVED FROM DGIT(INV.,), MUMBAI. AS HELD BY THE COORDINATE BENCH IN THE CASE OF ITO V. LATE SHRI AMARCHAND P. SHAH (LEGAL HEIR SHRI NITIN A. SHAH) IN ITA.NO. 818 TO 8 20/MUM/2017 DATED 08.07.2019, DGIT (INV.,), MUMBAI IS NOT AN EXTERNAL AGENCY BUT IT IS ONLY AN INTERNAL AGENCY OF THE REVENUE DEPARTMENT. IN ANY CASE THE MODIFIED INSTRUCTIONS DATED 20.08.2018 APPLIES ONLY FOR THE ASSESSMENT PROCEEDINGS AND IT DOES NOT APPLY TO PENALTY PROCEE DINGS. PENALTY IS LEVIED BASED ON THE ADDITION/DISALLOWANCE MADE IN T HE QUANTUM 11 ITA.NOS. 6027 & 6028/MUM/2019 (A.Y: 2009-10 & A.Y. 2010-11) M/S. WELD-TECH ENGINEERS (I) PVT. LTD., ASSESSMENT PROCEEDINGS WHICH IS SEPARATE FROM THE P ENALTY PROCEEDINGS. SINCE THE REVENUE EFFECT IN THESE CASES IS LESS THA N .50 LAKHS, WE REJECT THE GROUNDS RAISED BY THE REVENUE. 12. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMISSED . ORDER PRONOUNCED ON AS PER RULE 34(4) OF ITAT RULES BY PLACING THE PRONOUNCEMENT LIST IN THE NOTICE BOARD. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI / DATED 22/06/2021 GIRIDHAR, SR.PS/JAISY VARGHESE,SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT.REGISTRAR) ITAT, MUM