DIAMOND CREATIONS, MUMBAI V. ASSISTANT COMMISSION OF INCOME TAX, CENTRAL CIRCLE - 1(2), MUMBAI

ITA 6294/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0747 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 18-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Bogus purchase; Unexplained expenditure; Question of law; Difference of opinion; Accommodation entries; Onus to prove
• Section: 271(1)(c); 69C; 143(3); 133(6); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI M. BALAGANESH , HON'BLE ACCOUNTANT MEMBER ITA NO S . 6293 , 6294 & 6295 /MUM/201 7 (A.Y S : 20 07 - 08 , 2008 - 09 & 2010 - 11 ) M/S. DIAMOND CREATIONS 132, SHREEJI CHAMBER TATA ROAD NO.2, OPERA HOUSE MUMBAI 400 004 PAN: AAAFD0315P V. ACIT, CENTRAL CIRCLE 1( 2) 9 TH FLOOR, OLD CGO BUILDING M.K. ROAD, MUMBAI 400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI CHAITANYA ANJARIA DATE OF HEARING : 02.08.2019 DATE OF PRONOUNCEMENT : 08 .08.2019 O R D E R PER C. N. PRASAD (JM) 1. ALL THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST DIFFERENT ORDERS OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) 47 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 31.07.2017 FOR THE A.Y S . 2007 - 08, 2008 - 09 & 2010 - 11 IN SUSTAINING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 2 ITA NOS. 6293, 6294 & 6295/MUM/2017 (A.YS: 2007 - 08, 2008 - 09 & 2010 - 11) M/S. DIAMOND CREATIONS 2. INSPITE OF ISSUE OF NOTICE ON SEVERAL DATES , NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT BY THE ASSESSEE. THIS CASE WAS INITIALLY HEARD BY THE BENCH ON 09.04.2019 AND LATER KEPT FOR CLARIFICATION AND HEARING O N 02.08.2019 AND ON THESE DATE S THE LD.DEPARTMENTAL REPRESENTAT IVES W AS HEARD . HOWEVER , NOBODY APPEARED ON BEHALF OF ASSESSEE. THUS, WE PROCEED TO DISPOSE OF THESE APPEALS BASED ON THE FACTS ON RECORD AND HEARING THE LD. DR ON MERITS . 3. BRIEFLY STATED THE FACTS ARE THAT, ASSESSEE FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF DIAMONDS AND BULLION . THE ASSESSMENTS FOR THE A.YS. 2007 - 08, 2008 - 09 & 2010 - 11 WERE COMPLETED U/S. 143(3) R.W.S. 147 OF THE ACT ON 26.03.2015. WHILE COMPLETING THE ASSESSMENT ON THE BASIS OF THE INFORMATIO N RECEIVED FROM DGIT(INVESTIGATION), MUMBAI THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES FROM VARIOUS PARTIES WITHOUT MAKING ANY PURCHASES FROM THEM BUT MADE PURCHASES ONLY IN GRAY MARKET. THE ASSESSING OFFICER TREATED SUCH PURCHASES FROM VARIOUS PARTIES AS NON - GENUINE AS THE ASSESSEE COULD NOT PRODUCE THE PARTIES AND ALSO COULD NOT ESTABLISH THE MOVEMENT OF GOODS . FURTHER, THE NOTICES ISSUED TO THE PARTIES U/S. 133(6) OF THE ACT WERE AL SO RETURNED UNSERVED. TH E ASSESSING OFFICER ESTIMATED THE PROFIT ELEMENT IN SUCH NON - GENUINE 3 ITA NOS. 6293, 6294 & 6295/MUM/2017 (A.YS: 2007 - 08, 2008 - 09 & 2010 - 11) M/S. DIAMOND CREATIONS PURCHASES AT 3.51 % , 3.46% AND 3.49% FOR A.YS. 2007 - 08, 2008 - 09 AND 2010 - 11 RESPECTIVELY BEING THE GROSS PROFIT SHOWN BY THE ASSESSEE ON ITS TURNOVER FOR THE RESPE CTIVE A SSESSMENT Y EARS CONSIDERING THE FACTS OF THE ASSESSEES CASE, NATURE OF BUSINESS AND VARIOUS JUDICIAL PRONOUNCEMENTS MADE IN VARIOUS COMPARABLE CASES. THE ASSESSMENTS WERE ACCEPTED AND NO FURTHER APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE ACCEPTIN G THE ESTIMATION OF PROFIT ELEMENT FROM NON - GENUINE PURCHASES MADE BY THE ASSESSING OFFICER. SUBSEQUENTLY, ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS AND LEVIED PENALTY U/S. 271(1)(C) OF THE ACT STATING THAT THE ASSESSEE HAS DELIBERATELY FURNISHE D INACCURATE PARTICULARS OF ITS INCOME AND CONCEALED ITS INCOME WITHIN THE MEANING OF SECTION 271(1)(C) R.W. EXPLANATION 1 OF THE ACT AND THE LD.CIT(A) SUSTAINED THE PENALTY . 4. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR , PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IT IS A SETTLED POSITION OF LAW THAT PENALTY CANNOT BE LEVIED WHEN AN ADHOC ESTIMATION IS MADE. ON A PERUSAL OF THE RECORD, I N THIS CASE WE FIND THAT AN ESTIMATION OF GROSS PROFI T WAS MADE BY THE ASSESSING OFFICER RESTRICTING THE PROFIT ELEMENT IN THE ALLEGED BOGUS PURCHASES AT 3.51 % ,3.46% AND 3.49% FOR THE A.YS. 2007 - 08, 2008 - 09 & 2010 - 11 RESPECTIVELY. 4 ITA NOS. 6293, 6294 & 6295/MUM/2017 (A.YS: 2007 - 08, 2008 - 09 & 2010 - 11) M/S. DIAMOND CREATIONS 6. 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 T HE 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 PARTIC ULARS 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 PARTICU LARS OF INCOME. THUS WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 7. 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 ESTIMAT ED BASIS IN ORDER TO BRING THE BOGUS PURCHASES T O 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. TH E REAFTER 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 INVESTIGATI ON. IN OUR VIEW THE PENALTY CAN NOT BE IMPOSED WHERE THE ADDITIONS ARE MADE ON ESTIMATE BASIS. THE TRIB UNAL 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:- 5 ITA NOS. 6293, 6294 & 6295/MUM/2017 (A.YS: 2007 - 08, 2008 - 09 & 2010 - 11) M/S. DIAMOND CREATIONS 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 D EPARTMENT 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 ASSE SSES ON IDENTICAL REASONS HAVE BEEN DELETED BY THE CO - ORDINATE BENCHES OF THE TRIBUNAL IN THE FOLLOWING CASES : 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 INVESTIGA TION. 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 WI THOUT PURCHASES. HE HAS FURTHER PLACED RELIANCE ON THE DECISION RENDERED 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 CA S E OF ITO VS. PREMANAND (20 08)(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 ASSESSE E 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 6 ITA NOS. 6293, 6294 & 6295/MUM/2017 (A.YS: 2007 - 08, 2008 - 09 & 2010 - 11) M/S. DIAMOND CREATIONS 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 HONBLE KERALA HIGH COURT IN THE CASE OF PONKUNNAM TRADERS (83 ITR 508 & 102 ITR 366). ACCORDINGLY, THE LD CIT(A) HAS DELETED THE IM PUGNED 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, W E 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 S IMILAR VIEW IN SOME OF THE CASE THAT ON THE BASIS OF THIRD PARTY EVIDENCE, ADDITION MADE BY THE AO CANNOT BE HELD AS GO OD 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 B Y 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 . 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 T HE 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. 8. 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 DEPARTME NT 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 HOUSE HOLD 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 7 ITA NOS. 6293, 6294 & 6295/MUM/2017 (A.YS: 2007 - 08, 2008 - 09 & 2010 - 11) M/S. DIAMOND CREATIONS FOUND THAT SINCE THE ASSESSEE HAD NOT FILED ANY FRESH EVIDENCE IN PENALTY PROCEEDINGS T O 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), PATI ALA, 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 ASSESSE E 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 AN Y 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 UNDER APPEA L. 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 ASSESS EE 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 E XPLANATION 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 SUBSTAN TIATED 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. 9. 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 8 ITA NOS. 6293, 6294 & 6295/MUM/2017 (A.YS: 2007 - 08, 2008 - 09 & 2010 - 11) M/S. DIAMOND CREATIONS OF PROFIT APPLIED ON THE TURNOVER OF THE ASSESSEE DOES NOT AMOUNT TO CONCEALMENT OR FURNISHING INACCURATE PARTICULARS . 10. IN THE CASE ON HAND THE A SSESSING OFFICER 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, RESPECTFULLY FOLLOWING THE ABOVE DECISIO NS, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT FOR ALL THESE ASSESSMENT YEARS . 11. IN THE RESULT, APP EALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 08 TH AUGUST , 2019 SD/ - SD/ - ( M. BALAGANESH ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 08 / 0 8 / 2019 GIRIDHAR , S R. 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