ITO 32 (1)(5), MUMBAI v. EMPEE ENGINEERING CORPORATION , MUMBAI

ITA 6797/MUM/2019 | 2009-2010
Pronouncement Date: 22-03-2021 | Result: Dismissed

Appeal Details

RSA Number 679719914 RSA 2019
Assessee PAN AAAFE1715A
Bench Mumbai
Appeal Number ITA 6797/MUM/2019
Duration Of Justice 1 year(s) 4 month(s) 18 day(s)
Appellant ITO 32 (1)(5), MUMBAI
Respondent EMPEE ENGINEERING CORPORATION , MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 22-03-2021
Last Hearing Date 22-03-2021
First Hearing Date 22-03-2021
Assessment Year 2009-2010
Appeal Filed On 04-11-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) E BENCH MUMBAI BEFORE SHRI C.N. PRAS AD HON'BLE JUDICIAL MEMBER AND SHRI M. BALAGANESH HON'BLE ACCOUNTANT MEMBER IT A. NO S . 6797 & 6798 /MUM/201 9 (A.Y S : 2009 - 10 & 2010 - 11 ) INCOME TAX OFFICER 32(1)(5) ROOM NO. 729 7 TH FLOOR KAUTILYA BHAVAN BANDRA KURLA COMPLEX BANDRA(E) MUMBAI - 400051 V. M/S. EMPEE ENGINEERING CORPORATION 704 LAXMAN TOWER CHIKUWADI BORIVALI (W) MUMBAI - 400092 PAN: AAAFE1715A (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI VIJAY KUMAR MENON DATE OF HEARING : 22.03.2021 DATE OF PRONOUNCEMENT : 22 . 03 .2021 O R D E R PER C.N. PRASAD (JM) 1. THESE APPEAL S ARE FILED BY THE REVENUE AGAINST DIFFERENT ORDER S OF THE LD. COMMISSI ONER OF INCOME - TAX (APPEALS) - 44 MUMBAI [HEREINAFTER FOR SHORT 'LD. CIT(A)] DATED 28.08.2019 FOR THE A.Y. 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. 6797 & 6798/MUM/2019 (A.YS: 2009 - 10 & 2010 - 11) M/S. EMPEE ENGINEERING CORPORATION 2. BRIEFLY STATED THE FACTS ARE THAT ASSESSEE A FIRM ENGAGED IN THE BUSINESS OF METAL FLANGES ETC. WHICH INVOLVES CUTTING OF METAL SHEETS INTO DIFFERENT SHAPES/SIZES AND SALES THEREOF . ASSESSMENT S WERE REOPENED U/S. 147 OF THE ACT AND RE - ASSESSMENT S WERE COMPLETED BY MAKING AN ADDITION OF . 1 68 59 313 / - AND . 1 16 81 990 / - FOR THE A.Y. 2009 - 10 AND A.Y. 2010 - 11 RESPECTIVELY . ASSESSEE PREFERRED AN APPEAL BEFORE LD.CIT(A) AGAINST THE ADDITION AND THE LD.CIT(A) RESTRICTED THE ADDITION GP @14.33 % AND 12.63 % FOR THE A.Y. 2009 - 10 AND A.Y. 2010 - 11 RESPECTIVELY . ON FURTHER APPEAL BEFORE ITAT THE TRIBUNAL RESTRICTED THE ADDITION TO 10% OF THE ALLEGED BOGUS PURCHASES INSTEAD OF 14.33% AND 12.63% ESTIMATED BY THE LD.CIT(A). SUBSEQUENTLY ASSESSIN G OFFICER INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY OF . 5 10 837 / - AND . 3 53 964 / - U/S. 271(1)(C) OF THE ACT FOR THE A.Y. 2009 - 10 AND 2010 - 11 RESPECTIVELY STATING THAT THE ASSESSEE HAS 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. ON APPEAL THE LD.CIT(A) DELETED THE PENALTY SINCE THE DISALLOWANCE WAS MADE BY MAKING ESTIMATION OF GROSS PROFIT ON THE PURCHASES. AGAINST THIS ORDER OF THE LD.CIT(A) REVE NUE IS IN APPEAL BEFORE US. 3 ITA.NOS. 6797 & 6798/MUM/2019 (A.YS: 2009 - 10 & 2010 - 11) M/S. EMPEE ENGINEERING CORPORATION 3. A SSESSEE FILED LETTER DATED 16.03.2021 REQUESTING TWO MONTHS TIME FOR NECESSARY PREPARATION OF THE DOCUMENTS AND TO CONTACT THE CONSULTAN T FOR APPEARING IN THIS MATTER. HOWEVER ON A PERUSAL OF THE GROUNDS RAISED BY THE REVENUE WE OBSERVE THAT THE PENALTY WAS LEVIED ON DISALLOWANCE OF ALLEGED BOGUS PURCHASE S BY ESTIMATING THE GROSS PROFIT ELEMENT. THIS BENCH IS CONSISTENTLY TAKING A VIEW THAT THE PENALTY IS NOT ATTRACTED WHEN THE GROSS PROFIT IS ESTIMATED ON ADHOC BASIS ON BOGUS PURCHASES . THE ADJOURNMENT SOUGHT BY THE ASSESSEE IS REJECTED AND WE PROCEED TO DISPOSE OF F THIS APPEAL ON MERITS ON HEARING LD.DR . 4. WE HAVE HEARD 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. IN BOTH THE CASES AN ADHOC ESTIMATION WAS MADE BY THE LD.CIT(A) RESTRICTING THE ADDITION GP @14.33% AND 12.63% FOR THE A.Y. 2009 - 10 AND A.Y.2010 - 11 RESPECTIVELY. 5. ON IDENTICAL SITUATION 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 TH AT 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 ASSESS ING OFFICER HAD MADE ONLY ADHOC ESTIMATION OF PROFIT ON CERTAIN 4 ITA.NOS. 6797 & 6798/MUM/2019 (A.YS: 2009 - 10 & 2010 - 11) M/S. EMPEE ENGINEERING CORPORATION 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'BL E 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 DENIE D 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 CONCE ALMENT 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. 6. SIMILARLY IN THE CASE OF DCIT V. MANOHAR MANAK ALLOYS PVT. LTD IN ITA NO. 5586/MUM/2015 DAT ED 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 TH E 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 5 ITA.NOS. 6797 & 6798/MUM/2019 (A.YS: 2009 - 10 & 2010 - 11) M/S. EMPEE ENGINEERING CORPORATION 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 ASSESSE S 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 T HE 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 B Y 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 HONBLE GUJARAT HIGH COURT IN THE CASE OF C IT VS. M.K. BROTHERS (163 ITR 249). HE HAS FURTHER RELIED UPON THE DECISION RENDERED BY THE TRIBUNAL IN THE CASE OF ITO VS. 6 ITA.NOS. 6797 & 6798/MUM/2019 (A.YS: 2009 - 10 & 2010 - 11) M/S. EMPEE ENGINEERING CORPORATION 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 VOU CHERS 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 DECISIO N 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 IMPUGNED ADDITION. ON A CAREFUL PERUSAL OF THE DECISION RENDERED BY LD CIT(A) WOULD SHOW THAT THE FIRST APPELLATE AUTHORI TY 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 TRIB UNAL 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 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. 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. 7 ITA.NOS. 6797 & 6798/MUM/2019 (A.YS: 2009 - 10 & 2010 - 11) M/S. EMPEE ENGINEERING CORPORATION 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 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 CONSI DERATION 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 M ARCH 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 UNDER APPEAL. 8 ITA.NOS. 6797 & 6798/MUM/2019 (A.YS: 2009 - 10 & 2010 - 11) M/S. EMPEE ENGINEERING CORPORATION IT IS THUS CLEAR THAT THERE WAS A DIFFERENCE OF OPINION AS REGARDS THE ESTIMATE OF THE I NCOME 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 IN COME 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 INCU RRED 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 RESU LT 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. 8. 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 AF FIRMED 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. 9. IN BOTH THESE APPEALS ON HAND THE ASSESSING OFFICER HAS ONLY ESTIMATED TH E GROSS PROFIT ON THE ALLEGED NON - GENUINE PURCHASES WITHOUT 9 ITA.NOS. 6797 & 6798/MUM/2019 (A.YS: 2009 - 10 & 2010 - 11) M/S. EMPEE ENGINEERING CORPORATION 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 ORDER PASSED BY THE LD.CIT( A) IN DELETING THE PENALTY U/S. 271(1)(C) OF THE ACT LEVIED BY THE ASSESSING OFFICER FOR BOTH THE ASSESSMENT YEAR S . GROUNDS RAISED BY THE REVENUE ARE REJECTED. 10. IN THE RESULT APPEAL S OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 22 . 0 3 .2021 AS PER RULE 34(4) OF ITAT RULES BY PLACING THE PRONOUNCEMENT LIST IN THE NOTICE BOARD SD/ - SD/ - ( M. BALAGANESH ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 22 / 03 / 2021 GIRIDHAR 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