The Income Tax Appellate Tribunal (ITAT) Mumbai bench held that determination of income of assessee on certain estimate was not sufficient to constitute concealed income. Hence, the bench deleted the penalty imposed under Section 271(1)(c) of the Income Tax Act.
Assessee, Bhawarlal Tarachandji filed the appeal against the penalty order passed under Section 271(1)(c) of the Act and it was challenged the penalty levied of Rs.73,950/ u/s 271(4)(c) on addition of Rs.664,789/- being 12.5% of total purchases of Rs.53,18,312/- from different suppliers treating as purchases made from hawala parties.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax Appeals [CIT(A)], who dismissed the appeal and confirmed the penalty. Therefore the assessee filed another appeal before the tribunal.
Before the bench, Rashesh P Patel, counsel for the assessee submitted that the payment to suppliers has been made by the account payee cheques and the purchased goods has been sold to different customers which tally with the quantity of detail maintained.
Further, it was argued that Assessee had made genuine purchases from suppliers who have not filed MVAT returns on the basis of which they have been treated by the sales tax department as hawala dealers.
Thus just on the basis of information obtained from the sales tax department AO made the estimated addition without proving that the assessee has made any ingenuine purchases.
Ashok Kumar Ambastha, Counsel for the revenue, supported the decision of the lower authorities.
It was observed by the tribunal that During the course of assessment proceeding the assessee has submitted the relevant supporting details. The assessee has also submitted the relevant evidence of making corresponding sales against the purchases made by the assessee.
Thus, it was assumed that the assessing officer on an estimated basis has made the addition on the ground that the assessee has made purchase from another supplier at lower price without contrary disproving the relevant supporting evidence furnished by the assessee.
Therefore, it was noted that the assessing officer had determined the addition on estimated basis which is not sufficient to establish that assessee had actually concealed the particulars of income.
Assessee has successfully demonstrated and established identity and creditworthiness of said lender company and genuineness of transaction routed through bank, the tribunal observed.
After considering the facts submitted by both parties, the two member bench of Amarjit Singh (Accountant Member) and Aby T Varkey (Judicial Member) held that determination of income of assessee on certain estimates was not sufficient to support the contention that the assessee had concealed his income.
Therefore, the bench allowed the appeal filed by the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
