Chhogaram Hardanji Patel v. Income-tax Officer, Ward-5(3), Baroda
[Citation -2016-LL-1004-42]

Citation 2016-LL-1004-42
Appellant Name Chhogaram Hardanji Patel
Respondent Name Income-tax Officer, Ward-5(3), Baroda
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 04/10/2016
Assessment Year 2007-08
Judgment View Judgment
Keyword Tags estimate basis • market value
Bot Summary: It is a case in which a part of purchases, on adhoc basis, have been disallowed. Keeping in view the complete facts and circumstances of the case, in our considered opinion, disallowance of 20 of purchase amount shall meet the ends of justice. Having heard the rival contentions, and having perused the material on record, I am of the considered view that it is not a fit case for confirming the penalty. After considering the facts of the case, I find that it is not a case wherein the assessee has concealed any income or has furnished any inaccurate particulars of income. It is a case of estimate of profit on purchases, which has not been substantiated by the assessee by one or other reasons. Under the circumstances, we are of the considered view that in case where addition is made merely on estimation basis, penalty u/s. In the present case also, the disallowance is on estimate basis alone, and there is nothing concrete against the assessee.


I.T.A. No.1632/Ahd/2013 Assessment Year: 2007-08 Page 1 of 3 IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [Coram: Pramod Kumar AM] I.T.A. No.1632/Ahd/2013 Assessment Year: 2007-08 Chhogaram Hardanji Patel ............... .Appellant 6, Sumangal Apartment, B/h. Gangotri Apartment, R.V. Desai Road, Baroda 390 001. [PAN: AEPPP 4009 R] Vs. Income Tax Officer, Ward 5(3), Baroda. ................ Respondent Appearances by: Surendra V. Modiani, for appellant Antony Pariath, for respondent Date of concluding hearing: 05.07.2016 Date of pronouncing order: 04.10.2016 ORDER 1. This appeal challenges learned CIT(A) s order dated 25th March, 2013 confirming penalty of Rs.1,76,500/- imposed on assessee, under section 271(1)(c) of Income Tax Act 1961, for assessment year 2007-08. 2. Grievance of assessee is that learned CIT(A) erred in upholding impugned penalty. 3. To adjudicate on this appeal, only few facts need to be taken note of. It is case in which part of purchases, on adhoc basis, have been disallowed. When matter I.T.A. No.1632/Ahd/2013 Assessment Year: 2007-08 Page 2 of 3 travelled in appeal before this Tribunal, division bench confirmed disallowance @ 20% by observing as follows :- 9. We find that Learned Commissioner of Income Tax (Appeals) has held that since corresponding sale has been accepted by Department there could not have been sale without corresponding purchases. According to Learned Commissioner of Income Tax (Appeals) assessee might have purchased goods in cash from open market at lesser price. Learned Commissioner of Income Tax (Appeals) therefore, restricted disallowance to 30% of amount of purchase of Rs.26,54,142/-. We find that no material was brought before us to show that price of purchase claimed by assessee was more by 30% than market value of such goods. Keeping in view complete facts and circumstances of case, in our considered opinion, disallowance of 20% of purchase amount shall meet ends of justice. We therefore, modify order of Learned Commissioner of Income Tax (Appeals) to above extent and direct Learned Assessing Officer to restrict disallowance to 20% of purchase amount of Rs.26,54,142/-. Thus, this ground of appeal of assessee is partly allowed. 4. It is in this respect that impugned penalty is levied by Assessing Officer, and confirmed by learned CIT(A). assessee is not satisfied and is in appeal before me. 5. Having heard rival contentions, and having perused material on record, I am of considered view that it is not fit case for confirming penalty. As I say so, I am in respectful agreement with view of division bench in case of Lalit Thakkar HUF vs. ITO (IT No.608/Ahd/2006; order date 16.05.2006), as follows :- 6. I have heard rival contentions of both Representatives and records perused. After considering facts of case, I find that it is not case wherein assessee has concealed any income or has furnished any inaccurate particulars of income. It is case of estimate of profit on purchases, which has not been substantiated by assessee by one or other reasons. For this purpose, addition to total can be sustained but merely on that basis penalty u/s.271(1)(c) is not leviable. It is also pertinent to note that in such case of estimation of amount for purpose of addition depends on facts of each case. Under circumstances, we are of considered view that in case where addition is made merely on estimation basis, penalty u/s. 271(1)(c) is not leviable. Accordingly, penalty of Rs.28,830/- levied u/s. 271(1)(c) is cancelled. I.T.A. No.1632/Ahd/2013 Assessment Year: 2007-08 Page 3 of 3 6. In present case also, disallowance is on estimate basis alone, and there is nothing concrete against assessee. In this view of matter, as also bearing in mind entirety of case, I delete impugned penalty of Rs.1,76,500/-. assessee gets relief accordingly. 7. In result, appeal is allowed. Pronounced in open Court on this 4th day of October, 2016. Sd/- Pramod Kumar (Accountant Member) Dated: 4 th day of October, 2016. PBN/* Copies to: (1) appellant (2) respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File By order Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad Chhogaram Hardanji Patel v. Income-tax Officer, Ward-5(3), Baroda
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