Hon'ble Judges/Coram:
Annapurna Gupta, Member (A) and T.R. Senthil Kumar

ORDER

T.R. Senthil Kumar, Member (J)

1. This appeal is filed by the assessee against order dated 8.6.2018 in CIT(A)-5/ACIT Cir. 5(3)/10028/2017-18 passed by the Ld. Commissioner of Income-tax (Appeals)-5, Ahmedabad [for short "Ld. CIT(A)] relating to the assessment year 2010-11 against confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act" for short).

2. Grounds raised by the assessee as follows:

(I) Penalty on addition of Rs. 4,79,000/-:

During the assessment proceedings, assessee had agreed Rs. 4,79,000/- (Rupees Four lakhs Seventy Nine Thousands only) as his income from Malhar Dairy, which is not shown in total

income as Assessee has strong belief that income from Dairy Farming is exempt from Income Tax and so it is not disclosed while filing Income tax return.

It is held in C.I.T. & Anr. vs. Manjunatha Cotton & Ginning factory MANU/KA/2416/2012 : (2013) 359 ITR 565 that no penalty on income bonafidely disclosed during scrutiny proceedings be levied.

There is no concealment of income by the assessee and thus penalty on the amount of Rs. 4,79,000/- requires to be deleted.

(II) Penalty on addition of Rs. 10,88,357/-:

During the assessment proceedings, the Ld. Deputy Commissioner of Income Tax had made an addition of Rs. 43,53,429/- to the total-income of the assessee on account of bogus purchase. However, the Ld. Asst. Commissioner of Income Tax, Circle 5(3), Ahmedabad had restricted the bogus purchase to Rs. 10,88,357/- on estimated basis.

It is held in Etco Telecom Ltd. Mumbai vs. Department of Income tax that no penalty is leviable on addition of Rs. 11,20,000/- sustained by C.I.T. (A) as addition/disallowance is entirely on estimated basis which is not supported by concrete material. The Honourable C.I.T. (A) reduced the estimated disallowance of Rs. 11,20,000/- in place of Rs. 55,20,000/- made by A.O. such estimated addition is not subject to penalty u/s. 271(1)(c) of Income Tax Act.

So the addition of 10,88,357/- is made arbitratory and without any base. There is no concealment of income by the assessee and thus penalty on the amount of Rs. 10,88,357/- requires to be deleted."

3. Brief facts of the case is that the assessee is an individual and Proprietor of M/s. Ghanshyam Builders. The assessee has filed his return of income on 26.9.2011 declaring total income at Rs. 1,26,45,910/-. The case was selected for scrutiny assessment and Assessment Order under section 143(3) of the Act was passed on 28.3.2014 making few disallowances and determined the total income at Rs. 2,06,94,410/-. Thereafter, the AO also initiated penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars and concealment of income. Aggrieved by the above assessment, the assessee filed appeal before the Ld. Commissioner of Income Tax (Appeals) against quantum appeal. The Ld. CIT(A) partly allowed the appeal of the assessee vide his order dated 11.6.2015 wherein Rs. 4,79,000/- on account of undisclosed income from Malhar Dairy Farm was upheld and Rs. 10,88,357/- on account of bogus purchase were being upheld.

4. It is thereafter, the Ld. AO vide order dated 31.3.2017 levied penalty of Rs. 4,84,310/- on the ground that the assessee has concealed particulars of income to evade tax of such income. Aggrieved with the penalty order, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) by his impugned order confirmed levy of penalty following judgment of jurisdictional High Court in the case of A.M. Shah & Co. Vs. CIT,