ITO, WARD-3(2), KALYAN vs. SHRI SAI WORKS, THANE

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ITA 2151/MUM/2022Status: DisposedITAT Mumbai11 April 2023AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the sustained addition was purely on an ad-hoc basis due to estimated GP rates on purchases, it could not lead to an inference of concealment of income. Therefore, the deletion of penalty by the CIT(A) was justified.

What were the facts?

The Revenue appealed the deletion of penalty levied under Section 271(1)(c) for AY 2010-11. The penalty was based on an addition for alleged unproved purchases, of which only 25% was sustained by the CIT(A).

What were the issues?

Whether penalty for concealment of income can be levied when additions are made on an ad-hoc estimation of GP rates on purchases.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SHRI AMIT SHUKLA, JM & SHRI PRASHANT MAHARISHI, AM

For Appellant: Shri Ram K. Kedia, Sr. AR
For Respondent: Shri Ram K. Kedia, Sr. AR
Pronounced: 11.04.2023

आदेश / O R D E R

Per Amit Shukla, Judicial Member:

1.

The aforesaid appeal has been filed by the Revenue against order dated 15.06.2022, passed by NFAC Delhi, in relation to the penalty proceedings u/s. 271(1)(c) for the AY: 2010-11.

SHRI SAI WORKS LL 2. The revenue is aggrieved by the deletion of penalty of Rs. 1,15,229/- levied by the AO, on account of GP addition on alleged unproved purchases of Rs. 9,47,471/-.

3.

The assessee is engaged in the business of Engineering and Electrical contracts, labour contracts, etc. Earlier the assessee’s case was completed u/s. 143(3) r.w.s 147, vide order dated 13.08.2014, determining the total income at Rs. 11,92,430/- as against the return income of Rs. 2,4,959/-.

4.

The assessee’s case was re-opened again u/s 147 on the basis of information received from Sales Tax department Mumbai, that some parties were involved in providing bogus purchase bills and assessee has also shown purchases from them. Thus, it was noted that assessee was also one of the beneficiary who has availed accommodation entry of purchases of Rs. 9,47,471/- from various parties as per the detailed mentioned in the impugned penalty order. The AO in the assessment has made addition of entire purchases of Rs. 9,47,471/-. However, the Ld. CIT (A) in quantum proceedings has sustain 25% of the total addition, i.e., Rs. 2,36,868/- .

5.

Accordingly, penalty has been levied by the AO for concealment of income on the amount sustained by the Ld. CIT (A) at Rs. 1,15,229/-.

6.

The Ld. CIT (A), had deleted the penalty after referring to the various Tribunal decisions, wherein on similar facts the penalty has SHRI SAI WORKS LL been deleted in the cases where addition has been made on adhoc estimation of GP rate on bogus purchases.

7.

After hearing both the parties, and on perusal of the impugned order, it is seen that in the quantum proceedings the additions which has been sustained was purely made on adhoc basis. Once the source of purchases have been shown from the books and the addition has been made/sustained purely on adhoc basis by estimating GP rate on such purchases, then it cannot lead to inference of concealment of income an accordingly, penalty levied by the AO has rightly deleted by the Ld. CIT(A).

8.

In the result, appeal of the Revenue is dismissed. Orders pronounced in the open court on 11th April, 2023. Sd/- Sd/- (Prashant Maharishi) (Amit Shukla) Accountant Member Judicial Member मुंबई Mumbai;ददनांक Dated : 11.04.2023 Ms.Urmila

आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त (अपील) / The CIT(A)

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