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Facts
The Revenue filed an appeal against the order of the CIT(A) which deleted a penalty imposed under Section 271(1)(c) of the Income-tax Act, 1961. The penalty was levied on an addition made on account of alleged bogus purchases.
Held
The Tribunal noted that the quantum of penalty was hit by a CBDT circular regarding monetary limits for appeals. The appeal was dismissed as withdrawn based on this circular.
Key Issues
Whether the penalty levied under Section 271(1)(c) was justified, and whether the appeal was maintainable in light of CBDT circulars on monetary limits for appeals.
Sections Cited
271(1)(c), 69C
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Income Tax Appellate Tribunal, “A” BENCH MUMBAI
Before: SHRI SAKTIJIT DEY, HONBLE & SHRI GIRISH AGRAWAL
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the Revenue is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide order no. ITBA/NFAC/S/250/2024-25/1072157831(1), dated 14.01.2025, passed against the penalty order by NFAC, Delhi, u/s.271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 29.04.2016, for Assessment Year 2011-12.
Grounds taken by the Revenue are reproduced as under: (1) Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the penalty Ra 1,18,470/- levied by the AQ on the restricted addition 3% of Rs. 5,80,994/ by ignoring the fact that the Maharashtra Sales Tax Department through DGIT(Inv.), Mumbai hat proved beyond doubt that the assessee has obtained accommodation entries of bogus /un-proven purchases from two hawala dealers amounting to Rs. 46,47,953/- to inflate the expenses and thereby suppress true profit and this act of the assessee itself established deliberate failure to furnish accurate particulars of the income, which attracts for imposition of penalty u/s 271(1)(c) of the Act, for concealment of income?"
(2). Whether on the facts and circumstances of the case and in law, Id. CIT(A) has erred in deleting the penalty Rs. 1,18470/- levied by the AO on the restricted addition 3% of Rs.5,80,994/- by ignoring the fact that the disallowance of purchase made on ad-hoc basis were not arbitrary but based on undisputed fact that the assessee has taken accommodation entries in the form of bogus purchase. The quantification of income out of bogus purchases was made but it does not alter the fact that the assessee has concealed the particulars of his income by way of non-genuine purchases through the bogus parties. The assessee cannot get away with the penalty levied on estimation of undisclosed income when the fact of undisclosed income is beyond doubt and in the absence of exact determination of undisclosed income the knowledge of which is within the domain of the assessee, an estimation of undisclosed income was made which was held by the judicial authorities to be proper ?"
3. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the penalty levied, by ignoring the fact that there was a conscious concealment of particulars of income and a deliberate failure to furnish accurate particulars of the income and relevant evidences by the assessee, even at the penalty proceedings, which attracts the provision of section 271(1)(c) and explanation thereto, as held in the case of E.P. Madhusudhan Vs. CIT reported in 251 ITR 99 (SC) ?"
4.Whether on the facts and circumstances of the case and in law, the decision of the Lad. CITTA) is right in deleting the penalty, in view of the decision of the Hon'ble High Court Mumbai, in the case of Pr. Commissioner of Income Tax 5, Mumbai Va Kanak Impex (India) Ltd (2015)172 Taxmann.com 283(Bombay) Dated. 03.03.2025, wherein it was held that the 100% addition made on the bogus purchases has been allowed, by rejecting the Hon'ble ITAT decision of estimating the profit rate @ 12.5% on bogus purchases and thereby impliedly grant deduction of such unexplained expenditure incurred u/s 69C of the Act, even though, the assessee failed to discharge its onus to prove genuineness of alleged purchases and has offered no explanation of the sources of expenditure incurred on account of such purchases ?"
5. Whether on the facts and circumstances of the case and in law, Id. CIT(A) has erred in deleting the penalty levied, by ignoring the observations of Hon'ble High Court in the CIT VS Chanchal Katiyal 173 Taxman 71(all), which is relevant in the facts and circumstances of this case, that if the assessee did not furnish particulars or inaccurate explanation for the concealed income, penalty is justified?"
Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the penalty levied, without appreciating the decision of the Hon'ble Supreme court in case of Union of India Vs Dharmendra Textiles Processors &ors 306 ITR 277), wherein it was held that explanation appended to sec. 271(1)(c) of the Act, entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return and that the said section has been enacted to provide for a remedy for loss of revenue ?"
Whether on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in directing the AO to delete the penalty levied, without appreciating judgment of Hon'ble Delhi High Court in the case of CIT Vs Atul Kumar Gupta in which reinforces the Revenue Authority to impose penalties under section 271(1)(c), in the cases where the assessee fails to provide accurate and satisfactory explanations for discrepancies in their accounts even if the addition is made of estimate basis ?"
The Tax- Effect involved in the instant case is Rs. 1,18,470/-, which is below the prescribed limit us per CBDT's Circular F.No.279/Misc. 142/2007-ITJ(Pt) amended vide No 09/2024 dated. 17.09.2024. However, the case fall under one of the exceptions laid down in CBDT Circular No. 05/2024 Dated. 15.03.2024, wherein it is stated that in cases involving "Organized Tax Evasion" the decision to file appeal/SLP shall be taken on merit without regard to the tax effect and the monetary limit.”
At the outset we note that there is a delay of 8 days in filing the present appeal before the Tribunal for which petition for condonation of delay along with affidavit is placed on record. The same have been perused and we find it appropriate to condone the brief delay of 8 days to take up the matter for adjudication.
The issue contested in this appeal is in respect of deletion of penalty by the ld. CIT(A), imposed under Section 271(1)(c) of the Act amounting to Rs.1,18,471/-, levied on the restricted addition of Rs.5,80,994/- @ 3% on alleged accommodation entry for bogus purchases. The quantum of penalty so imposed is hit by Circular No. 09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes (CBDT) whereby the monetary limit of Rs.60 Lakhs prescribed in respect of appeal before the Tribunal. Since the present appeal is in respect of imposition of penalty, the same is not covered by the exceptions prescribed in the said Circular.
Accordingly, in terms of the aforesaid CBDT circular, the present appeal filed by the revenue is dismissed as withdrawn.