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Income Tax Appellate Tribunal, ‘SMC‘ BENCH MUMBAI
Before: SHRI ABY T VARKEY & SHRI M.BALAGANESH
Assessee by None Revenue by Shri. Vaibhav Jain Date of Hearing 13/12/2022 Date of Pronouncement 14/12/2022 O R D E R PER M.BALAGANESH (A.M.) : This appeal in Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC for short), [hereinafter referred to as ld. CIT(A)] in Appeal No. ITBA/NFAC/S/250/2022-23/1044966831(1) dated 26.08.2022 against the assessment order passed by the learned Income Tax 2 M/S. MANISHA CONSTRUCTION COMPANY LTD Officer, National Faceless Assessment Circle, Delhi [hereinafter referred to as ld. AO] under section under section 271(1)(c) of the Income Tax Act, 1961 [hereinafter referred to as the ‘Act’] on 30.12.2021 for the Assessment Year (A.Y.) 2011-12.
The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the levy of penalty u/s 271(1)(c ) of the Act in respect of addition sustained in respect of bogus purchases on an estimated basis.
None appeared on behalf of the assessee.
We have heard the ld. DR and perused the materials available on record. We find that the assessee had made some purchases from some tainted parties and the ld. AO had resorted to make disallow the entire purchases made from such tainted parties in the sum of Rs 9,78,780/- in the assessment. The ld. CIT(A) in quantum proceedings observed that since the sales made out of disputed purchases had not been doubted by the revenue, only the profit element embedded in the value of disputed purchases could be brought to tax. Accordingly, the ld. CIT(A) estimated such profit percentage to be at 12.5% and directed the ld. AO to re-determine the income of the assessee accordingly. Pursuant to this, the ld. AO levied penalty u/s 271(1)(c ) of the Act in the sum of Rs 37,805/- on the sustained addition made on account of bogus purchases on an estimated basis. The ld. CIT(A) upheld the levy of penalty despite the fact that the addition has been ultimately sustained only on an estimated basis by estimating the profit percentage embedded in the disputed purchases. The law is now very well settled that there cannot be any concealment penalty on an estimated addition. Hence we have no hesitation in directing the ld. AO to delete the penalty in the sum of Rs 37,805/- in the instant case. Accordingly, the ground raised by the assessee is allowed.
3 M/S. MANISHA CONSTRUCTION COMPANY LTD 5. In the result, the appeal of the assessee is allowed. Order pronounced on 14/12/2022 by way of proper mentioning in the notice board.