RONAK METAL INDUSTRIES,MUMBAI vs. ITO WD.23(3)(6), MUMBAI

At the outset, assessee’s appeal is time barred by 40 days. In the petition for condonation of delay assessee has stated that the assessee company was dissolved w.e.f. 31/03/2018 and at the time of filing of appeal in Form No.35 e-mail ID was provided as skmi137139@gmail.com, however, the order was served through e-mail on 30/09/2024 on personal e-mail ID of partner Mr.Pankaj Shivlal Shah: pankaj61169@gmail.com instead of skmi137139@gmail.com. Since it was sent on personal e-mail ID of partner therefore, it skipped the attention of the assessee and it is only when authorised representative opened the portal to find out the possibility of filing benefit under DTSVS revised scheme 2024, it came to his knowledge that ld. CIT(A) has already passed the order on 30/09/2024. It was on receiving of this order, appeal has been filed immediately. Under these circumstances, delay of 40 days is condoned.

The brief facts are that assessee has filed its revised return of income at Rs.4,75,660/- within the prescribed time limit whch was accepted. However, subsequently, the case was reopened by issuance of notice u/s.148 on 14/10/2014 on the ground that information has been received from DG (Investigation) for bogus accommodation entries in respect of purchase parties. It was noted that assessee has made purchases from six parties for amounts aggregating to Rs. 1,81,65,330/-. The ld. AO estimated GP rate of 12.5% while making the addition and such an M/s. Ronak Metal Industries addition was confirmed from the stage of appellate authority wherein GP rate of 12.5% was confirmed. Now on such estimated GP rate, penalty u/s 271(1)(c) of Rs.7,01,635/- has been levied.

From the perusal of the facts brought on record and the finding given in the impugned orders, it is seen that the source of purchases have been shown from the books and the only allegation was that assessee might have suppressed the profit by inflating the purchases on alleged bogus parties. Once source of purchases are from the books and corresponding sales have not been doubted and merely because addition has been made by applying the same adhoc GP rate to factor any suppression of alleged bogus profit, no penalty can be levied for concealment of income and accordingly, the penalty levied by the ld. AO is deleted.

In the result, appeal of the assessee is allowed.