M/S. SIDDHANT DIAMONDS PVT. LTD,MUMBAI vs. ACIT CIR 5(3) (1), MUMBAI

Appellant has raised solitary ground challenging levy of penalty of INR 17,440/- by the Assessing Officer under Section 271(1)(c) of the Assessment Year: 2009-10 Act which has been confirmed by the CIT(A) leading to the filing of the present appeal.

Brief facts of the case are that the Appellant is a company engaged in the business of import/export of diamonds and jewellery. For the Assessment Year 2009-10 assessment under Section 143(3) read with Section 147 of the Act framed on the Appellant vide order dated 04.03.2016 at Total Income of INR 37,45,250/- after making addition of INR 90,812/- being 12.5% of the alleged bogus purchases of INR 7,26,494/- made by the Appellant from M/s A2 Jewels. In appeal filed by the Appellant against the aforesaid assessment order, dated 04.03.2016, the CIT(A) further reduced the addition to INR 58,120/- being 8% of the alleged bogus purchases. The appeal filed by the Appellant before the aforesaid order of CIT(A) was dismissed by the Tribunal.

Since the Assessing Officer had also initiated penalty proceedings under Section 271(1)(c) of the Act, in the meanwhile, the Assessing Officer passed penalty order on 29.01.2019 levying penalty of INR 17,440/- on the Appellant. Being aggrieved the appeal preferred appeal before CIT(A) which was dismissed. Now the Appellant is in appeal before us.

When the matter was taken up for hearing none was present for the Appellant. We have considered the submissions advanced by the Ld. Departmental Representative and perused the material on record including the orders passed by the authorities below. We note that the Assessing Officer has, in paragraph 5.2 of the Assessment Order, dated 04.03.2016, observed that the Appellant has failed to prove that the purchases were made from M/s A2 Jewels and that the Appellant could have made purchases from 2 Assessment Year: 2009-10 other parties in cash and taken accommodation bills from M/s A2 Jewels. Thus, the Assessing Officer had made disallowance on estimate basis on account of failure of the Appellant to prove purchases. We note that the Tribunal has, in identical facts and circumstances, deleted penalty in the case of ITO-13(2)(4) Vs. M/s Swar Creative Art Pvt. Ltd.: (21.05.2021) and in the case of ITO 32(1)(5) Vs. M/s. Empee Engineering Corporation : ITA. Nos. 6797 & 6798/MUM/2019 (decided on 22.03.2021). Respectfully following the aforesaid decisions of the Tribunal, we delete the penalty of INR 17,440/- levied under Section 271(1)(c) of the Act.

In the result, appeal filed by the Appellant is allowed.