ITO 19(3)(1), MUMBAI vs. SUPREME STEEL IMPEX, MUMBAI

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ITA 2499/MUM/2021Status: DisposedITAT Mumbai24 May 2022AY 2011-124 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 the CBDT circular regarding low tax effect for not prosecuting appeals applies to quantum proceedings, not penalty proceedings. Therefore, the Revenue's appeals were treated as withdrawn.

What were the facts?

The Revenue appealed against the deletion of penalty levied under Section 271(1)(c) for bogus purchases. The additions were made based on information from DGIT(Inv) regarding hawala dealers.

What were the issues?

Whether the CBDT circular on low tax effect applies to penalty proceedings. Whether the deletion of penalty by the CIT(A) was justified.

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, MUMBAI BENCH “G”, MUMBAI

Before: ShRI PRASHANT MAHARSHI (AM) & SMT. KAVITHA RAJAGOPAL (JM)

For Appellant: Shri Satish Bokadia
For Respondent: Shri Hoshang B Irani (DR)
Hearing: 23.05.2022Pronounced: 24.05.2022

PER KAVITHA RAJAGOPAL, JM:

1.

The captioned appeals arise out of the separate orders both dated 07/06/2021 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment years

2 ITAS 2498 & 2499/Mum/2021 2010-11 and 2011-12 against the penalty orders passed by the Assessing Officer under section 271(1)(c) of the Act. The solitary ground which is common to both the appeals is as follows:-

1.a) Whether, on the facts and in the circumstances of the case and in law, the CIT(A) was justified in deleting the penalty levied on addition made by the AO on bogus purchases despite the fact that the addition was made on the basis of credible information received from DGIT(Inv) Mumbai based on information supplied from sales tax authorities?

2.

The brief facts are that the Assessee firm is engaged in the business of trading in ferrous / non ferrous metals, filed its return of income for A.Ys 2010-11 & 2011-12 on 26/09/2010 and 19/09/2011 declaring total income of Rs.1,29,610/- and Rs.3,04,790/- respectively. Assessment was reopened for the impugned assessment years on the ground that income chargeable to tax has escaped assessment on the basis of information received from the DGIT(Inv), Mumbai, with regard to bogus sale bills issued by three parties alleged to be hawala dealers. Assessment orders under section 143(3) r.w.s. 147 were passed and addition was made. Subsequent to this, the Assessing Officer initiated penalty proceedings and levied penalty in assessee’s case under section 271(1)(c) of the Act for both the assessment years under appeal, which, on appeal was deleted by the Ld.CIT(A) on the ground that unsubstantiated claim does not amount to furnishing of inaccurate particulars of income.

3.

Aggrieved by the orders of Ld.CIT(A), the Revenue is in appeal before us.

3 ITAS 2498 & 2499/Mum/2021

4.

The Ld.AR contended that the impugned penalty of Rs.64,000/- and Rs.2,02,050/- respectively, would fall under the purview of the monetary limit prescribed by the CBDT in its in Circular No. 17/2019 vide F.No. 279/Misc.142/2007-ITJ(Pt.) dated 08.08.2019, wherein the department has taken a policy decision not to prosecute the appeals when the tax effect is less than Rs.50 lakhs. On the other hand, the Ld.DR argued that the Assessee’s case would fall within the exception provided in para 10(e) of the circular No.17/2019 dated 08/08/2019.

5.

Having considered the rival submissions of the learned representatives, we are of the considered opinion that the exception provided in para 10(e) of the circular No.17/2019 dated 08/08/2019 is applicable only for the quantum proceedings and not to penalty proceeding. As the issue involved in both these appeals pertains to penalty levied under section 271(1)(c) of the Act which is divergent to that of the quantum proceedings, we hereby treat the appeals filed by the Revenue as withdrawn on account of low tax effect with the liberty to the Revenue to recall the same at a later stage, if it warrants to be so.

6.

In the result, the appeals filed by the Revenue are dismissed.

Order pronounced in the open court on 24.05.2022.

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