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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI PRAMOD KUMAR & SHRI PAVAN KUMAR GADALE
O R D E R PER PAVAN KUMAR GADALE JM: These are the appeals filed by the revenue against the separate orders of the National Faceless Appeal Centre (NFAC), Delhi passed u/s 271(1)(c) and 250 of the Act.
Since the issues in these appeals are common and identical, hence they are clubbed, heard and consolidated order is passed. For the sake of Bajranglal Bhikaram Mittal, Mumbai. - 2 - convenience we shall take up assessee appeal in for the A.Y 2009-10 as a lead case. The revenue has raised the following grounds of appeal.
1. "Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) has erred in deleting the penalty u/s. 271(1)c) of Rs. 3,74,872/- which was levied on the addition of Rs. 11,02,886/- being 4% of the total bogus purchase of Rs. 2,75,72, 160?" 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty u/s. 271(1)(c) of Rs.3,74,872/- inspite of the penalty levied on the amount of Rs. 11,02,886/- which was made on the basis of information received from DGIT(Inv.) and Sales Tax Department, Maharashtra with regard to bogus purchase made by the assessee from debtors without supply of actual goods and sound evidence?" 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty u/s. 271(1)(c) of Rs. 3,74,872/- imposed in respect of difference between enhanced income confirmed by ITAT over and above the returned income based on evidences which prove that the assessee has debited purchases from parties whiàh did not make actual supply of goods and, thereby, falsified the books of accounts?" 4. The appellant craves leave to amend or alter or add a new ground which may be necessary.
Bajranglal Bhikaram Mittal, Mumbai. - 3 -
The brief facts of the case are that, the assessee is engaged in the business of trading in Iron and steel. The assessee has filed the return of income on 25.09.2009 for the A.Y2009-10 disclosing a total income of Rs.34,40,790/- and the return of income was processed u/s 143(1) of the Act. The Assessing officer (A.O) received the information from Sales Tax Department Maharashtra, the list of the persons who have provided entries for bogus purchase bills to the tax payers. On verification of the facts, the A.O. find that the assessee is one of the beneficiary and has reason to believe that the income has escaped assessment and issued notice u/s 148 of the Act. Subsequently the notice u/s 143(2) and 142(1) of the Act along with questionnaire are issued. In compliance to notice, the assessee has submitted the financial statements vide letter dated 5-11-2014.
The A.O. found that the assessee has made purchases from seven parties aggregating to Rs.2,75,72,165/- and the assessee was called to submit the copies of purchase bills, transport bills pertaining to purchase transactions. Since the assessee has not submitted the details, the A.O. has Bajranglal Bhikaram Mittal, Mumbai. - 4 - issued the notice u/s 133(6) of the Act on the seven partiers in respect of purchases and the notices were returned un served by the postal authorities and no reply was received. Therefore the A.O. has called for the additional details from the books of accounts maintained. The A.O. found that the genuineness of the purchase transactions could not be established by the assessee with evidences and the A.O. relied on the judicial decisions and estimated income @ 12.5% of the bogus purchases which works out to Rs. 34,46,520/- and assessed the total income of Rs.68,87,311/- and passed the order u/s 143(3) r.w.s 147 of the Act dated14-03-2015.
Subsequently, the A.O. has initiated the penalty proceedings u/s 271(1)(c) of the Act. In the course of penalty proceedings it was brought to the knowledge of the Assessing officer that the assessee has filed an appeal with the CIT(A) on quantum addition of bogus purchases. Whereas, the CIT(A) has relied on the facts and judicial decisions and restricted the addition to the extent @ 8% of purchases, and on appeal, the Honble ITAT has restricted to @4%. The A.O. has considered these facts and observed that in spite of Bajranglal Bhikaram Mittal, Mumbai. - 5 - providing the opportunity, no explanations were filed in respect of penalty notice. The A.O. dealt on the findings of the scrutiny assessment and levied a penalty of Rs.3,74,872/- and passed the order u/s 271(1)(c) of the
Aggrieved by the penalty order, the assessee has filed an appeal with the CIT(A), the CIT(A) has considered the grounds of appeal, findings of the A.O and the submissions of the assessee and observed that the A.O has made addition of bogus purchases in the assessment U/sec 143(3) r.w.s Sec147 of the Act. Further, the Honble Tribunal in quantum appeal has restricted the addition by estimating gross profit/income @4%. But the A.O has levied the penalty u/sec 271(1)(c) of the Act on the estimated income. The CIT(A) dealt on the provisions of Sec. 271(1)(c) of the Act and relied on the Coordinate Bench of Hon’ble Tribunal and the Hon’ble High Court decisions and observed that no penalty can be levied on estimated income and directed the A.O. to delete the penalty and allowed the assessee’s appeal. Aggrieved by the order of the CIT(A),the revenue has filed an appeal with the Hon’ble Tribunal. Bajranglal Bhikaram Mittal, Mumbai. - 6 -
6. At the time of hearing, none appeared on behalf of the assessee. Contra, the Ld. DR submitted that the CIT(A) erred in deleting the penalty, whereas the A.O has received the information that, the assessee has obtained bogus purchase bills and the same could not be overlooked and prayed for allowing the revenue appeal.
7. We heard the Ld.DR submissions and perused the material on record. The sole crux of the disputed issue as envisaged by the Ld.DR that the CIT(A) has erred in deleting the penalty overlooking the transactions of bogus purchases. Whereas, the Ld.CIT(A) considering the facts and circumstances observed that the penalty cannot be levied on estimated income. We find that the Honble Tribunal in quantum appeal has estimated income/gross profit @ 4% of bogus purchases.
We are of the opinion that when the addition is on estimated basis, penalty u/s 271(1)(c) of the Act cannot be levied on such adhoc estimated income. The disallowance of purchases on ad-hoc/estimated basis does not tantamount to furnishing inaccurate particulars of income under the provisions of Section Bajranglal Bhikaram Mittal, Mumbai. - 7 - 271(1) (c) of the Act. The A.O. has not doubted the sales and made disallowance of bogus purchases and we rely on the ratio of the Honorable Jurisdictional High Court in the case of M/s Nikunj Eximp Enterprises Vs Cit (W.P.No 2860 dated 18-06-2014). Further the assessing officer made an addition based on the information received from Sales tax department Maharashtra. We are of the opinion that once the revenue accepts that penalty is levied on the basis of information from the outside agency/ department, the penalty is not sustained. The Ld. DR could not controvert the findings of the CIT(A) with any new cogent evidences or information to take different view. Accordingly, we are not inclined to interfere with the order of the Ld.CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue .
ITA.No. 2483 &2482/Mum/2022, A.Y 2010-11&2011-12
As the facts and circumstances in these appeals are identical to for the A.Y.2009-10 except the variance in figures. Therefore, the decision rendered in above paragraphs would apply Bajranglal Bhikaram Mittal, Mumbai. - 8 - mutatis mutandis for this appeal also. Accordingly, grounds of appeal of the revenue are dismissed
In the result, all the three appeals filed by the revenue are dismissed.