ACIT- 32(1), MUMBAI vs. SHRI UTTAM SHANTARAM PHUTANKAR, MUMBAI

This appeal by the Revenue is directed against the order of Commissioner of Income Tax(Appeals), National Faceless Appeal Centre, Delhi [in short 'the CIT(A)’] dated 30/07/2021 for the assessment year 2010-11.

As per defect memo raised by the Registry, this appeal is time barred by 94 days. The ld.Departmental Representative submitted that the delay in filing of the appeal was on account of COVID-19 Pandemic . The limitation for filing the appeal was extended by the Hon'ble Supreme Court of India on its own motion to mitigate the hardship caused due to COVID 19 Pandemic. The limitation for filing of appeals under various laws was extended by general order reported as Cognizance for Extension of Limitation 132 taxmann.com 123. In the present case the impugned order was passed on 30/07/2021. The appeal before the Tribunal was filed on 31/12/2021. The appeal has been filed within extended period of limitation. Hence, no delay in filing of the appeal.

The ld.Departmental Representative submitted that the Assessing Officer has levied penalty u/s. 271(1)(c) of the Income Tax Act, 1961 [ in short ‘the Act’] in respect of addition made on account of bogus purchases. The assessee failed to discharge his onus in proving genuineness of purchases from hawala operators. The CIT(A) without appreciating the facts in right perspective has deleted the penalty. The ld.Departmental Representative submitted that the findings of CIT(A) be reversed and the penalty levied vide order dated 24/08/2015 be restored.

We have heard the submissions made by ld.Departmental Representative and have examined the material available on record. The addition on account of bogus purchases was made merely on estimation basis. The Assessing Officer levied penalty under section. 271(1)(c) of the Act on the said addition. There is no concrete finding by the Assessing Officer as to what is the amount unreported by the assessee that has lead to escapement of income from tax net.

The Hon'ble Rajasthan High Court in the case of CIT vs. Krishi Tyre Retreading and Rubber Industries reported as 360 ITR 580 has held that where addition is made purely on estimate basis, no penalty u/s. 271(1)(c) of the Act is leviable. Similar view has been expressed by Ho’ble Punjab & Haryana High Court in the case of CIT vs. Sangrur Vanaspati Mills Ltd. reported as 303 ITR 53. The Hon’ble High Court approving the order of Tribunal held that when the addition has been made on the basis of estimate and not on any concrete evidence of concealment, penalty u/s. 271(1)(c) of the Act is not leviable. The Hon'ble Gujarat High Court in the case of CIT vs. Subhash Trading Co. Ltd. reported as 221 ITR 110 has taken a similar view in respect of penalty levied u/s. 271(1)(c) of the Act on estimated additions. There are catena of decisions by different High Courts and various Benches of the Tribunal wherein penalty levied u/s. 271(1)(c) of the Act on estimated addition has been held to be unsustainable.

In the facts of the case and in the light of aforementioned decisions, we see no infirmity in the order of CIT(A). Hence, the impugned order is upheld and appeal by the Revenue is dismissed being devoid of any merit.