ITO 8 (2)(4), MUMBAI vs. M/S SUN COLORANTS PVT LTD., MUMBAI

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ITA 6469/MUM/2019Status: DisposedITAT Mumbai28 April 2022AY 2009-103 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 penalty could not be sustained as the addition was made on an estimation basis and the Assessing Officer failed to establish concealment of income. The Tribunal also noted the low tax effect of the appeal.

What were the facts?

The Income Tax Officer appealed the deletion of a penalty imposed under Section 271(1)(c) for alleged bogus purchases. The penalty was levied after an addition was made to the assessee's income on an estimation basis.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied when additions are made on an estimation basis and whether the appeal is maintainable on grounds of low tax effect.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 148,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, H BENCH, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL "H" BENCH, MUMBAI SHRI PRAMOD KUMAR, VICE PRESIDENT SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER (ASSESSMENT YEAR: 2009-10) Income Tax Officer-8(2)(4), Mumbai, Room No. 618, 6th Floor, Aayakar Bhavan, M.K. Road, Mumbai - 400020 ……………… Appellant Vs M/s Sun Colorants Pvt. Ltd., 142/9, Ashalaya, 2nd Floor, Sion (West), Mumbai - 400022 [PAN: AACCS7533D] …………….… Respondent Appearances For the Appellant/Department : Ms. Neha Thakur For the Respondent/ Assessee Shri Vijay Mehta Date of conclusion of hearing : 21.02.2022 Date of pronouncement of order : 28.04.2022

O R D E R Per Rahul Chaudhary, Judicial Member:

1.

By way of the present appeal the Appellant/Department has challenged the order, dated 30.07.2019, passed by the Commissioner of Income Tax (Appeals) – 14, Mumbai [hereinafter referred to as „the CIT(A)‟] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as „the Act‟] in appeal CIT(A)-14/IT- 2/2018-19 for the assessment year 2009-10, whereby the CIT (A) had allowed the appeal filed by the Assessee against the penalty order, dated 22.03.2018, passed under section 271(1)(c) of the Act.

2.

Revenue has raised the following grounds of appeal:

Assessment Year: 2009-10 “1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting the penalty u/s 271(1)(c) without having regard to the fact that the penalty was imposed in respect of the purchases which were conclusively proved to be bogus & thus there was furnishing of accurate particulars of income & also concealment of income.

2. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in quashing the assessment order on the ground that the case was not validly reopened.”

3.

Brief facts of the case are that the Assessee, a private limited company, filed its return of income on 28.09.2009 declaring total income at INR 20,960/-. Assessment was framed on the Assessee under Section 143(3) read with Section 148 of the Act vide order, dated 13.03.2015, wherein, inter alia, an addition of INR 3,51,000/- (being 12.5% of bogus purchases of INR 28,08,000/-) was made to the returned income.

4.

In the penalty proceedings initiated under Section 271(1)(c) of the Act, penalty of INR 1,08,459/- was levied vide order, dated 22.03.2018. The CIT(A), however, allowed the appeal filed by the Assessee and deleted the aforesaid penalty following the decision of the Tribunal in the case of ITO 8(1)-3 Mumbai Vs. M/s. ETCO Telecom Ltd. (ITA No. 5243, 5998 & 9999/Mum/2012) and in the case of ACIT vs. M/s Balaji Construction (ITA No. 217/ Mum/ 2015).

5.

Being aggrieved, the Revenue has filed the present appeal. We have perused the material on record and considered the rival submissions. We note that the addition in respect of which penalty has been levied was made on estimation basis, and therefore, in our view, levy of penalty cannot be sustained in the facts of the present case. The CIT(A) has noted that the Assessing Officer has failed to bring on record any material to establish concealment on the part of the Assessment Year: 2009-10 Assessee and has allowed the appeal of the Assessee by placing reliance on the abovesaid decisions of the Tribunal. We do not find any infirmity in the order of the CIT(A). Even otherwise, the appeal filed by the Revenue is liable to be dismissed on account of low tax effect.

6.

In view of the above, the appeal filed by the Revenue is dismissed.

Order pronounced on 28.04.2022.

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