SNT CONTROLS LTD.,MUMBAI vs. CIT (A)-18, MUMBAI

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ITA 271/MUM/2021Status: DisposedITAT Mumbai09 March 2022AY 2009-103 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since purchase vouchers were produced and payments were made through banking channels, the assessee could not be penalized for concealment or furnishing inaccurate particulars of income. The penalty was set aside.

What were the facts?

The Assessing Officer disallowed 100% of purchases due to non-production of suppliers, despite purchase vouchers and banking channel payments. The CIT(A) restricted the addition to 12% and sustained the penalty under Section 271(1)(c).

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when purchases are disallowed on an estimated basis due to non-production of suppliers, despite valid vouchers and banking channel payments.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “B” Bench, Mumbai

Before: Shri Shamim Yahya (AM) & Shri Pavan Kumar Gadale (JM)

For Appellant: Shri Kalpesh Turalkar
For Respondent: Shri C.T.Mathews, Sr.AR
Hearing: 08.03.2022Pronounced: 09.03.2022

O R D E R Per Shri Shamim Yahya(A.M) :- These are assessee’s appeals directed against respective orders of learned CIT(A) for respective assessment years, wherein following penalty levied under section 271(1)(c) of the Act has been sustained:-

A.Y. Amount (Rs.) of Penalty 2009-10 Rs. 83,253/- 2010-11 Rs. 8,114/- 2011-12 Rs.1,09,305/- 2. At the outset, it is noted that there is a delay of 309 days. The reason for the same is attributed to the covid pandemic. Ld. Counsel submits that as per the order of Hon’ble Supreme Court such period is to be ignored. Upon careful consideration and hearing both parties, the delay is condoned.

2 SNT controls Ltd. 3. Since the issues are common and connected and the appeals were heard together, these have been consolidated and disposed off together for the sake of convenience.

4.

Brief facts of the case leading to the levy of penalty are that the AO in these cases made disallowance of 100% on account of bogus purchases. Assessee has supplied the purchase vouchers and the payment, where shown to have been made by banking channel. However, drawing the adverse inference for the non-production of the suppliers the AO disallowed 100% of the bogus purchases. However, the AO did not doubt the sales. The ld.CIT(A) restricted the addition to 12% and gave further relief of 4% VAT paid. Penalty under section 271(1)(c) was also levied. Ld.CIT(A) sustained the penalty.

5.

Against the above order assessee is in appeal before us.

6.

We have heard the Ld. DR and perused the record. As clear from the facts recorded above, the disallowance has been made on an estimated basis on account of the non production of suppliers before the AO. The purchase vouchers were duly produced and the payments were through banking channel. In these backgrounds, in our considered opinion, assessee cannot be visited with the rigours of penalty u.s 271(1)(c). As a matter of fact, on many occasions, on similar circumstances in quantum proceedings, the disallowance itself has been deleted. In our considered opinion, on the facts and circumstances of the case assessee cannot be said to have been guilty of concealment or furnishing of inaccurate particulars of income. In this regard, we draw support from the decision of a larger bench of the Hon’ble Supreme Court in the case of the State of Orissa 82 ITR 26, where in it was held that the authority may not levy the penalty, if the conduct of the assessee is not found to be contumacious.

3 SNT controls Ltd.

7.

In the background of aforesaid discussion and precedent we set aside the order’s of Ld.CIT(A) and delete the levy of penalty.

8.

In the result, these assessee’s appeals are allowed.

Pronounced in the open court on 09.03.2022

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