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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
PER RAVISH SOOD, J.M: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-44, Mumbai, dated 25.02.2020, which in turn arises from the order passed by the A.O u/s 271(1)(c) of the Income Tax Act, 1961 (for short ‘Act’), dated 31.01.2019 for A.Y.2009-10. The revenue has assailed the impugned order on the following grounds before us:
1. On the facts and in the circumstances of the case, the ld. CIT(A), erred in deleting the penalty levied by the A.O u/s 271(1)(c) of the Income Tax Act, 1961 2 ITO 32(1)(3) Vs. Shri Bipin Girdharilal Bhadresa of Rs.21,629/- without appreciation the fact that the assessing officer has correctly held that the assessee has failed to substantiate the transactions claimed in its return of income thereby evaded taxes to that extent.
2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in not appreciating the fact that the act of assessee clearly falls within the ambit of provisions of Explanation -1 of Sec. 271(1)(c) of the Act as the assessee had failed to offer an explanation or which was found by the A.O to be false.
3. On the facts and in the circumstances of the case, the ld. CIT(A) erred in deleting the penalty levied by the A.O u/s 271(1)(c) of the I.T. Act, 1961 of Rs.21,629/- without appreciating the fact that the assessee claimed bogus purchases in its return of income of income thereby making himself liable for penalty u/s 271(1)(c) of the I. T. Act, 1961.
On the facts and in the circumstances of the case, the Hon’ble ITAT is requested to entertain this appeal though the tax effect is below the monetary limit prescribed in the CBDT Circular No. 17/2019 date d08.08.2019 r.w Circular No. 2018 dated 11.07.2018 as amended on 20.08.2018 as the case falls in the exception provided in Para 10(e) of the said Circular in as much as the addition is bases on information received from external sources in the nature of law enforcement agencies, namely, Sales Tax Authorities.
The appellant prays that the order of the ld. CIT(A) on the above grounds be set aside and that of the assessing officer be restored.
The appellant craves leaves to amend or alter any ground or add a new ground.
Briefly stated, the assessee had e-filed his return of income for A.Y 2009- 10 on 16.09.2009, declaring an income of Rs.1,57,920/-. The return of income was initially processed as such u/s 143(1) of the Act. Subsequently, on the basis of information received by the A.O from the Sales Tax Department [through DGIT (Inv.),Mumbai] that the assessee as a beneficiary had obtained bogus purchase bills of Rs.1,69,042/-, its case was reopened u/s 147 of the Act. Assessment was thereafter framed by the A.O vide his order passed u/s 143(3) r.w.s 147, dated 22.01.2015 and the income of the assessee was determined at Rs.3,33,960/- after making the following additions:
Sr. No. Particulars Amount 1. Addition of unexplained expenditure of the Rs.1,69,042/- bogus/unverifiable purchases u/s 69C. 2. Addition of interest on loan. Rs.6,993/- 3 ITO 32(1)(3) Vs. Shri Bipin Girdharilal Bhadresa
After culmination of the assessment proceedings, the A.O vide his order passed u/s 271(1)(c) dated 31.01.2019 imposed a penalty of Rs.21,629/- in respect of the aforesaid additions made by the A.O.
4. Aggrieved, the assessee assailed the order passed by the A.O u/s 271(1)(c) before the CIT(A). As is discernible from the order of the CIT(A), we find that the assessee had only challenged the levy of penalty u/s 271(1)(c) w.r.t the addition of bogus purchases made by the A.O. Be that as it may, the CIT(A) finding favor with the contentions advanced by the assessee vacated the penalty that was imposed by the A.O. The CIT(A) was of the view that as the addition made by the A.O on an ad hoc basis did not indicate any deliberate attempt on the part of the assessee to conceal or furnish inaccurate particulars of income, therefore, penalty u/s 271(1)(c) could not have been justifiably imposed on him. Accordingly, the CIT(A) vacated the penalty imposed by the A.O u/s 271(1)(c) and allowed the appeal. 5. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The assessee respondent has filed his written submissions in support of the order of the CIT(A). 6. Per contra, the ld. Departmental Representative (for short ‘D.R’) assailed the order of the CIT(A). It was submitted by the ld. D.R that as the assessee had booked bogus purchases, therefore, the A.O had rightly imposed penalty u/s 271(1)(c) of the Act. Backed by his aforesaid contentions, it was submitted by the ld. D.R that the order of the CIT(A) be set-aside and that of the A.O be restored. 7. We have heard the ld. D.R, perused the written submissions filed by the assessee and the orders of the lower authorities. Admittedly, it is a matter of fact borne from the record that the assessee had failed to substantiate the genuineness and veracity of its claim of having made purchases of Rs.1,69,042/- from the following two parties:
4 ITO 32(1)(3) Vs. Shri Bipin Girdharilal Bhadresa TIN No. Name of the Party Amount (In Rs.) 27200610259V SURACHI MULTITRADE PVT. LTD. 84,968/- 27530626228V ACCURE IMPEX PVT. LTD. 84,074/- As the assessee had failed to discharge the onus that was cast upon him as regards proving the authenticity of his claim of having made genuine purchases from the aforementioned parties, therefore, the A.O held a conviction that the assessee had not made any purchases from the aforementioned parties. Backed by his aforesaid observation, the A.O added the entire value of the impugned purchases of Rs.1,69,042/- as an unexplained expenditure u/s 69C of the Act.
We have given a thoughtful consideration to the issue before us and are unable to persuade ourselves to subscribe to the view taken by the A.O. It is a matter of fact borne from the record that the assessee had failed to substantiate the authenticity of the impugned purchase transactions on the basis of supporting documents. But then, we cannot remain oblivious of the fact that the assessee in his attempt to fortify the genuineness of the impugned purchase transactions in question had produced before the A.O certain documentary evidence, viz. purchase bills and also the bank statements from where payments to the aforementioned suppliers were made by cheques. In our considered view, though the failure on the part of the assessee to discharge the onus as regards proving the genuineness of the impugned purchases would justify the addition made by the A.O in the course of the assessment proceedings, however, in the absence of any clinching material which would irrefutably prove to the hilt that the assessee had booked bogus purchases no penalty u/s 271(1)(c) could have validly been imposed on him. Accordingly, we are of strong conviction that the CIT(A) had in the totality of the facts involved in the present case rightly vacated the penalty imposed by the A.O u/s 271(1)(c) of the Act. We, thus, in the backdrop of our aforesaid deliberations finding no infirmity in the view taken by the CIT(A) uphold his order.
5 ITO 32(1)(3) Vs. Shri Bipin Girdharilal Bhadresa
Resultantly, the appeal filed by the revenue being devoid and bereft of any merit is dismissed.