ITO-6(1)(2), MUMBAI vs. M/S. AMOOLYA ENGINEERS P. TLD., MUMBAI

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ITA 1481/MUM/2020Status: DisposedITAT Mumbai13 September 2021AY 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 was not sustainable as the additions were merely estimated and there was no concealment of income. Furthermore, the Revenue's appeal was not maintainable due to the low tax effect circular.

What were the facts?

The Revenue appealed against the deletion of penalty by the CIT(A) for AY 2009-10. The penalty was levied on estimated additions for bogus purchases, which were later reduced by the Tribunal.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable on estimated additions for unproved purchases and if the Revenue's appeal is maintainable based on the low tax effect circular.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: HON’BLE SHRI MAHAVIR SINGH, VP & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

For Respondent: Shri Brajendra Kumar, Ld. DR

O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year [AY] 2009-10 contest the order of Ld. Commissioner of Income-Tax (Appeals)-12, Mumbai [CIT(A)] dated 18/12/2019 which has deleted the penalty of Rs.8,83,510/- u/s 271(1)(c) as levied by Ld. AO vide penalty order dated 27/09/2018. Though none appeared for assessee, however, the material on record was sufficient enough for disposal of the appeal.

2.

The assessee was assessed u/s 143(3) r.w.s. 147 on 09/03/2015 wherein it was saddled with estimated addition of 12.5% on alleged bogus purchases which was finally reduced to 5% by Tribunal. Consequently, penalty proceedings were initiated and penalty of Rs.8.83 Lacs was levied by Ld. AO vide order dated 27/09/2018. Upon further appeal, Ld. CIT(A) deleted the same in terms of certain decision of the Tribunal. Aggrieved, the revenue is in further appeal before us.

3.

In our considered opinion, the impugned order would not require any interference on our part for two reasons. Firstly, the additions were merely estimated additions for unproved purchases and therefore, no case of concealment of income or furnishing of inaccurate particulars of income could be made out against the assessee. Secondly, the revenue’s appeal is not maintainable in terms of latest low tax effect CBDT Circular No. 17/2019 dated 08/08/2019 [F.No.279/Misc. 142/2007- TTJ(Pt.) which prescribes minimum threshold limit of Rs.50 Lacs for revenue to agitate the matter further before Tribunal. It is settled legal position that quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of additions may not be the sole ground for confirming the penalty. Extending the same logic, unless specific exception is provided in the circular with respect to penalty also, it could not be construed that the penalty was to be treated at par with quantum additions. The clause 10(e) specifically applies only to additions which are based on information received from external sources. The levy of penalty, by no stretch of imagination, could be construed as addition as envisaged by clause 10(e). Therefore, the submissions made by Ld. DR could not be honored and we decline to accept the same.

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