ACIT 12(2) (1), MUMBAI vs. DIE PLAST PVT LIMITED, MUMBAI

Aforesaid appeal by revenue for Assessment Year [AY] 2010-11 contest the order of Ld. Commissioner of Income-Tax (Appeals)-20, Mumbai [CIT(A)] dated 28/05/2019 which has deleted the part penalty of Rs.1,93,433/- as levied by Ld. AO vide penalty order dated 31/03/2018 u/s 271(1)(c) of the Act. The penalty was levied against estimated addition of bogus purchases and rejection of claim of loss on fixed assets. Though none appeared for assessee, however, the material on record was sufficient enough for disposal of the appeal. The Ld. DR pleaded for restoration of the penalty.

Upon perusal of impugned order, it could be seen that the penalty has been deleted by Ld. CIT(A) since the addition of bogus purchases was purely on estimation basis. However, the penalty on rejection of claim of loss on fixed assets was confirmed. 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.