DCIT 2 (2)92), MUMBAI vs. M/S NISIGANDHA POLYMERS PVT LTD., MUMBAI

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ITA 7959/MUM/2019Status: DisposedITAT Mumbai09 July 2021AY 2010-113 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 CBDT Circular No. 17/2019, which sets monetary limits for appeals, does not apply to penalty proceedings in the same way as quantum proceedings. Furthermore, penalty under Section 271(1)(c) cannot be levied on an estimated addition.

What were the facts?

The Revenue appealed against the deletion of penalty imposed under Section 271(1)(c) on an addition made for bogus purchases. The penalty was deleted by the CIT(A) as it was levied on an estimated addition.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied on an estimated addition and whether the CBDT Circular 17/2019 is applicable to penalty proceedings.

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, ‘B‘ BENCH

Before: SHRI VIKAS AWASTHY & SHRI M.BALAGANESH

For Appellant: Shri Mayank Chauhan
For Respondent: Shri Tharian Oommen, Shri Mayank Chauhan
Hearing: 05/07/2021Pronounced: 09/07/2021

आदेश / O R D E R PER M. BALAGANESH (A.M):

1.

This appeal in A.Y.2010-11 arises out of the order by the ld. Commissioner of Income Tax (Appeals)- CIT(A)-5, Mumbai in appeal No.CIT(A)-5/ACIT-2(2)(2)/IT-24/17-18 dated 01/10/2019 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as Act).

M/s. Nishigandha Polymers Pvt. Ltd.,

2.

We have heard rival submissions and perused the material available on record. We find that the ld. AO had levied penalty on the estimated addition made on account of bogus purchases. This penalty levied u/s.271(1)(c) of the Act on an addition made on account of bogus purchases was deleted by the ld. CIT(A) on the primary ground that no penalty would survive on an estimated addition. Aggrieved, the revenue is in appeal before us.

3.

We find at the outset, the ld AR argued that penalty that is in dispute before us, falls below the monetary limit prescribed by the CBDT in its Circular No. 17/2019 dated 08/08/2019 for preferring appeal by the Revenue before this Tribunal. We find that the ld. DR vehemently argued that the said case falls within the exception provided in para 10(e) of the said Circular and accordingly he argued that the appeal is maintainable. We find that the exception provided in para 10(e) of the Circular 17/2019 dated 08/08/2019 is applicable only for the quantum proceedings and the same cannot be made applicable for penalty proceedings. It is well settled that penalty and quantum assessment proceedings are distinct and separate. Even otherwise on merits, we find that the concealment penalty u/s.271(1)(c) of the Act had been levied in the instant case on an estimated addition made on account of bogus purchases. The law is very well settled that no concealment penalty would lie on an estimated addition. Accordingly, we dismiss this appeal of the Revenue by following the aforesaid Circular No.17/2019 dated 08/08/2019 and hold that the appeal of the Revenue is not maintainable.

M/s. Nishigandha Polymers Pvt. Ltd.,

4.

In the result, appeal of the Revenue is dismissed.

Order pronounced on 09/07/2021 by way of proper mentioning in the notice board.

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