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

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).

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.

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.

In the result, appeal of the Revenue is dismissed.