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Income Tax Appellate Tribunal, VIRTUAL COURT
Before: SHRI C.N. PRASAD, HONBLE & SHRI MANOJ KUMAR AGGARWAL, HONBLE
Theseappeals are filed by the revenue against different orders of the Learned Commissioner of Income-tax (Appeals)-1, Thane [hereinafter for short "Ld. CIT(A)] dated 19.08.2019 for the A.Ys.2009- 10 to A.Y.2011-12in deleting the penalty levied u/s. 271(1)(c) of the Act by the Assessing Officer.
2 ITA.NOs. 6743, 6744 & 6745/MUM/2019 (A.Ys: 2009-10, 2010-11 & 2011-12) M/s. Varna Graphics 2. Briefly stated the facts are that, assessee engaged in the business of Pre-Press(Scanning and Visualizing)filed its return of income on 29.09.2009, 29.09.2010 and 30.09.2011declaring income of ₹.7,86,550/- ₹.10,46,640/-and ₹.14,37,710/-for the A.Y. 2009-10, A.Y. 2010-11 and A.Y. 2011-12 respectively. The returns were processed u/s. 143(1) of the Act accepting the income returned.Subsequently, assessments werereopened u/s. 147 of the Act for the reason that the assessee has obtained accommodation entries from various parties as per the information provided by Sales Tax Department, Mumbai. In the course of the re-assessment proceedings the Assessing Officer required the assessee to prove the genuineness of the purchases. Assessee however filed revised return of income offering the purchases to income, to purchase peace of mind and to avoid further unnecessary litigations and also paid taxes thereon. The reassessments were completed u/s.143(3) r.w.s 147 of the Act on 10.02.2014 determining the income at ₹.26,94,410/-, ₹.18,38,760/- and ₹.26,94,410/- for the A.Y. 2009-10, A.Y.2010-11 and A.Y. 2011-12 respectively, accepting the revised return of income filed by the assessee.
3 ITA.NOs. 6743, 6744 & 6745/MUM/2019 (A.Ys: 2009-10, 2010-11 & 2011-12) M/s. Varna Graphics 3. Subsequently, Assessing Officer initiated penalty proceedings and levied penalty of ₹.2,79,700/-, ₹.2,00,358/- and ₹.4,14,288/- u/s.271(1)(c) of the Act for the A.Y.2009-10, A.Y. 2010-11 and A.Y.2011-12 respectively, stating that the assessee has furnished inaccurate particulars of its income and concealed its income within the meaning of section 271(1)(c) r.w. Explanation 1 of the Act. On appeal the Ld.CIT(A) deleted the penalty levied by the Assessing Officer.
Against this order of the Ld.CIT(A), revenue is in appeal before us.
Inspite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought by the assessee. Therefore, we proceed to dispose off these appeals on hearing the Ld. DR on merits.
Ld. DR vehemently supported the orders of the Assessing Officer.
We have heard Ld. DR, perused the orders of the authorities below. On a perusal of the material available on record, we find that the tax effect in these appeals is ₹.2,79,700/-, ₹,2,00,358/- and ₹.4,14,288/- for the A.Y. 2009-10, A.Y. 2010-11 and A.Y.2011-12 respectively, is less than ₹.50 Lakhs and therefore the appeals of the revenue are not maintainable on account of low tax effect in view of the CBDT Circular
4 ITA.NOs. 6743, 6744 & 6745/MUM/2019 (A.Ys: 2009-10, 2010-11 & 2011-12) M/s. Varna Graphics No. 17/2019 dated 08.08.2019. When this was pointed out Ld. DR submitted that it is covered under exceptions provided under clause 10(e) of the circular which provides that when additions are made based on the information received from “external sources” the revenue appeals cannot be dismissed on monetary grounds. Ld. DR submitted that this is a case where information has been received from DGIT (Inv.)/Sales Tax Department based on which re-assessment was made u/s. 147 of the Act and thus falls under the exception as the information was received from external sources.
On a perusal of the re-assessment order, we observe that the re-assessment u/s. 143 r.w.s. 147 of the Act was made on the basis of information received from Sales Tax Department, Mumbai. We have noticed in many cases where Sales Tax Department provided information to DGIT(Inv.,), Mumbai and the DGIT(Inv.,) Mumbai in turn forwarded the information to the concerned Assessing Officer. As held by the Coordinate Bench in the case of ITO v. Late Shri Amarchand P.
Shah (legal heir Shri Nitin A. Shah) in ITA.No. 818 to 820/Mum/2017 dated 08.07.2019, DGIT (Inv.,), Mumbai is not an external agency but it is only an internal agency of the revenue department. In any case the 5 ITA.NOs. 6743, 6744 & 6745/MUM/2019 (A.Ys: 2009-10, 2010-11 & 2011-12) M/s. Varna Graphics modified instructions dated 20.08.2018 applies only for the assessment proceedings and it does not apply to penalty proceedings. Penalty is levied based on the addition/disallowance made in the quantum assessment proceedings which is separate from the penalty proceedings.
In the circumstances, since the revenue effect in all these appeals is less than ₹.50 lakhs, we hold that these appeals are not maintainable.
On merits the penalty was deleted by the Ld.CIT(A) since the return income and the income computed by the Assessing Officer in the Assessment Order are same, there is no difference, observing as under:
- “5.2. Further, the Hon'ble ITAT 'A' Bench, Mumbai, in the case of Armoury International vs ACIT, vide 3300 & 3301/Mum/2017, dated 01.01.2019, has held that: “6. We have heard both the counsel and perused the records. We find that the assessment in this case has been completed on the returned income. Hence, when the returned income and the assesses income are same, the machinery provision for levy of penalty u/s 271(1)(c) fails, as the penalty u/s. 271(1)(c) is levied with reference to the tax sought to be evaded, which is the difference between the income returned and that assessed by the A.O.
7. In this case, since the assessed income and the returned income are the same the machinery provision for levy of penalty u/s 271(1)(c) fails. In this regard we draw support from the decision of Hon'ble Delhi High Court in the case of CIT vs. SAS Pharmaceutical [2011]] 335 ITR 259 (Del.). The Hon'ble High Court has expounded that penalty u/s. 271(1)(c) can only be levied if in the course of proceedings, the A.O. is satisfied that 6 ITA.NOs. 6743, 6744 & 6745/MUM/2019 (A.Ys: 2009-10, 2010-11 & 2011-12) M/s. Varna Graphics there is an concealment or furnishing inaccurate particulars. The words 'in the course of any proceedings under this Act mean the assessment proceedings'. However, the question 'whether there is concealment or inaccurate particulars' has to be determined with reference to the returned income. Accordingly, in the background of the aforesaid discussion and precedent, we set aside the order of the Id. CIT(A) and delete the levy of penalty." 5.3 Considering the facts of the case and decision of the Hon'ble ITATs (supra) the penalty of Rs. 2,79,700/-, levied by the AO, u/s.271(1)(c) of the Act is deleted and the grounds of appeal, raised as above, are allowed.”
9. On a perusal of the order of the Ld.CIT(A) and the reasoning given therein we do not find any infirmity in the order passed by the Ld.CIT(A) in deleting the penalty.
In the result, appeals of the revenue aredismissed.
Order pronounced on as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board.