ITO-28(3)(5), MUMBAI, MUMBAI vs. SHRI. TARKESHWARNATH ANGADPRASAD GUPTA, MUMBAI

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ITA 5741/MUM/2019Status: DisposedITAT Mumbai23 June 2021AY 2009-104 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 upheld the CIT(A)'s decision to delete the penalty. It agreed that penalty under Section 271(1)(c) is not leviable when additions are made on an estimation basis, as there is no concealment or furnishing of inaccurate particulars of income in such cases.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting a penalty levied under Section 271(1)(c). The original assessment involved additions for bogus hawala purchases, which the CIT(A) had partly sustained. The penalty was levied on the tax sought to be evaded.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when additions to income are made on an estimation basis. Whether the assessee concealed particulars of income or furnished inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI RAJESH KUMAR

For Respondent: Shri Vijay Kumar Menon, D.R
Hearing: 23.06.2021Pronounced: 23.06.2021

Per Rajesh Kumar, Accountant Member:

1.

The present appeal has been preferred by the Revenue against the order dated 12.06.2019 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2009-10.

2.

At the time of hearing when the case was called for hearing neither assessee nor his authorised representative was present to attend the hearing nor any application for adjournment was filed. Therefore, we are deciding the issue after hearing the Ld. D.R.

2 Shri Tarkeshwarnath Angadprasad Gupta 3. The only issue challenged by the Revenue is confirmation of penalty of Rs.32,280/- by Ld. CIT(A) as levied by the AO under section 271(1)(c) of the Act read with section 274 of the Act.

4.

The facts in brief are that the assessment was framed under section 143(3) read with section 147 of the Act at a total income of Rs.10,29,930/- as against the returned income of Rs.3,12,540/- vide order dated 17.03.2015. The assessee is engaged in the business of timber trading and supplying of hardware items. The case of the assessee was reopened after the AO received information from DGIT(Inv.) and also from Sales Tax Department, Government of Maharashtra that assessee has made bogus hawala purchases from two parties namely Sheetal Trading Co. for Rs.3,52,977/- and Payal Enterprises for Rs.3,64,417/- aggregating to Rs.7,17,394/-. The AO treated these alleged bogus purchases as non genuine and added the entire amount to the income of the assessee in the assessment framed as stated hereinabove whereas the Ld. CIT(A) partly allowed the appeal of the assessee by sustaining the addition to the extent of 15% of the bogus purchases . Thereafter the AO levied penalty equal to 100% of the tax sought to be evaded vide order dated 28.03.2018 passed under section 271(1)(c) of the Act.

5.

In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee by holding and observing as under: “6.4 On the similar set of facts, the Hon'ble ITAT, Mumbai has deleted penalty u/s. 271(1)(c) of the Act in dated 16.01 2017 in the case of DCIT Cir 4(2)(2) vs. M/s. Manohar Manak Alloys P. Ltd. On the same lines, the Hon'ble ITAT, Mumbai in ITA No. 7519/Mum/2013 dated 08.07.2015 in the case of M/s. Yashraj Films P. Ltd. vs. The A.C.I. T.Central Circle 29, Mumbai has deleted the 3 Shri Tarkeshwarnath Angadprasad Gupta penalty u/s. 271(1)(c) of the Act. Levied on addition made on estimation basis. Likewise, the Hon'ble ITAT, Mumbai in ITA No. 93/Mum/2011 dated 10.04.2015 in the case of DCIT 14(2) vs. M/s. Rishabh lmpex Gulabdas & Co. deleted the penalty u/s. 271(1)(c) of the A. levied on addition made on estimation basis.

Further, in a recent decision of Delhi ITAT in the case of Shruti Fastners Ltd. vs. DCIT (2017) 49 CCH 0183 Del Trib and ITAT Mumbai in the case of Rakeshkuror M. Gupta vs.lTO(2017) 49 CCH 0066 MumTrib, it has been Meld that where income has been estimated, the appellant cannot be said to have concealed particulars of income or furnished inaccurate particulars of income and therefore, penalty u/s 271(1)(c) was not leviable.

6.5 In the background of the aforesaid discussions and respectfully following the precedents, as above and those relied upon by the appellant, I am of the considered view that the appellant has not concealed the particulars of income and nor has it furnished inaccurate particulars of income, there being are no findings of the AO that the details furnished by the appellant in his return are found to be inaccurate or erroneous or false. Accordingly, I delete the penalty of Rs. 32,2807- levied by the AO u/s 271(1)(c) of the Act and the grounds of appeal are 'Allowed'.”

6. After hearing the Ld. D.R. and perusing the material on record, we observe that the Ld. CIT(A) has given a finding that no penalty is leviable where the addition is made on estimation basis and relied on several decisions as mentioned hereinabove. Accordingly, we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.

7.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on 23.06.2021.

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