ACIT 13 (3)(1), MUMBAI vs. REMI ELECTROTECHNIK LTD., MUMBAI

The captioned appeals have been filed by the Revenue challenging two separate orders both dated 24th June 2019, passed by 2 Remi Electrotechnik Ltd. Remi Process Plant & Machinery Ltd. the learned Commissioner (Appeals)–21, Mumbai, pertaining to the assessment year 2009–10.

When the case was called for hearing, neither the assessee nor any of its authorized representative appeared before us to contest its appeals. There is no application for adjournment either. In this view of the matter, we proceed to dispose off these appeals ex–parte qua the respondent assessee after hearing the learned Departmental Authorities and on perusal of the record available before us. ./2019 – A.Y. 2009–10 M/s. Remi Electrotechnik Ltd.

Facts in brief:– The assessee company is engaged in the business of manufacturing and selling of electrical motors and laboratory equipments. It filed return of income on 25th August 2011, declaring total income at ` 1,06,25,020. The assessment was completed on 15th December 2011, determining total income of ` 1,07,38,940. Subsequently, on the basis of information received by the Assessing Officer that the assessee is a beneficiary of accommodation entries provided by hawala operators through bogus purchase bills various entities aggregating to ` 49,20,896. Accordingly, the Assessing Officer re–opened the assessment under section 147 of the Income Tax Act, 1961. During the assessment proceedings, the Assessing Officer called upon the assessee to prove the genuineness of purchases worth `

The learned Commissioner (Appeals) considering the reply of the assessee and in view of the facts and circumstances of the case deleted penalty levied by the Assessing Officer for furnishing inaccurate particulars of income in respect of bogus purchase. He was of the considered opinion that the additions on which penalty in dispute has been imposed is purely on estimation basis and the Assessing Officer has not brought any material on record to establish any mala fide intention of the assessee to evade tax in the return of 5 Remi Electrotechnik Ltd. Remi Process Plant & Machinery Ltd. income filed by the assessee. In view of certain judicial pronounce– ments, the learned Commissioner (Appeals) directed the Assessing Officer to delete the addition of ` 2,00,000 on account of penalty levied under section 271(1)(c) of the Act. The Revenue being aggrieved by this order of the learned Commissioner (Appeals), filed appeal before the Tribunal.

Considered the submissions of the learned Departmental Authorities and perused the material on record. As it transpires from the record available before us that the Assessing Officer levied penalty under section 271(1)(c) of the Act on estimate basis without any evidence on record with regard to concealment of income. Penalty under section 271(1)(c) of the Act is leviable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad–hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. We find support from the series of decisions by different High Courts as well the decision of the Co–ordinate Benches of the Tribunal, wherein it was held that when addition is made on estimate basis, penalty is not sustainable in the eyes of law. In support of this contention, following case law are relied upon:- i) CIT v/s Norton Electronics Systems (P) Ltd. [2014] 41 taxmann.com 280 (Allahabad HC);

The learned Departmental Authorities has not brought any cogent material to prove otherwise warranting interference at the instance of the Revenue. In this view of the matter, we are of the considered view that the learned Commissioner (Appeals) was indeed justified in deleting the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and addition made on estimation by the Assessing Officer do not call for initiation of penalty. Consequently, we uphold the order passed by the learned Commissioner (Appeals) by dismissing the grounds of appeal raised by the Revenue.

In the result, Revenue’s appeal is dismissed. ./2019 – A.Y. 2009–10 M/s. Remi Process Plant & Machinery Ltd.

We have heard the learned Departmental Authorities and perused the material on record. We find that, except variation in figures, the facts and circumstances of the issue arising out of the grounds raised in the present appeal are mutatis mutandis identical to the facts and circumstances relating to the issue arising out of the 7 Remi Electrotechnik Ltd. Remi Process Plant & Machinery Ltd. grounds raised by the Revenue in its appeal being ITA no.6375/Mum./2019, for the assessment year 2009–10, wherein the said issue is decided against the Revenue and in favour of the assessee vide Para–5 and 6 of this order. Consistent with the view taken therein, we dismiss these grounds also.

In the result, Revenue’s appeal is dismissed.

To sum up, both the appeals of the Revenue are dismissed. Order pronounced in the open court on 10.06.2021