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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: SHRI SHAMIM YAHYA (AM) & SHRI RAM LAL NEGI
The present appeal has been filed by the revenue against the order dated 31.05.2019 passed by the Commissioner of Income Tax (Appeals)-10 (for short ‘the CIT(A), Mumbai, for the assessment year 2011-12, whereby the Ld. CIT(A) has allowed the appeal filed by the assessee against the penalty order passed u/s 271 (1) (c) of the Income Tax Act, 1961 (for short the ‘Act’).
Assessment Year: 2011-12 2. Brief facts of the case are that the assessee company filed its return of income for the assessment year under consideration declaring total income of Rs.9,89,683/- and the same was processed u/s 143(1) 0f the Act. Subsequently, on the basis of information received from the Director General of Income Tax (Inv.) Mumbai, that the assessee had obtained bogus purchase bills amounting to Rs. 86,15,256/- from three hawala parties without actual delivery of goods, AO reopened the case of the assessee and completed the assessment u/s 143(3) r.w.s,147of the Act and determined the total income of the assessee at Rs. 20,66,590/- after making addition of 12.5% of the total amount of bogus purchases on estimation basis. On the basis of the said addition, AO initiated penalty proceedings u/s 271(1(c) of the Act and imposed penalty of Rs.3,32,764/-.
The assessee challenged the penalty order passed by the AO before the CIT(A). The Ld. CIT(A) after hearing the assessee set aside the impugned order and deleted the penalty. Against the said findings, the revenue is in appeal before this Tribunal.
The Revenue has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:-
“1. On the facts & in the circumstances of the case, and in law, the Ld.CIT(A) erred in deleting the penalty u/s 271(1)(c) of the I T Act 1961 without appreciating that the assessee could not establish the genuineness of the bogus purchases before the Assessment Year: 2011-12 Assessing Officer during the course of assessment proceedings and therefore, the additions so made amounted to furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the I T Act and penalty u/s 271(1)(c) of the I T Act, 1961 was correctly levied.”
This appeal was fixed for hearing on 11.03.2012. However, on the said date when the case was called for hearing, none appeared on behalf of the assessee. Since the assessee did not appear despite service of notice, we decided to dispose of the appeal on the basis of material on record after hearing the revenue. Accordingly, we allowed the Ld. Departmental representative (DR) to argue the appeal.
The Ld. DR submitted that since the assessee had failed to prove the genuineness of the purchases in question addition of 12.5% of the disputed purchases was made to the income of the assessee. Hence, the Ld. CIT(A) has wrongly deleted the penalty levied by the AO on the basis of the said addition. The Ld. DR further submitted that the impugned order passed by the Ld. CIT(A) may be set aside and the order passed by the AO may be restored.
We have perused the material available on record. The Ld. CIT(A) has deleted the penalty levied by the AO holding that penalty proceedings are different from the assessment proceedings and addition of income during assessment Assessment Year: 2011-12 proceedings does not ipso facto make the assessee liable u/s 271(1)(c) of the Act. Under section 271(1)(c) of the Act, AO has power to impose penalty if he/she is satisfied that the assessee has concealed the particulars of his income or has furnished inaccurate particulars of such income. The Ld. CIT(A has further held that since in the present case, the addition has been made on estimation basis it cannot be concluded that the assessee has either concealed his income or furnished inaccurate particulars of his income to initiate proceedings u/s 271(1)(c) of the Act. Further, Ld. CITA) has followed the ratio laid down by the coordinate Bench of the Tribunal in the case of DCIT vs. Unisynth Chemicals wherein the coordinate Bench upholding the findings of the Ld. CIT(A) deleted the penalty levied under the similar set of facts. The Ld CIT(A) has reproduced the findings of the coordinate Bench in the said case, which read under:
“On an appreciation of the material on record we are inclined to concur with the view of the CIT(A) that the explanation put forth by the assessee in the penalty proceedings was plausible one in as much as the circumstances on which the additional income was offered was because the disputed parties with whom these transactions were made were non cooperative and the assessee having no control over those parties was therefore, not able to substantiate its claim with necessary material evidence.”
Assessment Year: 2011-12 8. Further, the Ld. CIT(A) has also based his findings on the decision of the coordinate Bench of the Tribunal in the case of Deepak Gupta vs. ITO wherein the Tribunal deleted the penalty levied u/s 271(1)(c) of the Act on the basis of addition on account of profit made on estimation basis, holding that the addition made on estimation basis does not amount to concealment of income or furnishing of inaccurate particulars of income.
9 In our considered view, findings of the Ld. CIT(A) are well reasoned and based on the decisions of the Tribunal discussed above. Hence, do not find any reason to interfere with the decision of the Ld. CIT(A). Accordingly, we dismiss the present appeal and uphold the decision of the Ld. CIT(A) and direct the AO to delete the penalty levied u/s 271(1)(c) 0f the Act.
In the result, appeal filed by the revenue is dismissed.
Order pronounced on 31/05/2021 under Rule 34 of the ITAT Rules.