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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI S RIFAUR RAHMAN & SHRI PAVAN KUMAR GADALEShri Rajendra Prasad
O R D E R
PER PAVAN KUMAR GADALE, JM:
The appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) -38 Mumbai, passed u/s. 271(1)(c) and 250 of the Income Tax Act, 1961. The assessee has raised the following grounds of appeal:
“1. The CIT(A) erred in ignoring the facts that addition is only made on purely estimated basis on account of alleged bogus purchases by estimating a part of alleged bogus purchases as non-genuine, for which there is no basis.
Rajendra Prasad Maurya, Mumbai - 2 -
2. The CIT(A) erred in not accepting such 10% purchases as genuine on purely estimate basis, when 90% of such purchases are held as genuine. It cannot be said there is concealment of income or furnish of inaccurate particulars of income when additional made on purely estimate basis.
The CIT(A) failed to appreciate that there is neither concealment of particulars of income nor furnishing of in accurate particulars of income, when addition made on estimate basis. Therefore, penalty imposed under S. 271(1)(c) is bad in law.
4. The Ld. CIT(A) erred in upholding penalty order u/s 271(1)(c) passed by the A.O ignoring the fact that in the quantum appeal, the Hon’ble ITAT, Mumbai sustained partial addition of Rs. 5,69,384/- on estimated basis reducing the addition of Rs. 14,23,467/- to Rs. 5,69,384/-. Since both the additions are based on estimate basis, neither concealment of particulars of income nor furnishing of inaccurate particulars of income by the appellant. Hence the impugned order of the CIT(A) dated 25 June, 2019 is therefore liable to be annulled on this ground also.
5. The appellant craves leave to alter, amend, and or substitute all any of the aforesaid grounds of appeal at the time of hearing.
The Brief facts of the case are that, the assessee is an individual engaged in the business of manufacturing of washers. The assessee has filed the return of income for the A.Y 2009-10 on 27.09.2009 declaring a total income ofRs. 2,72,440/-. The return of income was processed u/s 143(1) of the Act. The A.O has received information from sales tax department through DGIT (Inv.) Wing, Mumbai that the assessee has entered into bogus purchase
Rajendra Prasad Maurya, Mumbai - 3 - transactions with the parties who are providing accommodation bills. As per the information of Sale Tax Department, Govt of Maharashtra the assessee is one of the beneficiary and obtained bogus bills aggregating to Rs.56,93,838/- from four parties and based on the said information the A.O. has issued notice u/s 148 of the Act. The assessee has filed a letter on 26.08.2014 along with the copy of return of income and audit report and to treat the return of income as compliance to notice u/s 148 of the Act. Subsequently, the notice u/s 143(2) and 142(1)of the Act was issued. In compliance, the Ld.AR of the assesse appeared from time to time and the case was discussed. The A.O considering the facts and details submitted by the assessee has dealt on the disputed issue and required the assessee to prove the purchase transactions are genuine and notice u/sec133(6) of the Act are issued on the parties and the said notices were returned un served by the postal authorities and one party denied the transactions.Further, the A.O. was not satisfied with the reply and supporting documents. Finally the A.O. has estimated profit element/Gross Profit (GP) on non-genuine purchases @25% which works out to Rs.14,23,467/-and assessed the total income of Rs. 16,95,907/- and passed the order u/s 143(3) r.w.s 147 of the Act on 24.03.2015.
Rajendra Prasad Maurya, Mumbai - 4 - Subsequently, the A.O. has initiated penalty proceedings u/s 271(1)(c) of the Act, Since the assessee has entered into bogus purchase transactions, the A.O relied on the findings in the scrutiny assessment and also observed that in spite of providing opportunity of hearing no explanations were filed in the penalty proceedings. Therefore,the A.O. has levied penalty based on the addition made in the scrutiny assessment, which worked out to Rs.3,06,532/-and passed the order u/s 271(1)(c) of the Act on26-04-2018.
3.Aggrieved by the penalty order, the assessee has filed an appeal with the CIT(A). The CIT(A) considered the grounds of appeal and the submissions of the assessee but the confirmed the action of the A.O in the levy of penalty and dismissed the appeal. Aggrieved by the order of CIT(A), the assessee has filed an appeal with the Hon’ble Tribunal.
At the time of hearing, none appeared on behalf of the assessee. The Ld. DR relied on the orders of lower authorities.
We heard the Ld. DR submissions and perused the material on record. The sole crux of the disputed issue
Rajendra Prasad Maurya, Mumbai - 5 - is with respect to levy of penalty u/s 271(1)(c) of the Act by the A.O based on the assessment order under section 143 r.w.s 147 of the Act. We find the A.O has made disallowance of bogus purchases by estimation of income/Gross Profit@25% but has accepted the sales in the books of accounts. We find in the penalty order at page 2 Para 3.6, in respect of quantum addition, the assessee on further appeal to Honble tribunal, it was restricted to @10%. We are of the opinion, that where the addition is sustained on the estimated basis no penalty u/s 271(1)(c) of the Act can be levied. Accordingly, we considering the facts, circumstances and judicial decisions set aside the order of the CIT(A) and direct the assessing officer to delete the penalty and allow the grounds of appeal of the assessee.
6.Inthe result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 24.05.2021