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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI M.BALAGANESH & SHRI RAVISH SOOD
ORDER PER RAVISH SOOD, J.M: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-20, Mumbai, dated 26.06.2019, which in turn arises from the order passed by the A.O under Sec. 271(1)(c) of the Income Tax Act, 1961 (for short „Act‟), dated 31.03.2018. The revenue has assailed the impugned order on the following grounds of appeal before us: “1. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in deleting the penalty levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961, of Rs.80,243/- without appreciating the facts that the assessee claimed bogus purchases in its Return of Income and thus furnished inaccurate particulars of income within the meaning of section 271(1)(c) of the Income Tax Act, 1961.
2. On the facts and circumstances of the case, the Hon'ble ITAT is requested to entertain this appeal though the tax effect is below the monetary limit prescribed in the CBDTs Circular no. 17/2019 dated 08.08.2019 read with circular no.3/2018 dated 11.07.2018 as amended on 20.08.2018 as the case falls in the exception provided in para 10(e) of the said instruction in as much as the addition is based on information received from external sources in the nature of law enforcement agencies, namely, Sales Tax Authorities.
2 ITO-12(3)(3) Vs. M/s Maniar Electricals P. Ltd. 3. The appellant prays that the order of the Ld. CIT(A) on the grounds be set aside and that of the Assessing Officer be restored. 4. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.”
Briefly stated, the assessee company which is engaged in the business of trading in computer parts & services maintenance and networking peripherals had e-filed its return of income for A.Y. 2009-10 on 29.09.2009, declaring a total income of Rs.20,19,090/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, on the basis of information received from the Investigation wing, Mumbai, that the assessee as a beneficiary had obtained accommodation entries of purchases, its case was reopened by the A.O under Sec. 147 of the Act. During the course of the assessment proceedings it was observed by the A.O that the assessee had claimed to have made purchases aggregating to Rs.5,19,375/- from a tainted party viz. M/s Nikhil Enterprise.
As the assessee failed to substantiate the genuineness and veracity of the aforesaid purchase transactions, the A.O, disallowed the entire amount of impugned purchases of Rs.5,19,375/-. At the time of culminating the assessment the A.O also initiated penalty proceedings under Sec.271(1)(c) of the Act. 4. After the culmination of the assessment proceedings, the A.O vide his order passed under Sec. 271(1)(c), dated 31.03.2018 imposed a penalty for furnishing of inaccurate particulars of income of amounting to Rs.80,243/- under Sec. 271(1)(c) of the Act. 5. Aggrieved, the assessee assailed the penalty imposed by the A.O under Sec. 271(1)(c) in appeal before the CIT(A). Observing, that the penalty u/s 271(1)(c) was imposed by the A.O on the basis of an estimate the CIT(A) vacated the same. 6. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. D.R relied on the order passed by the A.O u/s 271(1)(c) of the Act. Per contra, the ld. A.R submitted that as the „tax effect‟ involved in the captioned appeal was below that contemplated in the CBDT Circular No. 17/2019, dated 08.08.2019, therefore, the revenue‟s appeal was not maintainable.
3 ITO-12(3)(3) Vs. M/s Maniar Electricals P. Ltd.
As is discernible from the records, the quantum of penalty imposed by the A.O u/s 271(1)(c) under dispute is Rs.80,243/-, which is substantially below the threshold limit of Rs.50 lac as had been provided in the latest CBDT circular No. 17/2019, dated 08.08.2019, that contemplates the tax effect for filing of the appeals by the revenue. However, it is the claim of the ld. D.R that as the present appeal is covered by the exception carved out in clause 10(e) of the CBDT Circular No. 3 of 2018 (as amended on 20.08.2018) thus, the appeal filed by the revenue is maintainable.