ITO 32 (3)(4), MUMBAI vs. SHREERAM STEEL CORPORATION, MUMBAI

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ITA 6437/MUM/2019Status: DisposedITAT Mumbai05 April 2021AY 2009-103 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 held that the appeal was not maintainable due to the low tax effect, as it fell below the monetary threshold specified in CBDT Circular No. 17/2019. The Revenue's argument that the penalty should be covered by an exception clause was rejected.

What were the facts?

The Revenue appealed the deletion of a penalty of Rs. 2.55 Lacs levied under Section 271(1)(c) by the first appellate authority. The penalty was deleted because the addition on account of alleged bogus purchases was made on an estimated basis.

What were the issues?

Whether the appeal is maintainable based on the monetary limit prescribed by CBDT circulars, and if penalty proceedings fall under exceptions for additions based on external information.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI RAVISH SOOD, JM

For Respondent: Shri Sumit Kumar- Ld. DR

O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. At the time of hearing, none appeared for assessee. However, we find that the revenue is contesting the deletion of penalty of Rs.2.55 Lacs u/s 271(1)(c) by learned first appellate authority vide impugned order dated 26/07/2019. The penalty has been deleted in view of the fact that addition on account of alleged bogus purchases has been made on estimated basis.

2.

After going through material on record, we find that quantum of penalty under dispute is below threshold monetary limit of Rs.50 Lacs and therefore, the appeal is not maintainable in terms of recently issued low tax effect Circular No. 17/2019 dated 08/08/2019 [F.No.279/Misc. 142/2007-TTJ(Pt.) issued by CBDT. This recent circular further enhances the monetary limit fixed in earlier Circular No.3 of 2018 dated 11/07/2018 issued by CBDT as amended on 20/08/2018. In view of the same, the appeal is not maintainable.

3.

The Ld. DR submitted that penalty should be construed to be covered by exception clause 10(e) of the circular since the same was levied on account of quantum additions which was based upon receipt of information from an external agency i.e. Sales Tax Department. 4. We have considered the said submissions. It is settled legal position that quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of additions may not be the sole ground for confirming the penalty. Extending the same logic, unless specific exception is provided in the circular with respect to penalty also, it could not be construed that the penalty was to be treated at par with quantum additions. The clause 10(e) specifically applies only to additions which are based on information received from external sources. The levy of penalty, by no stretch of imagination, could be construed as addition as envisaged by clause 10(e). Therefore, the submissions made by Ld. DR could not be accepted. 5. In view of the foregoing, the appeal stand dismissed. However, a liberty is given to revenue to seek recall of the appeal, if at a later stage, it is found that the matter is covered by any exceptions provided in any of the circular or in case the tax effect in the appeal exceeds the prescribed monetary limit. 6. Resultantly, the appeal stands dismissed. Order pronounced on 5th April, 2021.

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