INCOME TAX OFFICER WARD 1(5), THANE vs. SHRI HARSHAND VALJI SHAH, MUMBAI

The only issue in this appeal of Revenue is against the order of CIT(A) deleting the penalty levied by Assessing Officer under section 271(1)(c) of the Act in regard to bogus purchases. For this, Revenue has raised the following two grounds: - “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the penalty levied under section 271(1)(c) merely on the grounds it was levied on estimate basis and voluntary surrender by the assessee without properly appreciating the decision of Hon’ble Apex Court in the case of Mak Data Pvt. Ltd. Vs. CIT (Civil Appeal No.9772 of 2013)”.

2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the penalty levied under section 271(1)(c) without appreciating the fact that there was definite finding in the assessment order in respect of

We have heard the learned DR and gone through the facts and circumstances of the case. The Assessing Officer during the course of assessment proceedings noticed that the assessee has obtained bogus bills from sun enterprises amounting to Rs. 43,211/- and from sejal enterprises amounting to Rs.1,03,369/-. Accordingly, the Assessing Officer treated this purchases as bogus by holding that as per the information received from Sales Tax Department, Maharashtra, the aforesaid parties are hawala dealers and the assessee has obtained bogus bills from them. The Assessing Officer initiated the penalty proceedings and levied the penalty under section 271(1)(c) of the Act despite the fact that none was present from assessee’s side. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) deleted the penalty by observing as under : - “I have carefully considered the submissions of the appellant, the observations of the Assessing Officer in the penalty order; case laws relied upon by the appellant and the facts of the case. The Assessing Officer has levied penalty on the ground that the assessee has accepted the addition and did not file appeal. Further, the appellant could not produce the supplier, the referred supplier name was reflecting in the list