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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI PAVAN KUMAR GADALE & SHRI MANOJ KUMAR AGGARWAL
Date of Hearing 10.03.2021 Date of Pronouncement 12.03.2021 आदेश / O R D E R PER BENCH: These two appeals are filed by the assessee against the separate orders of the Commissioner of Income Tax (Appeals) – 20, Mumbai, passed u/s. 271(1)(c) and 250 of the Income Tax Act, 1961. 1.1 Since the issues in these appeals are identical and similar, hence the appeals are clubbed and heard and common consolidated order is passed. For the M/s Khanvilkar plasticiser Pvt Ltd., Mumbai sake of convenience, we shall takeup the appeal ITA No. 6108/Mum/2019 for the A.Y 2010-11 and the facts narrated therein. The revenue has raised the following grounds of appeal.
1 “"On the facts and in the circumstances of the case, the 14. CIT (A) erred in deleting the penalty levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961, of Rs.26,508/- 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".
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".
The Brief facts of the case are that, the assessee is a private limited company engaged in the business of manufacturing and selling chemicals and filed the Return of income for the A.Y 2010-11 on 13.10.2010 disclosing the total income of Rs. 5,84,790/- and the return of income was processed u/s 143(1) of the Act.
ITA No 6108&6107/Mum/2019 M/s Khanvilkar plasticiser Pvt Ltd., Mumbai Subsequently, the A.O. has received the information from Sales Tax Department and the office of the DGIT (Inv) Wing, Mumbai that the assessee has obtained bogus purchase bills from two bogus purchase parties aggregating to Rs. 3,43,141/-.Therefore, the A.O has reason to believe that, the income has escaped assessment and issued notice u/s 148 of the Act. Subsequently, the notice u/s 143(2) and 142(1) of the Act were issued. In compliance the Ld.AR of the assessee appeared from time to time and submitted the details. The A.O considered the material on record and observed that the assessee could not prove the genuineness of the transaction of purchases. Further the A.O has issued notice u/s 133(6) of the Act on the parties, to cross verify the claim of the assessee. But the said notices were returned us- served by the postal authorities with remarks as left”. Hence, the A.O dealt on the disputed issue of bogus purchases and made addition by estimation the income/gross profit @ 25% of the bogus purchases which worked out to Rs. 85,785/- and assessed the total income of Rs. 6,70,580/- and passed the order u/s 143(3) r.w.s 147 of the Act on 22.12.2017. Subsequently, the A.O initiated penalty proceedings M/s Khanvilkar plasticiser Pvt Ltd., Mumbai u/s 271(1)(c) of the Act. The A.O relied on the findings in the scrutiny assessment and the submissions made by the assessee in the course of hearing. On perusal of the facts and explanations, the A.O was not satisfied with the reply as the assessee has indulged in obtaining the bogus purchase bills from hawala operators and therefore levied penalty of Rs.26,508/-and passed order u/s 271(1)(c) of the Act dated 29.06.2018.
Aggrieved by the penalty order, the assessee has filed an appeal with the CIT(A), the CIT(A) considered the grounds of appeal, findings of the A.O and the submissions of the assessee and observed that the A.O has estimated the gross profit/income @ 25% of the bogus purchases in the scrutiny assessment U/sec143(3) r.w.s Sec147 of the Act and further the A.O has levied the penalty u/sec 271(1)(c) of the Act on estimated income. The CIT(A) dealt on the provisions of Sec. 271(1)(c) of the Act and relied on the Coordinate Bench of Hon’ble Tribunal and the Hon’ble High Court decisions and observed that no penalty can be levied on estimated income and directed the A.O to delete the penalty and allowed the ITA No 6108&6107/Mum/2019 M/s Khanvilkar plasticiser Pvt Ltd., Mumbai assessee’s appeal. Aggrieved by the order of the CIT(A),the revenue has filed an appeal with the Hon’ble Tribunal.
4. At the time of hearing, the Ld. DR submitted that the CIT(A) erred in deleting the penalty, whereas the A.O has received the information that, the assessee has obtained bogus purchase bills and the same could not be overlooked and prayed for allowing the revenue s appeal. None appeared on behalf of the assessee.
We heard the Ld.DR submissions and perused the material on record. The sole crux of the disputed issue as envisaged by the Ld. DR that the CIT(A) has erred in deleting the penalty overlooking the facts of bogus purchases. Whereas, the Ld.CIT(A) considering the facts and circumstances observed that the penalty cannot be levied on estimated income. On the perusal of the assessment order; we find that the A.O has estimated income/ gross profit on bogus purchases. We are of the opinion that when the addition is made on estimated basis, penalty u/s 271(1)(c) of the Act cannot be levied on such adhoc estimated income. The Ld.DR could not controvert the findings of the M/s Khanvilkar plasticiser Pvt Ltd., Mumbai CIT(A) with any new cogent evidences or information. Accordingly, we are not inclined to interfere with the order of the Ld.CIT(A) and upheld the same and find the grounds of appeal raised by the revenue are infructuous and are dismissed.
As the facts and circumstances in this appeal are identical to ITANo. 6108/Mum/2019 for A.Y. 2010-11, the decision rendered in above paragraphs would apply mutatis mutandis for this case also. Accordingly, grounds of appeal of the revenue are dismissed
In the result, both the appeals filed by the revenue are dismissed.