DY. CIT CIRCLE-3, THANE vs. SHRI. NILESH RAMESH BHURE, THANE

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ITA 4931/MUM/2019Status: DisposedITAT Mumbai25 February 2021AY 2009-105 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 since the addition was restricted to 20% of non-genuine purchases by a prior Tribunal order, it indicated doubt about the source of purchases rather than concealment of income. Therefore, the penalty was not leviable.

What were the facts?

The Assessing Officer reopened the assessment based on information that the assessee used accommodation bills for purchases. The AO disallowed the entire purchases, and initiated penalty proceedings. The CIT(A) deleted the penalty.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the addition is restricted to a part of alleged non-genuine purchases, indicating doubt rather than concealment.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY

For Appellant: Smt. Smita Verma (DR)
Pronounced: 25/02/2021

O R D E R This is an appeal by the revenue against order dated 06-05-2019 of learned Commissioner of Income-tax (Appeals)-2, Thane deleting the penalty imposed under section 271(1)(c) of the Act for the assessment year 2009-10.

2.

When the appeal was called for hearing, no one was present on behalf of the assessee to represent the case. Considering the nature of dispute, I proceed to dispose of the appeal ex parte qua the assessee after hearing the learned Departmental Representative and on the basis of materials on record.

3.

Briefly the facts are, the assessee is an individual and is engaged in electrical contract work. For the assessment year under dispute, assessee filed his return of income on 25-09-2010 declaring total income of Rs.26,69,918/-. On the basis of information received from Sales-tax Department, Government of Maharashtra, that the assessee is a beneficiary of accommodation bills for purchases worth Rs.19,04,514/-, the Assessing Officer reopened the assessment u/s 147 of the Act and ultimately completed the assessment by disallowing entire purchases alleged to be non genuine. Addition so made was also upheld by learned Commissioner (Appeals). On the basis of the addition so made, the Assessing Officer initiated proceedings for imposition of penalty under section 271(1)(c) of the Act and ultimately passed an order imposing penalty of Rs.6,47,343/- alleging concealment of income. Against the penalty order so passed, assessee preferred appeal before learned Commissioner (Appeals). After considering the submissions of the assessee and having found that the Tribunal, while deciding assessee’s appeal challenging the addition, has restricted the disallowance to 20% of the alleged non genuine purchases, deleted the penalty imposed under section 271(1)(c) of the Act.

4.

Heard the learned Departmental Representative and perused the materials on record. It is evident, the basis for disallowance of certain purchases made by the assessee is the information received from sales-tax department that the persons from whom the assessee claimed to have purchased the goods are providing accommodation bills. On the basis of such information, the Assessing Officer has added back the alleged non genuine purchases amounting to Rs.19,04,514/-. Further, on the basis of the aforesaid addition, penalty under section 271(1)(c) of the Act has been imposed alleging concealment of income.

However, it is a fact on record that while deciding assessee’s appeal contesting the addition made on account of alleged non genuine purchases, the Tribunal having found that the assessee had actually purchased goods during the year; but was unable to prove the exact source of purchases, had restricted the addition to 20% of the alleged non genuine purchases while deciding the appeal in dated 12-07-2017. Thus, the disallowance at 20% of the alleged non genuine purchases has been made on entertaining doubt that the assessee might have suppressed a part of its profit by purchasing goods from unverified sources. This certainly cannot lead to concealment of income. Therefore, in my considered opinion, learned Commissioner (Appeals) was correct in deleting the penalty imposed under section 271(1)(c) of the Act. Grounds are dismissed.

5.

In the result, appeal is dismissed.

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