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PER MAHAVIR SINGH, VICE-PRESIDENT; 1. This appeal by revenue is arising out of the order of Commissioner of Income Tax (Appeals)-2, Mumbai [for short ‘the ld. CIT(A)] in Appeal No. 598/15-16 dated 03.12.2018. Assessment was framed by ACIT Circle-3, Thane for the Assessment Year 2011-12 under section 143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order dated 26.02.2015. The penalty under dispute was levied by DCIT, Circle-3, Thane under section 271(1)(c) r.w.s 247 of the Act vide order dated 31.08.2015. 2. 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 Mum 2019-Shri Vilas Anant Shimpi the Act. For this revenue has raised following five effective grounds which are as under:
On the facts & in the circumstances of the case, and in law, the Ld.CIT(A) has erred in deleting the penalty by not appreciating the fact that the assessee failed to prove the genuineness of the alleged bogus purchases from the Hawala parties during the course of assessment as well as penalty proceedings.
On the facts & in the circumstances of the case, and in law, the Ld.CIT(A) has erred in deleting the penalty by not appreciating the fact that the assessee could not produce the alleged bogus parties for verification of genuineness of transaction during assessment proceedings as well as penalty proceedings and voluntary disclosure of his concealed income does not absolve the assessee from penalty.
3. On the facts and in the circumstances of the case, and in law, the Ld.CIT(A) has erred in deleting the penalty by not appreciating the fact that there was clear intention on the part of the assessee to reduce the taxable income by claiming purchases from non-genuine parties.
It is respectfully submitted that the penalty was levied for the additions made on the basis of information received from Law enforcement agency of the State Government of Maharashtra i.e. Sale Tax Department.
It is humbly requested that present appeal is being filed in accordance with the CBDT's Instruction No. 3/2018 dated 11/07/2018 amended vide letter dated 20.08.2018 as per para 10(e) of the said circular. Therefore, the order of the CIT(A) may be vacated & that of the Assessing Officer may be restored.
We have heard ld. Sr. Departmental Representative (DR) and gone through the facts and circumstances of this case. We noted that that the assessee is engaged in the business of sales and services of computers, mobile and accessories. The Income Tax Department received information from Sales Tax Department, Government of Maharashtra that the assessee has received Mum 2019-Shri Vilas Anant Shimpi a bogus purchase bill from Shakti Trading Company amounting to Rs. 8,77,500/-, which is bogus and the Assessing Officer added the entire amount under section 69C of the Act by observing that the assessee was beneficiary of accommodation bill issued by the party mentioned, wherein there was no actual delivery/physical delivery of goods. Hence, penalty proceedings under section 271(1)(c) of the Act was initiation by the Assessing Officer.
4. The Assessing Officer levied the penalty ex-parte by observing that, “Moreover, the addition has been made to the extent of purchases made from the hawala operator after being pointed out to the assessee. Besides this the addition has not been contested by the assessee before the Ld. CIT(A) also. Thus, there is an admission of concealment of income or furnishing of inaccurate particulars of such income.”
5. Aggrieved, assessee preferred appeal before the CIT(A). The CIT(A) also passed ex-parte appellate order and deleted the penalty by observing in para-9 as under:
“9. The levy of penalties is merely on disallowance of purchases and not finding of concealment of any particular or mala-fide intention to reduce taxable incomes. Additions made on account of disallowance of purchases as bogus automatically cannot justify the penalties levied u/s 271(1)(c) of the Act. Accordingly, the penalties of Rs. 4,75,860/- & Rs. 2,71,150/-, in AY 2010-11 & 2011-12, respectively, imposed u/s 271(1)(c) of the I.T. Act, by the AO, are hereby deleted and the grounds of appeal, raised as above, for both these appeals, are allowed.”
Mum 2019-Shri Vilas Anant Shimpi
Aggrieved, revenue came in appeal before the Tribunal in regard for A.Y. 2011-12.
We noted that this is a case of bogus purchases and bogus purchases were disallowed by Assessing Officer during the assessment proceedings only on the premise that assessee is unable to produce the actual delivery/physical delivery of goods but it is a fact that the Assessing Officer has not doubted the sales made by assessee or even the payments were made by account payee cheques. Once this is a fact that once sales are not doubted, the entire purchases cannot be considered as bogus and that is also a presumption.
Mere on presumption, penalty cannot be levied. Hence, we confirmed the order of CIT(A) deleting the penalty and dismissed this appeal of revenue.
In the result, appeal of revenue is dismissed. Order pronounced in the open court on 22nd January 2021.