ITO - 27(1)(1), MUMBAI vs. ANAM M. PARGI HUF, MUMBAI

This appeal by the Revenue is directed against order of learned CIT(A) dated 24.05.2018 and pertains to assessment year 2009-10 wherein he has deleted the penalty under Section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’) amounting to Rs. 89,112/-.

Brief facts of the case leading to the levy of penalty are that assessee is a HUF engaged in the business of reseller of timber, plywood, laminates. In the course of scrutiny assessment, Assessing Officer was of the opinion on the basis of information received from the Sales Tax Department that assessee has Shri Anam M. Pargi (HUF) made bogus purchases from 3 parties, which were amounting to Rs.6,05,057/-. Assessee explained that all the necessary particulars and details were available and assessee was only not in a position to produce these parties. However, Assessing Officer was not satisfied. He proceeded to make hundred percent addition on account of bogus purchase. The reason of the Assessing Officer was that notices to suppliers have returned unserved. Penalty was also initiated on this addition. In penalty order, the Assessing Officer accepted that there was no deficiency in the documents, hence he opined that assessee might have made purchases from the open market. The Assessing Officer levied the penalty by referring to decision of ITAT Ahmedabad in the case of Vijay Proteins Ltd.

The learned CIT(A) deleted the penalty on the erroneous assumption that addition has been made on estimated basis.

Against this order, Revenue is in appeal before us. We have heard the learned Departmental Representative. None appeared on behalf of the assessee despite notice.

Upon careful consideration, we find that addition in this case for bogus purchase has been solely done on the ground that suppliers could not be produced before the Assessing Officer. No deficiency in the documents submitted in this regard has been pointed out. While levying the penalty, the Assessing Officer has accepted that assessee might have made the purchases from grey market. In our considered opinion, on the facts and circumstances of the case, there is no case made out against the assessee for concealment or furnishing of inaccurate particulars, which are sine qua non for penalty under Shri Anam M. Pargi (HUF) Section 271(1)(c) of the Act. The non-production of the suppliers cannot be reason to levy penalty. The conduct of the assessee is bona fide. As held by the Hon’ble Supreme Court in the case of Hindustan Steel Ltd. vs State of Orissa, 83 ITR 26 (SC) that the authority may not levy penalty if the conduct of the assessee is not found to be contumacious. Hence, in the facts and circumstance of the case, in our considered opinion, there is no justification of levying penalty under Section 271(1)(c) of the Act upon the assessee. Hence, we confirm the deletion of the same.

Before parting, we note that this appeal was heard on 06.02.2020. The pronouncement is delayed due to lockdown in view of Covid-19 pandemic. The pronouncement is as per Rule 34(5) of Appellate Tribunal Rules and Hon'ble Bombay High Court decision vide order dated 15.04.2020 extending the time bound periods specified by Hon'ble High Court by removing the period under lockdown. This aspect is also dealt with in detail in ITAT Mumbai order in case of DCIT vs JSW Steel vide order dated 15.05.2020.

In the result, this appeal by the Revenue stands dismissed.