DCIT-7(3)(1), MUMBAI vs. M/S PARCO ENGINEERS (M) PVT. LTD., MUMBAI

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ITA 2755/MUM/2019Status: DisposedITAT Mumbai14 December 2020AY 2011-124 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 upheld the CIT(A)'s deletion of the penalty. It was held that non-protesting a quantum addition does not automatically imply furnishing inaccurate particulars of income, and no penalty is leviable on estimated income.

What were the facts?

The Revenue appealed against the deletion of penalty by the CIT(A). The AO had levied a penalty for alleged bogus purchases, which led to an addition to the assessee's income. The assessee did not challenge the quantum addition due to its small amount.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the quantum addition is based on estimation and not challenged by the assessee.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI

Before: SHRI MAHAVIR SINGH & SHRI RAJESH KUMAR

For Appellant: Shri Paresh D. Shah, A.R
For Respondent: Ms. Shreekala pardeshi, D.R
Hearing: 03.11.2020Pronounced: 14.12.2020

Per Rajesh Kumar, Accountant Member:

1.

The present appeal has been preferred by the Revenue against the order dated 04.12.2018 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12.

2.

The only issue raised by the Revenue is against the deletion of penalty by Ld. CIT(A) of Rs.89,965/- as levied by the AO under section 271(1)(c) of the Act.

3.

The facts in brief are that the assessment in this case was framed under section 143(3) read with section 147 of the Act

2 M/s. Parco Engineers (M) Pvt. Ltd. vide order dated 02.12.2016 wherein an addition of Rs.2,64,682/- was made by the AO @ 2.61% of alleged bogus purchases of Rs.1,01,41,060/-. Pertinent to state that the case was reopened by the AO on the basis of information received from Sales Tax Department, Government of Maharashtra that assessee has taken bogus purchase bills to the tune of Rs.1,01,41,060/- and hence this addition by the AO.

4.

The assessee did not challenge the quantum addition because of the smallness of the amount involved. The AO, however, came to conclusion that the assessee has furnished inaccurate particulars of income and thus levy of penalty of Rs.89,965/- being 100% of the tax sought to be evaded for furnishing of inaccurate particulars of income vide order dated 02.12.2016 after rejecting the contentions of the assessee that no penalty is leviable where the income is estimated on adhoc basis.

5.

In the appellate proceedings, the Ld. CIT(A) deleted the penalty by relying on the decisions of the coordinate benches of Tribunal, Mumbai benches in the cases of Mrs. Kalpana D. Pandya vs. ITO-23(2)(4) in dated 25.10.2017, ITA No.5243, 5998 & 5999/M/2012 in the case of ITO 8(1)-3 Vs. M/s. ETCO Telecom Ltd. dated 17.12.2014 and ACIT vs. M/s. Balaji Construction in ITA No.217/M/2015.

6.

After hearing both the parties and going through the material on record, we note that in this case the addition of Rs.2,64,682/-was made for alleged bogus purchases being

3 M/s. Parco Engineers (M) Pvt. Ltd. 2.61% of Rs.1,01,41,060/-. The assessee was not in appeal against the quantum proceedings. Thus the AO levied the penalty for inaccurate particulars of income of Rs.89,965/-. We have carefully perused the order of Ld. CIT(A) and observe that ld. CIT(A) has, after relying on various decisions of ITAT, deleted the penalty by holding that non protesting the quantum addition would not automatically lead to the conclusion that assessee has filed inaccurate particulars of income or concealed its income. Similarly, Ld. CIT(A) has also opined that no penalty is leviable in case of estimation of income by the AO. In the present case the assessee has fully disclosed all the details of purchases in return of income which is only on the basis of information from the Sales Tax Wing of Government of Maharashtra and estimated addition equal to 2.61% of the total purchases was made to the total income of the assessee. In our opinion, the order of Ld. CIT(A) is very reasoned order passed after taking into account the ratio laid down by the various judicial forum on this issue. Accordingly, we are of the view that no penalty is leviable on estimation of income.

7.

Accordingly, appeal of the Revenue is dismissed. Order pronounced in the open court on 14.12.2020.

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