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Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI
Before: SHRI S. RIFAUR RAHMAN (AM) & SHRI RAM LAL NEGI (JM)
O R D E R
PER RAM LAL NEGI, JM
This appeal has been preferred by the assessee against the order dated 15.03.2019 passed by the Commissioner of Income Tax (Appeals)-42 (for short ‘the CIT(A), Mumbai, for the assessment year 2010-11, whereby the Ld. CIT(A) has partly allowed the appeal filed by the assessee against the penalty order passed u/s 271 (1) (c) of the Income Tax Act, 1961 (for short the ‘Act’).
In this case, the AO passed assessment order u/s 143 (3) of the Act determining the total income of the assessee at Rs. 71,15,570/- as against the returned income of Rs. 10,53,527/-, inter alia making addition of Rs. 33,12,991/- on account of unexplained purchases. Accordingly, AO initiated proceedings u/s 271 (1) (c) of the Act and imposed penalty of Rs. 16,73,368/-. The assessee challenged the order passed by the AO before the CIT(A). The Ld. CIT(A) after hearing the assessee confirmed the penalty qua the addition of Rs. 33,12,991/- made on account of unexplained purchases and deleted the Assessment Year: 2010-11 penalty qua the remaining additions. Still aggrieved, the assessee is in appeal before this Tribunal. 3. The assessee has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:- “I. Confirming the penalty on purchase of Rs. 33,12,991/-
1. On the facts and in the circumstances of the case and in law, the IT Commissioner (Appeals) erred in confirming the penalty under section 271 (1) (c) of the Income Tax Act on purchase of Rs. 33,12,991/- without issuing proper notice for levying the penalty.
2. On the facts and in the circumstances of the case and in law, the IT Commissioner (Appeals) erred in confirming the penalty under section 271 (1) (c) of the Income Tax Act on purchase of Rs. 33,12,991/- eventhough the appellant has submitted the details. 4. At the outset, the Ld. counsel for the assessee submitted that the ITAT has deleted the addition of Rs. 33,12,991/- made on account of unexplained purchases in quantum appeal. Since, the ITAT has deleted the addition on the basis of which the Ld.CIT (A) has confirmed penalty, the impugned order does not survive. 5. The Ld. departmental representative (DR) did not controvert the fact stated by the Ld. counsel and fairly admitted that the Tribunal has deleted the addition in question in quantum appeal. 6. We have perused the material on record in the light of the submissions made by the Ld. counsel for the assessee. As pointed out by the Ld. counsel, the coordinate Bench has deleted the additions confirmed by the Ld. CIT(A) including the addition made on account of unexplained purchases amounting to Rs. Rs. 33,12,991/-. The relevant para of order dated 31.05.2019 passed in assessee’s appeal reads as under:- “8. After hearing both the parties and perusing the material on record, we observe that in this case the purchases to the tune of Rs.33,12,991/- which were stated to be made from two parties namely M/s. General Plumblines of Rs.17,95,387/- and M/s. Assessment Year: 2010-11 General Tubes Pvt. Ltd. of Rs.15,37,536/- were added to the income of the assessee for the reason that the said payments were not confirmed by the suppliers who specifically stated in reply to notice issued under section 133(6) of the Act that they have not supplied any such goods to the assessee. We also note that the assessee has filed the bills and vouchers before the authorities below. As regards the purchases, the allegations of the AO are that the purchases were booked on the basis of Performa invoices by cutting and striking off the word Performa by the suppliers and therefore the said bills can not be accepted. However, we note that in the said bill there was adjustment of Rs.1,00,000/- advance on behalf of M/s. The General Tubes Pvt. Ltd. which was duly accepted by the AO. We also find that no cross examination was allowed to the assessee by the AO. Moreover, the invoice submitted by the assessee of Rs.33,12,991/- appears to be genuine as compared to the bills submitted by the suppliers as the bills submitted by the assessee bear the signature of the suppliers and the receipt of Rs.1,00,000/- on behalf of the M/s. The General Tubes Pvt. Ltd. duly signed by the supplier. However, the said supplier denied having supplied any material as per the bills which is in consistent and contrary with the statement of the supplier as there is a receipt of Rs.1,00,000/- on behalf of M/s. The General Tubes Pvt. Ltd. which was accounted for by the assessee and accepted by the AO and even the supplier has admitted the same. Under these circumstances, we are not in agreement with the conclusion drawn by the Ld. CIT(A) that purchase bills submitted by the assessee are not genuine as any transaction can not be accepted in part. Moreover, the assessee is a civil contractor and in case of non maintenance of books by the assessee if the provisions of 448D of the Act are applied, the income is estimated @ 8% of the gross receipt whereas the AO estimated at 39% of the gross receipt, we also note that in the preceding three years namely A.Y. 2007-08, 2008-09 & 2009-10 the net profit rates of the assessee were Rs.7.9%, 8% and 8.3% and in the current year the GP rate is 9.22% as against 39% estimated by the AO. Therefore, even if we go by the theory of net profit and consistency over the years the case of the assessee appears to be reasonable. Accordingly, we are setting aside the order of Ld. CIT(A) on this issue and addition is ordered to be deleted.” Assessment Year: 2010-11
The Ld. CIT(A) has confirmed the penalty levied by the AO in respect of addition made on account of unexplained purchases. Since, the coordinate Bench has deleted the said addition in quantum appeal, the impugned order does not survive. Hence, we set aside the impugned order passed by the Ld. CIT(A) and direct the AO to delete the penalty levied/confirmed u/s 271 (1)