ITO - 29(1)(4), MUMBAI vs. SMT HEMA JAYESH PAREKH, MUMBAI

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ITA 3095/MUM/2019Status: DisposedITAT Mumbai16 September 2020AY 2010-113 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 the penalty under Section 271(1)(c) was not sustainable as the addition was made on an estimated basis and the assessee's conduct was not contumacious.

What were the facts?

The Assessing Officer made a disallowance on purchases and levied a penalty under Section 271(1)(c). The CIT(Appeals) deleted the penalty, finding the addition was based on an estimate and not entirely on bogus purchases.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the addition is based on an estimate and not on entirely bogus purchases.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 69C

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

For Respondent: Shri Akhtar H. Ansari
Hearing: 15.09.2020Pronounced: 16.09.2020

This is in appeal by the revenue in the Revenue is aggrieved that the learned CIT(appeals) has erred in deleting the penalty levied under section 271(1)(c) of the Act amounting to Rs. 57,145/- by order dated 12.12.2019 pertaining to assessment year 2010-11.

2.

Brief facts of the case are that assessee in this case is engaged in business of trading in chemical. During the course of assessment proceedings the assessing officer made disallowance of Rs. 184937 @12.5% of the purchases of Rs. 14,79,499/- penalty under section 271(1)(c) amounting to rupees 57,145/- was also levied.

3.

Upon assessee's appeal learned CIT(appeals) deleted the penalty by observing as under :- The AO has stated in para 4 of the penalty order that the appellant failed to prove the genuineness of the purchases claimed. But I also find that the AO did not treat the entire purchases as bogus. Had the transactions been treated entirely as bogus, the AO would have disallowed the entire purchases. But in this case, the AO disallowed only 12.5% of the disallowances made. I also find from para 4 of the penalty order that the 2 Smt. Hema Jayesh Parekh

addition was made u/s 69C of the Act which does not appear to be in conformity with the finding that the purchases were bogus. Further, I find that the quantum addition is based on estimate. In view of decision held by Punjab & Haryana High court in case of Harigopal Singh. vs CIT (2002) 258 ITR 85 (P&H) the penalty imposed is not sustainable. Accordingly, I direct the Assessing Officer to delete the penalty of Rs. 57,145/-.

4.

Against this order revenue is in appeal before the ITAT. I have heard the learned departmental representative and perused. I find the addition on account of bogus purchases has been done on estimated basis. The learned CIT(A) is correct in holding that the penalty under section 271(1)(c) in this case is not sustainable. I further note that the conduct of the assessee in this case cannot be considered be contumacious to warrant levy of penalty under section 271(1)(c). This proposition is supported by the decision of honourable Supreme Court decision the case of Hindustan Steel Ltd. v. State of Orissa (83 ITR 26).

5.

In the result appeal filed by the revenue stands dismissed Order pronounced under Rule 34(4) of ITAT Rules on 16.9.2020.

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