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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI INTURI RAMA RAO & SHRI S. S. VISWANETHRA RAVI
ORDER PER BENCH : These are the three appeals filed by the assessees against the separate orders of ld. Commissioner of Income Tax (Appeals)-9, Pune [‘the CIT(A)’] commonly dated 23.032018 for the assessment years 2009-10 to 2011-12.
2 to 935/PUN/2018 2. Since the identical facts and common issues are involved in all the above captioned three appeals, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.933/PUN/2018 for the assessment year 2009-10 are stated herein. ITA No.933/PUN/2018, A.Y. 2009-10 : 4. The appellant raised the following grounds of appeal :- “1. Initiating the Penalty proceeding was wrong. The Appellant has neither concealed the facts nor submitted wrong details.
2. On the facts and circumstances of the case in law the Ld. CIT(A) was not justified to levy the penalty u/s 271(1)(c) and be cancelled.
3. The Hon’ble ITAT has reduced the addition from 100% of Bogus Purchases to 10% of Bogus Purchases.
4. To grant ad interim stay against the wrong demand till disposal of Appeal.
5. Appellant craves Leave to add or delete the grounds of appeal at the time of hearing.”
5. Briefly, the facts of the care are as under : The appellant is an individual engaged in the business of trading of all types of M.S. Plates and S.S. Plates. The return of income for the assessment year 2009-10 was filed on 29.09.2011 declaring total income of Rs.21,37,980/-. Subsequently, on receipt 3 ITA Nos.933 to 935/PUN/2018 of information from the Maharashtra Sales Tax Department that the appellant is a beneficiary of bogus purchases made through bogus purchase bills, the Assessing Officer issued notice u/s 147 of the Income Tax Act, 1961 (‘the Act’) and the assessment was completed vide order dated 04.03.2015 passed u/s 143(3) r.w.s. 147 r.w.s. 144 of the Act at total income of Rs.3,24,23,170/- after making addition on account of alleged bogus purchase of Rs.3,02,85,190/-.
6. Being aggrieved, an appeal was filed before the ld. CIT(A) who had confirmed the addition. However, on further appeal before the ITAT, Pune Benches vide order dated 31.08.2017 in ITA No.1832, 1833 & 1834/PUN/2017 for A.Y. 2009-10, 2010-11 & 2011-12 restricted the addition to 10% of such bogus purchase of Rs.3,02,85,190/-. Thus, it is clear that the addition was made by the Assessing Officer on account of bogus purchase was restricted to 10% of such bogus purchases.
7. While matter stood thus, the Assessing Officer had proceeded with levy of penalty u/s 271(1)(c) of the Act vide order dated 30.09.2015 holding that the assessee is guilty of concealing the 4 to 935/PUN/2018 particulars of income as well as furnishing inaccurate particulars of income.
Being aggrieved by the order of levy of penalty, an appeal was preferred before the ld. CIT(A), who vide impugned order confirmed the levy of penalty. Hence, the appellant is in appeal before us.
It is submitted before us that the Assessing Officer had not struck off the relevant column of limb of the show-cause notice and, therefore, the levy of penalty is not justified as it is not specified under which limb of section 271(1)(c) of the Act, the penalty proceedings are initiated. In support of this proposition, he relied upon the plethora of decisions placed on record.
Without prejudice to the above, it is submitted that the addition was made only on estimate basis and, therefore, the question of levy of penalty does not arise.
On the other hand, ld. Sr. DR submitted that the order of the ld. CIT(A) confirming the levy of penalty is just and reasonable and does not require any interference. He further submits that the show- cause notice u/s 274 r.w.s. 271(1)(c) of the Act was issued by the Assessing Officer for both the limbs i.e. for concealment of 5 ITA Nos.933 to 935/PUN/2018 particulars of income as well as for furnishing of inaccurate particulars of income. Thus, it is submitted that none of the decision relied upon by the ld. AR for application to the facts of the present case.
We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the validity of levy of penalty u/s 271(1)(c) of the Act. The Assessing Officer made addition on account of alleged bogus purchases made from Hawala Traders. However, the said addition made by the Assessing Officer was restricted to 10% of such bogus purchases by this Tribunal (supra) which means that the assessment of income was made on estimate basis. The Hon’ble Punjab & Haryana High Court in the case of CIT vs. Sangrur Vanaspati Mills Ltd., 303 ITR 53 (P&H) held that no penalty u/s 271(1)(c) is leviable in case the addition made is based on the estimate basis. Similar view also taken by the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Ravail Singh & Co., 254 ITR 191, Harigopal Singh vs. CIT, 258 ITR 85 and CIT v. Dhillon Rice Mills, 256 ITR 447.
The decision of the Hon’ble Punjab & Haryana High Court in the cases cited above supra is squarely applicable to the facts of the 6 to 935/PUN/2018 present case. Accordingly, we are of the considered opinion that the levy of penalty u/s 271(1)(c) is not proper. Accordingly, we direct the Assessing Officer to delete the penalty of Rs.14,40,342/- u/s 271(1)(c) of the Act.
Since the levy of penalty u/s 271(1)(c) is not justified and proper in the case of estimate income, we need not dwell into the applicability of the case laws relied upon by the ld. AR for the appellant.
In the result, the appeal of the assessee in ITA No.933/PUN/2018 for A.Y. 2009-10 stands allowed. ITA Nos.934 & 935/PUN/2018, A.Y. 2010-11 & 2011-12 : 16. Since the facts and issues involved in all the above three appeals are identical, therefore, our decision in ITA No.933/PUN/2018 for A.Y. 2009-10 shall apply mutatis mutandis to the remaining two appeals of the assessee in ITA Nos.934 & 935/PUN2018 for A.Y. 2010-11 & 2011-12 respectively. Accordingly, the appeals of the assessee in ITA Nos.934 & 935/PUN2018 for A.Y. 2010-11 & 2011-12 are allowed.