SHRI SAMIR H DOSHI,MUMBAI vs. INCOME TAX OFFICER, 26(3)(1), MUMBAI

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ITA 2749/MUM/2019Status: DisposedITAT Mumbai17 November 2020AY 2009-103 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition was made on an estimated basis, and since the assessee furnished all details, they cannot be held guilty of furnishing inaccurate particulars or concealment. The conduct of the assessee was not contumacious to warrant penalty.

What were the facts?

The assessee, engaged in iron and steel business, faced a disallowance of 12.5% of purchases during assessment, leading to an addition and penalty. The CIT(A) upheld the penalty but directed recomputation, reducing the penalty amount.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when additions are made on an estimated basis and the assessee has furnished all details.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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

Before: SHRI SHAMIM YAHYA

For Appellant: Shri Narayan Atal
For Respondent: Ms. Smita Verma
Hearing: 09/11/2020Pronounced: 17/11/2020

This is an appeal by the assessee, wherein it is urged that the learned Commissioner of Income Tax (Appeals)-38 (in short ‘learned CIT(A)’) has erred in confirming the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’) amounting to Rs.6,60,000/- by order dated 29.09.2015 pertaining to Assessment Year 2009-10.

2.

The brief facts of the case are that assessee in this case is engaged in the business as reseller and supplier of iron and steel, hardware, etc. During the course of assessment proceedings, the Assessing Officer made disallowance of 12.5% of the purchases resulting in addition of Rs.18,91,383/-. Penalty under Section 271(1)(c) of the Act amounting to Rs.6,60,000/- was also levied.

3.

Upon assessee’s appeal, learned CIT(A) upheld the penalty by inter alia observing that the Assessing Officer was wrong in computing the amount of Samir H. Doshi addition, which should have been Rs.9,45,691/-. Hence, he directed the Assessing Officer to recompute the penalty. The resultant penalty would only be Rs.3,30,000/-.

4.

Against this order, assessee is in appeal before the ITAT. I have heard both the parties and perused the material on record. I find the addition on account of bogus purchases has been done on estimated basis. Since all the details were furnished, assessee cannot be held guilty of furnishing inaccurate particulars of income or for concealment of income. I further note that there is lack of application of mind by the Assessing Officer in making the addition. While stating that he is disallowing 12.5% of bogus purchases of Rs.75,65,531/-, he has arrived at a figure of Rs.18,91,383/- with reference to which penalty is levied. The learned CIT(A) is wrong in holding that penalty under Section 271(1)(c) in this case is sustainable. I further note that the conduct of the assessee in this case cannot be considered to be contumacious to warrant levy of penalty under Section 271(1)(c) of the Act.

5.

This proposition is supported by the decision of Hon'ble Supreme Court in the case of Hindustan Steel Ltd. vs State of Orissa, 83 ITR 26 (SC).

6.

In the result, appeal filed by the assessee stands allowed.

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