ACIT, CIRCLE-3, KALYAN vs. MOHAN BALKRISHNA KARVE, MUMBAI

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ITA 1291/MUM/2019Status: DisposedITAT Mumbai04 March 2020AY 2009-104 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 penalty is not leviable on additions made on an estimated basis. Therefore, the order of the CIT(A) deleting the penalty was affirmed.

What were the facts?

The Assessing Officer disallowed 25% of purchases made from hawala dealers and levied penalty under Section 271(1)(c). The CIT(A) deleted the penalty, stating it was based on an estimated disallowance and not a finding of concealment or mala fide intention.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable on an estimated disallowance of purchases. Whether the CIT(A) was justified in deleting the penalty.

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 “SMC” MUMBAI

Before: SHRI R.C. SHARMA & SHRI PAWAN SINGH

For Appellant: Mr. S.L. Jain, AR
For Respondent: Mr. Mohammed Rizwan, DR, Mr. S.L. Jain, AR
Hearing: 04/03/2020Pronounced: 04/03/2020

PER PAWAN SINGH, JUDICIAL MEMBER;

1.

This appeal by Revenue is directed against the order of ld. CIT(A)-1, Thane dated 03.12.2018 for Assessment Year 2009-10. The ld. CIT(A) confirmed the order of Assessing Officer in levying the penalty under section 271(1)(c). The Revenue has raised the following grounds of appeal:

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A)was justified in deleting the penalty levied u/s 271(1)(c) without properly appreciatingthe decisions of the Hon'ble Apex Court in the case of Mak Data Pvt. Ltd. Vs CIT(Civil Appeal No. 9772 of 2013)", the Hon'ble Gujarat High Court's decision in thecase of N. K. Proteins Ltd, Tax Appeal No. 242 of 2003 dated 20/06/2016 against whichthe SLP was dismissed by the Hon'ble Supreme Court and also ignoring the fact thatDepartment received specific credible information in this case from the Sales TaxDepartment of the State Government of Maharashtra" in respect of non- genuinepurchases.

2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A)was justified in deleting the penalty levied u/s 271(1)(c) without appreciating the factthat there was a definite finding in the assessment order in respect of bogus purchasesand of furnishing inaccurate particulars of income relating to purchases resulting intoconcealment of income.

2.

Brief facts of the case are that the Assessing Officer (AO) while passing the assessment order made disallowance @ 25% of the impugned/bogus purchases shown from hawala dealers. The Assessing Officer initiated penalty under section 271(1)© of the Act, while passing the assessment order. The Assessing Officer levied penalty vide its order dated 28.04.2017. The Assessing Officer levied penalty @ 100% of tax sought to be evaded. On appeal before the Commissioner (Appeals), the penalty was deleted. The Ld. CIT(A) deleted the penalty by taking view that levy of penalty is merely on disallowance of purchases and not finding of concealment of any particular or mala fide intention to reduce tax income. Thus aggrieved by the order of CIT(A), the Revenue has filed the present appeal before us.

5. We have heard the submission of ld. Departmental Representative (DR) for revenue and ld. Authorized Representative (AR) of the assessee and perused the material available on record. The Ld. DR for the Revenue submits that the Assessing Officer while passing the assessment order made the disallowance on account of bogus purchases. The assessee has shown purchases from hawala traders. The hawala traders were indulging in providing accommodation entry. The assessee avail the accommodation entry to inflate the expenses. The assessee during the assessment could not substantiate the genuineness of purchases. The Assessing Officer reasonably disallowed the purchases @ 25% and in penalty order levied penalty only on amount of purchases. The Ld. DR paid for reversing the order of CIT(A) and we restore the order of Assessing Officer.

5.

On the other hand, the Ld. AR of the assessee submits that the addition in the assessment order is passed an estimated addition and no penalty is leviable and estimated addition.

6.

We have considered the submission of both the parties and perused the material available on record. There is no dispute that the Assessing Officer while passing the assessment order treated the purchases of assessee shown from the person which were declared hawala dealers by the Sales Tax Department, Government of Maharashtra. The Assessing Officer made estimated disallowance of disputed/impugned/purchases shown from hawala dealers @ 25%. The Assessing Officer levied penalty on such estimated disallowance. It is settled law that no penalty is leviable on addition made on estimated basis. Therefore, we affirm the order of Ld. CIT(A) on aforesaid observation.

7.

In the result, the appeal of the Revenue is dismissed.

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