ACIT - CIRCLE- 4, THANE vs. AJAY V. PRASAD, MUMBAI

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ITA 6415/MUM/2018Status: DisposedITAT Mumbai03 March 2020AY 2011-123 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 upheld the CIT(A)'s decision to delete the penalty. It found that the assessee's conduct was not contumacious enough to warrant a penalty, especially since purchase bills and banking channel payments were produced.

What were the facts?

The Assessing Officer (AO) levied penalty under Section 271(1)(c) based on information from the sales tax authority regarding bogus purchases. The assessee was unable to produce the suppliers, leading the AO to believe the purchases were not genuine and income was concealed.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the assessee is unable to produce suppliers but has produced purchase bills and evidence of payment through banking channels.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, “A” Bench, Mumbai

Before: Shri Shamim Yahya (AM) & Shri Ravish Sood (JM)

For Respondent: Shri Ravinder Sindhu
Hearing: 13.01.2020Pronounced: 03.03.2020

This appeal by the Revenue is directed against the order of learned CIT(A) dated 7.8.2018. In this order learned CIT(A) has deleted the penalty levied of Rs. 88,454/- levied u/s. 271(1)(c) of the Act for A.Y. 2011-12.

2.

Brief facts of the case leading to levy of penalty are enumerated as under:- There was information from sales tax authority that the assessee had made bogus purchases. The Proprietor/Partner of the above mentioned parties has given statements before the Sales Tax Authorities and stated therein that they have indulged in bogus billing under various names without supplying the actual goods/materials as mentioned in the bills. The Assessing Officer gave an opportunity to the assessee, to substantiate the creditworthiness and genuineness of the said transaction by producing the parties. In response, the AR of the assessee, vide order sheet noting dated

2 Shri Ajay V. Prasad Prop. M/s. Prime Industries 02.12.2014 stated that they are unable to locate the said parties. Taking into account the above facts and circumstances, Assessing Officer opined that the assessee was a beneficiary of the there wasn't actual delivery/physical delivery of goods. That an accommodation bill is obtained for introducing unaccounted goods into the accounted stream. Hence he held that the assessee deliberately claimed the depreciation and concealed particulars of his true income by furnishing inaccurate particular to the extent of Rs 2,86,260/-.

3.

On this addition penalty was levied amounting to Rs. 88,454/-.

4.

Upon assessee’s appeal learned CIT(A) found that the assessee has tried its best to prove alleged bogus purchases by providing purchase bills, evidence of payment made through banking channel etc. However, adverse inference was taken because of the inability of the assessee to produce alleged bogus suppliers. Learned CIT(A) opined that in these circumstances penalty cannot be levied. He found that the assessee has not made any conscious attempt of concealment or furnishing inaccurate particulars of income. Learned CIT(A) also placed reliance upon the decision of Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products and several other case laws. Learned CIT(A) was of the opinion that the assessee has made a bonafide claim and assessee cannot be imposed penalty u/s. 271(1)(c) of the Act.

5.

Against this order, the Revenue is in appeal before us.

6.

We have heard learned Departmental Representative. None appeared on behalf of the assessee. Upon careful consideration, we find that the penalty in this case has been levied on the addition made for disallowance of depreciation claimed on the plea that purchase of asset in this regard was bogus. For coming to this decision the Assessing Officer has relied upon the information received from the Sales Tax authority and also inability of the assessee to produce alleged bogus suppliers. The assessee has produced purchase bills

3 Shri Ajay V. Prasad Prop. M/s. Prime Industries and payments were also made through banking channel. In these facts, in our considered opinion learned CIT(A) is quite correct in holding that the assessee’s conduct is not contumacious to warrant levy of penalty u/s. 271(1)(c) of the Act. For this proposition we place reliance upon the decision of the Larger Bench of Hon'ble Apex Court in the case of Hindustan Steel Ltd. Vs. State of Orissa (83 ITR 26)

Accordingly, we do not find any infirmity in the order of learned CIT(A) and hence, we uphold the same.

7.

In the result, this appeal filed by the Revenue stands dismissed. Order has been pronounced in the Court on 3.3.2020.

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