ITO-31(1)(4), MUMBAI vs. M/S. FANCY WEAR, MUMBAI

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ITA 604/MUM/2019Status: DisposedITAT Mumbai25 February 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 held that the Revenue's appeals were not maintainable due to low tax effect, as per CBDT Circular No. 17/2019. The circular's exceptions were also not applicable to penalty proceedings.

What were the facts?

The Revenue filed appeals against the CIT(A)'s order deleting penalties levied under Section 271(1)(c) for alleged bogus purchases. The penalties were imposed for Assessment Years 2010-11 and 2011-12.

What were the issues?

Whether the Revenue's appeals are maintainable given the low tax effect and the nature of the penalty proceedings.

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 “F”, MUMBAI

Before: SHRI C.N. PRASAD, HON’BLE & SHRI S. RIFAUR RAHMAN, HON’BLE

For Respondent: Ms Samatha Mullamudi
Hearing: 25.02.2020Pronounced: 25.02.2020

O R D E R PER BENCH These appeals are filed by the revenue against common order of the Learned Commissioner of Income Tax (Appeals)-42, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 30.10.2018 for the A.Y. 2010-11 and A.Y. 2011-12 in deleting the penalty levied u/s. 271(1)(c) of the Act.

2 & 604/MUM/2019 M/s. Fancy Wear 2. The Revenue in its appeals has raised following common grounds: "1. "Whether on the facts and in the circumstances of the case, the Ld.CIT(A) is correct in holding that the addition was made purely on estimate basis ignoring the fact that the assessee have furnished inaccurate particulars of income as the assessee failed to reconcile the purchases and no genuine explanation was offered for failure."

2.

Whether on the facts and in the circumstances of the case, the Ld.CIT(A) has erred in ignoring the fact that it was statutory duty of the assessee to declare its true income, on the contrary, the assessee inflated purchases with the malafide intention to reduce the tax liability.”

3.

At the time of hearing, Ld. AR submitted that tax effect on the issue in the present appeals is below ₹.50 Lacs and in view of the CBDT Circular No. 17/2019 dated 08.08.2019 in F.No.279/Misc.142/2007-ITJ (Pt), the appeals of the Revenue are not maintainable.

4.

On the other hand, Ld. DR submitted that these appeals are filed against deletion of penalty of ₹.42,47,010/- and ₹.37,09,657/- levied u/s.271(1)(c) of the Act on the disallowance made towards bogus purchases for the A.Y.2010-11 and A.Y. 2011-12 respectively.

5.

We have heard the rival submissions, perused the grounds of appeal in these appeals and the orders of the authorities below. We find that the tax effect in both these appeals is less than ₹.50 Lakhs and therefore the appeals of the revenue are not maintainable on account of low tax effect in view of the CBDT Circular No. 17/2019 dated 08.08.2019. We also observed that since the issue is in respect of levy of penalty

6.

In the result, appeals of the revenue are dismissed.

Order Pronounced in the Open Court on the 25th February, 2020

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