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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI C.N. PRASAD & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the Revenue. The relevant assessment year is 2009-10. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-25, Mumbai [in short ‘CIT(A)’] and arises out of the penalty levied u/s 271(1)(c) of the Income Tax Act 1961, (the ‘Act’).
Though the case was fixed for hearing on 27.11.2019 and 17.02.2020, neither the assessee nor its authorized representative appeared before the Tribunal on the above dates. Because of non-compliance by the assessee, we are proceeding to dispose off this appeal after examining the materials available on record and after hearing the Ld. Departmental Representative (DR).
Briefly stated, the facts of the case are that the assessee filed its return of income for the assessment year (AY) 2009-10 on 20.08.2009 declaring an income of Rs.5,61,380/-. Assessment u/s 143(3) r.w.s. 147 of the Act was completed by the Assessing Officer (AO) on 27.03.2015 by making two additions i.e. (i) disallowance of Rs.2,69,756/- with regard to bogus purchases and (ii) disallowance of Rs.35,311/- towards expenses.
Herein, the dispute is with regard to disallowance of Rs.2,69,756/- made by the AO. The background is that that the AO received information from the Sales Tax Department, Government of Maharashtra that the assessee had obtained bogus purchases bills of Rs.21,58,052/- from Shree Yamuna Impex. In the assessment order, the AO estimated the profit @ 12.5% on such disputed purchases of Rs.21,58,052/- which comes to Rs.2,69,756/-. Thereby the AO made disallowance of Rs.2,69,756/-. Subsequently, the AO levied a penalty u/s 271(1)(c) amounting to Rs.83,355/- on the above amount of Rs.2,69,756/- on the reasoning that the assessee had concealed its taxable income and had furnished inaccurate particulars of such income within the meaning of section 271(1)(c) of the Act.
Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that the Ld. CIT(A) by following the decision on the Hon’ble Allahabad High Court in the case of Naresh Chand Agarwal v. CIT, 357 ITR 514 (All) and the order of the Tribunal in DCIT v. M/s Manohar Manak Alloys P. Ltd. (ITA No. 5586/Mum/2015), M/s Yashraj Films P. Ltd. v. ACIT (ITA No. 7519/Mum/2013), DCIT v. M/s Rishabh Impex Gulabdas & Co. (ITA No. 93/Mum/2011), Shruti Fastners Ltd. v. DCIT (2017) 49 CCH 183 (Del-Trib.) and Rakesh Kumar M. Gupta v. ITO (2017) 49 CCH 66 (Mum- Trib.), deleted the penalty of Rs.83,355/- levied by the AO.
Before us, the Ld. DR submits that on the basis of the information received for the Sales Tax Department, Government of Maharashtra that the assessee had obtained bogus purchase bills, the AO made verifications. The notice issued by the AO u/s 133(6) to the concerned party was returned un-served by the postal authorities. Also during the course of assessment proceedings, the AO asked the assessee to produce the said party for verification. However, the assessee failed to produce the said party before the AO for examination. In view of the above facts the AO estimated the profit @ 12.5% on the disputed purchases of Rs.21,58,052/- which comes to Rs.2,69,756/-. The DR further submits that in the instant case the assessee has concealed its taxable income and also furnished inaccurate particulars of such income within the meaning of section 271(1)(c). Thus the DR submits that the penalty of Rs.83,355/- levied by the AO u/s 271(1)(c) be restored.
We have heard the Ld. DR and perused the relevant materials on record. In the instant case, the AO has estimated the profit @ 12.5% of the disputed purchases of Rs.21,58,052/-. We find that the Ld. CIT(A) has rightly relied on the decisions mentioned at para 4 hereinbefore and deleted the penalty on the ground that the same is not leviable because the income has been estimated. We uphold the order of the Ld. CIT(A).
In the result, the appeal is dismissed.