ITO WARD 1(4), THANE vs. SHRI. GANESH CHANDRAKANT DERE, THANE

PDF · subscribers
ITA 371/MUM/2019Status: DisposedITAT Mumbai20 February 2020AY 2010-113 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 cannot be levied on additions made purely on estimation. The acceptance of addition by the assessee does not automatically warrant penalty proceedings.

What were the facts?

The Revenue appealed against the deletion of penalty levied under Section 271(1)(c) for alleged bogus purchases. The Assessing Officer had made an addition based on estimated GP on these purchases.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable on additions made on estimation of bogus purchases. Whether the appeal by the Revenue is maintainable considering the tax effect and CBDT circulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIKAS AWASTHY

For Appellant: Shri R. Bhoopati
Hearing: 22/01/2020Pronounced: 20/02/2020

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-1, Thane, dated 19/11/2018 for the A.Y 2010-11, deleting penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 (herein after referred to as ‘the Act’).

2.

The addition was made by the Assessing Officer in reassessment proceedings vide order dated 06/02/2015 passed under section 143(3) r.w.s. 147 of the Act by estimating GP @ 12.04% on alleged bogus purchases. The Assessing Officer vide order dated 21/08/2015 levied penalty u/s 271(1)(c) of the Act on the estimated addition of alleged bogus purchases. Shri R. Bhoopathi, appearing on behalf of Department, vehemently defended the penalty order and prayed for reversing the findings of the CIT(A). The Departmental Representative submitted that since reopening was done on the basis of information received from external investigating agency, the appeal would not be covered by CBDT Circular dated 08/082019 on monetary limits for filing appeals by the Department.

3.

I have considered the submissions made by ld.Departmental Representative and have perused the orders of authorities below. Every addition made in assessment proceedings does not automatically lead to levy of penalty u/s. 271(1)(c) of the Act. In the instant case penalty u/s. 271(1)(c) has been levied on the disallowance of bogus purchases made on estimation. It is a well settled legal position that no penalty is leviable on additions based on estimations. Merely for the reason that addition has been accepted by the assessee does not ipso-facto result in initiation of penalty proceedings. I see no reason to interfere with the impugned order.

4.

I further observe that the quantum of penalty which is subject matter of dispute is Rs. 25,047/- only. The Tax effect in this appeal by the Revenue is far less than the limit prescribed by CBDT for filing appeals by the Department before the Tribunal. It would be relevant to mention here that Department appeals emanating from penalty proceedings u/s 271(1)(c) of the Act on the additions consequent to information received from external investigating agencies are not covered by exceptions provided in para 10 of the CBDT circular dated 20.08.2018.

5.

Thus, for the reasons cited above, the appeal of Revenue is liable to be dismissed. I hold and direct accordingly.

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →