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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: Shri Shamim Yahya (A.M.) & Shri Pawan Singh (JM)
O R D E R PER PAWAN SINGH, JM : 1. This appeal by assessee is directed against the order of CIT(A)-3, Thane dated 24-02-2017 for assessment year 2011-12. The assessee has raised the following grounds of appeal:-
“1. The Assessing Officer (Ward 4(1), Thane) reopened the case of appellant for Assessment u/s 147 of The Income Tax Act, 1961 for AY 2011-12 having reason to believe- that appellant had bogus purchase during the said year on the basis of information received from The Sales Tax Department.
2. The Assessing Officer has passed ex parte order due to non attendance of the assessee and assessed the income of the appellant at Rs. 40,27,381/- with addition of Rs.37,17,321/- on account of bogus purchase. Further The AO has levied Penalty u/s 271(l)(c) of The Income Tax Act, 1961 for amount of Rs. 11,48,650/- on ground of furnishing inaccurate particulars.
Due to ex parte order the case could not be properly represented before Assessing Officer to explain and justify such purchase. Further Assessing
2 ITA 825/Mum/2019 Officer has not considered various judgments of tribunal and high court with regard to disallowance on account of bogus purchases.
4. The Appeal was filed against Order of Assessing Officer before the Commissioner of Income Tax (Appeals). The CIT (Appeals) has dismissed such Appeal on the grounds of non attendance by appellant and passed order in conformity of The Assessing Officer.
5. During the pendency of Assessment and Appeal, appellant has shifted its registered office to new address. All the Notices for Assessment and Appeal proceedings were being sent to old administrative office which was not received by the appellant. Hence the appellant could not attend the assessment and 'appeal proceedings. Such non attendance was not intentional or it was not to dishonor The Honble Income Tax Department.
The opportunity should be given to the appellant to represent the case & submits evidences and documents to verify genuineness of such suspicious purchases. Accordingly no inaccurate particulars of income are furnished in return of income.
Please consider our case and we hereby request your good selves for your great cooperation.”
At the outset of hearing, the Ld.AR of the assessee submits that the case of assessee was reopened and assessment was completed u/s 144 r.w.s. 147. The AO made addition on account of bogus purchases.
The AO made addition of 100% of the purchases. On appeal before CIT(A) the addition was confirmed. The Ld.CIT(A) confirmed the action of AO in ex-parte order. However, on further appeal before the Tribunal, the addition was restricted to 12.5% of the aggregate of alleged bogus purchases. The Ld.AR submits that the AO passed the penalty order on 29-09-2015 much prior to the order of Tribunal. The 3 ITA 825/Mum/2019 Ld.AR submits that once the addition has been restricted to 12.5%, the penalty order has no leg to stand. 3. On the other hand, the Ld. DR for the revenue submits that assessee is a habitual and defaulter in not appearing before the lower authorities.
The assessee neither appeared during the assessment nor in first appellate proceedings in the quantum assessment. Again in penalty proceedings, the assessee did not co-operate with the proceedings before AO. Though the assessee filed appeal against the penalty levied u/s 271(1)(c), despite granting opportunity, the assessee has not attended the proceedings. The Ld. DR submits that the assessee was not bringing any material evidence or any submission before the lower authorities. Therefore, the matter may be restored to the file of AO for taking action afresh.
We have considered the submissions of both the parties, perused the record. We have noted that the AO levied the penalty vide order dated 29-09-2015. The AO levied penalty on the addition on account of bogus purchases of Rs.37,17,321/-, which was 100% of the impugned /disputed purchase. We have further noted that on appeal before the Tribunal, the addition on account of bogus purchases has been restricted to 12.5% in ITA No.826/Mum/2019. Considering the fact that assessee has neither attended during the assessment in penalty
4 ITA 825/Mum/2019 proceedings or in appellate proceedings either in quantum assessment order in appeal proceedings against penalty levied u/s 271(1)(c) and the facts remains that the addition on the basis of which penalty was levied has been restricted to 12.5%, the penalty levied vide order dated 11-09-2015 has no leg to stand. Therefore, we restore the matter to the file of AO to decide the issue of penalty afresh in accordance with law. Needless to order that before passing the order, the AO shall grant opportunity of hearing to the assessee. The assessee is also directed to co-operate with the AO and to provide necessary information or evidence that may be required by the AO.
In the result, appeal of the assessee is treated as allowed, for statistical purpose.
Order pronounced in the open court on 10-02-2020.