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Income Tax Appellate Tribunal, “SMC”, BENCH
Before: SHRI R.C.SHARMA
आदेश / O R D E R PER: R.C. SHARMA, A.M. These are the appeals filed by the revenue against the separate orders of the ld. CIT(A)-01, Thane dated 26/11/2018 for the A.Y. 2009- 10, 2010-11 & 2011-12 respectively in the matter of deletion of penalty U/s 271(1)(c) of the Income Tax Act, 1961 (in short, the Act).
All these appeals have common issue, therefore, all the clubbed and heard together and for the sake of convenience, a common order is being passed.
Common grievance of the revenue relate to ld. CIT(A)’s action for deleting the penalty imposed with respect to disallowance made on account of bogus purchases. In the A.Y. 2009-10, the A.O. has levied penalty of Rs. 30,810/-, in the A.Y. 2010-11 the A.O. has levied penalty of Rs. 88,520/- and in the A.Y. 2011-12, the A.O. levied penalty of Rs. 45,450/-.
By the impugned order, the ld. CIT(A) has deleted the penalty after observing as under:
“5. I have carefully considered the facts of the case, findings of the AO, submission of the AR of the appellant and material placed on record. In the appeal order of the quantum appeal, the then CIT(A) had restricted the addition to the extent of 25% of bogus purchases. Hence the addition to income has been sustained on estimation basis.
The Supreme Court has recently reiterated the law in case of Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519 by holding in para 62 that finding in assessment proceedings cannot automatically adopted in penalty proceedings and the authorities have to consider the matter afresh from different angle. Moreover, in the case of Ajay Loknath Lohia, order dated 5.10.2018, Mumbai ITAT has addressed that when AO had estimated cost GP on alleged purchases, such disallowance does not tantamount to willful furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Income Tax Act, 1961. This was also echoed in the case of ETCO Profiles Pvt. Ltd. vs. ACIT, by Mumbai ITAT.
In the case of CIT v. Reliance Petro Products (P) Ltd. (2010) 322 ITR 158 (SC) it was held as under –
We do not agree; as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed
3 to 358/Mum/2019 ITO Vs Shri Hemant Manohar Takle as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the Revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature".
8. The levy of penalty is merely on disallowance of purchases and not finding of concealment of any particular or mala-fide intention to reduce taxable income. Addition made on account of disallowance of purchases as bogus automatically cannot justify the penalty levied u/s 271(1)(c) of the Act. Accordingly, the penalty of Rs. 32,490/-, imposed u/s 271(1)(c) of the I.T. Act, by the AO, is hereby deleted and the grounds of appeal, raised as above, are allowed.”
5. Against the above order of the ld. CIT(A), the revenue is in further appeal before the ITAT.
6. I have considered the rival contentions and carefully gone through the orders of the authorities below and found that the penalty has been levied by disallowing the assessee’s claim of purchases. The ld. CIT(A) has deleted the penalty by observing that merely disallowance of purchases without finding out any concealment of any particular or malafide intention to reduce taxable income will not attract the provisions of Section 271(1)(c) of the Act. After applying the various judicial pronouncements including the decision of the Hon’ble Supreme Court in the case of Dilip N Shroff Vs Jt.CIT (supra) and CIT Vs Reliance Petro on record to controvert the findings so recorded by the ld. CIT(A) in para 5 to 8 of his appellate order. Accordingly, I do not find any reason to interfere in the order of the ld. CIT(A).
7. Since the facts and circumstances in the appeals for the A.Y. 2010- 11 and 2011-12 are pari materia to the A.Y. 2009-10 as discussed above, therefore, following the reasoning given in the A.Y. 2009-10, I also do not find any reason to interfere in the order of the ld. CIT(A).
In the result, all these three appeals of the revenue are dismissed. Order pronounced in the open court on 23rd January, 2020.