ACIT - 13(3)(1), MUMBAI vs. RIZVI ESTATES AND HOTELS PVT. LTD., MUMBAI

Asstt. Commissioner of Income Tax ……………. Appellant Circle–13(3)(1), Mumbai v/s Rizvi Estates And Hotels Pvt. Ltd. First Floor, Rizvi House, Hill Road ……………. Respondent Bandra (W), Mumbai 400 050 PAN – AAACR5021K Revenue by : Shri Vishwas Mohantale Assessee by : Shri Kamal Mangal Date of Hearing – 13.01.2020 Date of Order – 17.01.2020

O R D E R PER SAKTIJIT DEY. J.M.

The captioned appeal has been filed by the Revenue challenging the order dated 25th July 2018, passed by the learned Commissioner (Appeals)–21, Mumbai, deleting the penalty of ` 8,50,000, imposed under section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act") pertaining to the assessment year 2010–11.

consideration, the assessee filed its return of income on 14th October 2010, declaring total income of ` 1,13,34,984. The assessment in case of the assessee was originally completed under section 143(3) of the Act vide order dated 17th December 2012, determining the total income of ` 1,17,48,350. Subsequently, on the basis of information received from the Sales Tax Department, Government of Maharashtra, through the office of the DGIT (Inv.), Mumbai, that purchases worth ` 27,32,475, claimed to have been made during the year from the four parties are non–genuine, the Assessing Officer re–opened the assessment under section 147 of the Act. During the assessment proceedings, the Assessing Officer called upon the assessee to prove the purchases. Further, to verify the genuineness of such purchases independently, the Assessing Officer issued notices under section 133(6) of the Act to the concerned parties which, as alleged by the Assessing Officer, returned back un–served. Only in respect of one party, though, the notice was served, however, the concerned party denied of having made any sales to the assessee. Thus, on the basis of such facts and material on record, the Assessing Officer held such purchases to be non–genuine. However, since such purchases were not debited to the Profit & Loss account as expenditure, the Assessing Officer reduced them from work–in–progress (WIP). As it appears, against the assessment order so passed, reducing the non–genuine

3 Rizvi Estates And Hotels Pvt. Ltd. purchases from WIP, the assessee did not prefer any appeal. On the basis of such reduction of WIP, the Assessing Officer initiated proceedings for imposition of penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income and ultimately passed order dated 27th March 2017, imposing penalty of ` 8,50,000, under section 271(1)(c) of the Act. Against the penalty order so passed, the assessee preferred appeal before the first appellate authority.

4 Rizvi Estates And Hotels Pvt. Ltd.

Commissioner (Appeals) has also taken note of the fact that the assessee has already reduced the WIP account in the assessment year 2011–12 by the amount of ` 27,69,102. From the aforesaid facts, not only the bona fide of the assessee is proved, but it has to be concluded that the assessee has not furnished any inaccurate particulars of income so as to be visited with penalty under section 271(1)(c) of the Act. Therefore, in our view, learned Commissioner (Appeals) was justified in deleting the penalty imposed under section 271(1)(c) of the Act. Even, otherwise also the present appeal of the Revenue would not be maintainable on account of low tax effect as the tax effect on the amount disputed in the present appeal is below the monetary limit of ` 20 lakh. For the aforesaid reasons, we do not find merit in the grounds raised.