ACIT -CIRCLE -7(3)(2), MUMBAI vs. PRINTEL CARDZ PVT. LTD., MUMBAI

The present Appeal has been filed by the revenue against the order of Ld. Commissioner of Income Tax (Appeals) -13 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 20/07/2018 for Assessment Year (in short AY) 2010-11, whereby the Ld. CIT(A) allowed the appeal filed by the assessee against the penalty M/s. Printed Cardz P.Ltd . - 2 - order passed u/s 271 (1) (c) of the Income Tax Act, 1961 (for short the ‘Act’) by deleting the same.

Brief facts of the case are that that assessee filed its return of income on 15-10-2010 for the A.Y 2010-11, declaring total income of Rs. 76,35,090/- which was processed/ accepted u/s 143(1) of the Act. Subsequently information received from sales tax department and DGIT (Investigation), Mumbai informing that assessee has made purchases from Hawala entry providers. Accordingly, the assessment was reopened, the reassessment was completed vide order dated 26.12.2016 by determining the total income at Rs. 82,38,500/-. In the above assessment A.O estimated the profit @ 12.5% on such transaction made by the assessee and made addition of Rs. 6,03,408/- on account of bogus purchase transaction. Thereafter, the A.O also initiated penalty proceedings u/s 271(c) of the Act by issuing of notice u/s 274 r.w.s 271( 1) ( (c )of the Act and levied penalty of Rs. 1,86,453/- for furnishing inaccurate particulars of income u/s. 271(1) ( c) of the Act vide order dated 31.08.2016.

Aggrieved with the order of the A.O the assessee preferred an appeal before the CIT(A).

At the time of hearing, it is brought to our notice that the penalty was levied on the alleged bogus purchases and the income was estimated, the same was also confirmed by the Ld. DR. Therefore, in our considered view and in the catena of cases the Courts have held that the penalty cannot be levied when the income of the assessee is estimated. Therefore, the penalty deleted by the CIT(A) is justified and proper. Accordingly the appeal of the revenue is dismissed.

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