ITO - 13(1)(2), MUMBAI vs. UNITED ASPHALTERS PVT. LTD., MUMBAI

The present Appeal has been filed by the revenue against the order of Ld. Commissioner of Income Tax (Appeals) -21 in short referred as ‘Ld. CIT(A)’, Mumbai, dated 29/06/2018 for Assessment Year (in short AY) 2009-10, whereby the Ld. CIT(A) allowed the appeal filed by the assessee against the penalty M/s. Unitd Asphalters 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 e- return of income for the A.Y 2009-10 on 28.09.2009, declaring total income of Rs. 15,53,320/- which was processed/ accepted u/s 143(1) of the Act. Subsequently information received from sales tax department and Investigation Wing, Mumbai informing that assessee has made purchases from Hawala entry providers. Accordingly, the assessment was reopened, the reassessment was completed vide order dated 20.03.2015 by determining the total income at Rs. 77,01,333/-. In the above assessment A.O estimated the commission @ 1% on sales made by the assessee and made addition of Rs. 61,30,375/- on account of bogus purchase transaction u/s.69C of the Act. In the re- assessment the AO also made disallowance of Rs. 17,638/- on account of claim of depreciation. On sustenance/restriction of addition by the ld. CIT(A), the A.O also initiated penalty proceedings u/s 271(c) of the Act by issue notice u/s 274 of the Act and levied penalty of Rs. 2,13,710/- u/s. 271(1) ( c) of the Act vide order dated 27.03.2017.

After considering the submissions of the assessee and by relying on the decisions of the Coordinate Bench of this Tribunal in the case of ITO Vs. ETCO Telecom Ltd., in 5998 & 5999/Mum/2012 and in the case of ACIT Vs. M/s Balaji constructions in ITA No. 217/Mum/2015 and ITA Nos. 5531, 5532/Mum/2018 in the case of ITO Vs. Smt. Seeman R. Singh, order dt. 10-12-2019 ld. CIT(A)has deleted the penalty levied by the A.O. Aggrieved with the above order the revenue is in appeal before us.

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.

In the result the appeal filed by the revenue is dismissed.