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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: Shri Pramod Kumar & Shri Pawan Singh
O R D E R PER BENCH : 1. These three appeals filed by the revenue are directed against the independent orders of learned CIT(A)-12, Mumbai, all dated 21-09- 2018, which, in turn, arise out of the orders passed by the assessing officer u/s 271(1)(c) of the I.T. Act, 1961 for assessment year 2010-11, 2011-12 & 2009-10, respectively. The revenue has raised identical grounds of appeal in all the years; the facts are also almost identical except for variation in figures. Therefore, with the consent of parties,
2 ITA 7148-7150/Mum/2018- M/s Jainex Fire & Safety Systems Pvt Ltd all the three appeals were clubbed together, heard and are decided by this common order. With the consent of parties, appeal for AY 2010- 11 was treated as lead case. In this appeal, the revenue has raised the following ground of appeal:-
"On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty levied u/s. 271(l)(c) of the Act amounting to Rs. 1,47,343/- by not appreciating that quantum addition on account of bogus bill purchases from two parties is sustained by the Hon'ble Tribunal to the extent of Rs. 4,76,839/". 7 "On the facts and in the circumstances of the case and in law, Id. CIT(A) has erred in directing the penalty ignoring that the information on account of bogus purchases is received from the external agency that the assessee had received accommodation entry." 8 Though the tax effect in this case is Rs. 1,47,343/-, however this appeal has been filed because it is covered by exception mentioned in para 10(e) of the CBDT Circular No. 3/2018 dt. 11-7-2018 as subsequently clarified by Board letter did. 20/08/2018 vide no. 279/misc./142/2007-ITJ(Pt.).”
The brief facts of the case are that for the year under consideration, the assessee filed return of income declaring income of Rs.83,295/-. The return was accepted u/s 143(1) on 27-05-2011. Subsequently, the case was reopened u/s 147 after recording reasons, by issue of notice u/s
The case was reopened on the basis of information received from the investigation wing of the department that certain traders were indulged in providing accommodation bills without actual delivery of 3 ITA 7148-7150/Mum/2018- M/s Jainex Fire & Safety Systems Pvt Ltd goods and that the assessee was one of such beneficiary of hawala purchases. The AO made 100% of the addition of alleged bogus purchases identified as non-genuine / bogus purchases. On appeal before ld CIT(A) the additions were sustained to the extent of 15% of alleged bogus purchases. The AO also initiated penalty u/s 271(1)(c) of the Act. Notice u/s 274 r.w.s. 271(1)(c) was issued to the assessee on 21-12-2015 and after giving opportunity of hearing the AO levied penalty @100% of tax sought to be evaded vide order dated 30-10- 2017. On further appeal before CIT(A), the order of penalty was set aside / quashed. Thus, aggrieved by the order of CIT(A), the revenue has filed the present appeal before us.
We have heard the submissions of Ld. departmental representative (DR) for the revenue and Ld. authorised representative (AR) for the assessee and perused the material available on record. At the outset of hearing, the Ld.AR of the assessee submits that the tax effect involved in the present appeal is less than the monetary limit prescribed by the CBDT in its circular No.17 of 20189, for filing the appeal before the Tribunal and the appeal is not liable to be entertained. The ld AR accordingly prayed for dismissal of the appeal.
The Ld. DR for the revenue, on the other hand, submits that the addition made in the impugned assessment was based on the basis of 4 ITA 7148-7150/Mum/2018- M/s Jainex Fire & Safety Systems Pvt Ltd information received from external sources. Therefore, the present appeal is covered by the exception clause of para 10(e) of circular No.3 of 2018 dated 11-07-2018 and accordingly, the appeal may be decided only on merit. On merit, the Ld. DR supported the order of AO and would submit that he levied penalty only on the additions sustained by ld CIT(A).
On the contrary, the Ld.AR of the assessee submits that para 10(e) of the circular No.3 of 2018 is not applicable as the appeal relates to the penalty u/s 271(1)(c). However, the said circular is specific only about the additions which are based on the information from external sources. On merit of the case, the Ld.AR submits that the AO made addition on estimate basis on which no penalty is leviable. In support of his submission, the Ld.AR of the assessee relied upon the following decisions:- Elcon Pipe & Fittings Pvt Ltd vs ITO Order dated 11-02-2019. Shri Deepak Gogri vs ITO – ITA No.1396/Mum/2017 Order dated 23-11-2017, Shri Ajay Loknath Lohia – ITA No.2998/Mum/2017, Order dt 05-10-2018 .
We have considered the submissions of both the parties and perused the material available on record. We have noted that the AO in re- assessment order dated 21-12-2015 made addition of 100% of the 5 ITA 7148-7150/Mum/2018- M/s Jainex Fire & Safety Systems Pvt Ltd alleged bogus purchases; however, on appeal before the ld CIT(A), the addition was restricted to 15% of the alleged bogus purchases. The AO initiated and levied penalty on the addition made on estimate basis and levied penalty vide order dated 30-10-2017 and levied penalty @100% of tax sought to be evaded. The Ld. CIT(A) deleted the penalty by taking view that no concealment penalty could be levied on estimate addition. The Ld. CIT(A) while deleting the penalty, relied upon the decision of Tribunal in Earthmoving Equipment Service Corporation vs ITO [2017] 84 taxmann.com 51 (Mum.Trib.) and deleted the penalty.
The ld. AR of the assessee vehemently relied upon the decision of as referred in para-5 above on the ratio that addition was made on adhoc basis and no penalty is leviable on such adhoc addition. Considering the fact that the sole basis of penalty is the addition estimated on account of bogus purchases. In our view, it is now settled legal position that no penalty u/s 271(1)(c) is leviable on adhoc disallowances.
Considering the decision of co-ordinate benches of the Tribunal, as relied upon by the Ld.AR of the assessee, we do not find any infirmity in the order passed by the Ld. CIT(A), which we uphold. No contrary facts or law has been brought to our notice to take a different view.
6 ITA 7148-7150/Mum/2018- M/s Jainex Fire & Safety Systems Pvt Ltd
As we have decided the appeal on merit, discussion on issue of tax effect rendered academic.
In the result, appeal of the revenue is dismissed. & 7150/Mum/2018 (AYs 2011-12 & 2009-10) 10. The facts and circumstances in these appeals are identical to the appeal in , which, we have already decided above. This being so, the decision rendered above against ITA No.7148/Mum/2018 shall apply mutatis mutandis to these appeals also. As such, the appeals filed by the revenue are dismissed. 11. As a result, all the three appeals filed by the revenue are dismissed. Order pronounced in the open court on 17-12-2019.