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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri Shamim Yahya (AM) & Shri Amarjit Singh (JM)
This appeal by the assessee is directed against the order dated 28.9.2018 and pertains to A.Y. 2009-10.
The issue raised is that learned CIT(A) erred in upholding the levy of penalty u/s. 271(1)(c) of the Act amounting to Rs. 9,12,542/-.
Brief facts of the case are that for the disallowance of bogus purchase in the case of the assessee gross profit was estimated at 12% and thereafter gross profit already declared @ 8.94% was deducted for the disallowance at Rs. 29,53,210/-. Penalty u/s. 271(1)(c) of the Act was also levied the same was confirmed by learned CIT(A).
Against this order the assessee is in appeal before the ITAT. We have heard both the counsel and perused the records. We find that the disallowance of purchase has been done on estimate basis. The assessee has submitted all the necessary documentary evidence. Adverse inference is drawn only on the 2 M/s. M. Patwari Traders Pvt. Ltd.
ground assessee was not able to produce concerned parties. In our considered opinion assessee’s conduct by no stretch of imagination is considered to be contumacious so as to warrant levy of penalty u/s. 271(1)(c) of the Act. The assessee has given all necessary documents for purchases. Sales were not doubted. As a matter of fact, on this issue Hon'ble Jurisdictional High Court in the case of Nikunj Eximp Enterprises (in Write Petition No. 2860, order dated 18.6.2014) has expounded that no disallowance for bogus purchases should be done. Hence, mere non-response from the suppliers cannot be lead to levy of penalty u/s. 271(1)(c) of the Act when disallowance in an estimate basis. Hence, in our considered opinion on the facts and circumstances of the case levy of penalty u/s. 271(1)(c) of the Act is unjustified. Hence, we set aside the orders of the authorities below.
Order has been pronounced in the Court on 2.12.2019.