SMT ZAHIRA RAMZANALI KHATUN,THANE vs. INCOME-TAX OFFICER,3, PANVEL

Brief facts are, the assessee is an individual. For the assessment year 2009–10, the assessee filed its return of income on 2 Smt. Zahira Ramzanali Khatun 18thSeptember 2010, declaring total income of ` 4,03,150. Similarly, for the assessment 2010–11, the assessee filed its return of income on 18th September 2010, declaring total income of ` 4,01,780. Initially, the return of income filed by the assessee were proposed under section 143(1) of the Act. Subsequently, on the basis of information received from the Sales Tax Department that certain purchases made by the assessee in the aforesaid assessment years are not genuine as they were effected from persons/dealers who were identified as hawala operators, the Assessing Officer re–opened the assessments under section 147 of the Act. After calling upon the assessee to prove the genuineness of the purchases, the Assessing Officer ultimately completed the assessments under section 143(3) r/w section 147 of the Act disallowing the purchases made in both the assessment years and adding back to the income of the assessee. The additions made by the Assessing Officer in different assessment years are as under:–

On the basis of such additions, the Assessing Officer also initiated proceedings for imposition of penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income and concealment of income. Against the additions so made, the assessee preferred appeals before learned Commissioner (Appeals) and 3 Smt. Zahira Ramzanali Khatun thereafter before the Tribunal. During the pendency of assessee’s appeals before the Tribunal, the Assessing Officer issued show cause notices under section 271(1)(c) r/w section 274 of the Act seeking explanation of the assessee as to why penalty under section 271(1)(c) of the Act should not be imposed. Though, the assessee filed explanations opposing imposition of penalty, however, the Assessing Officer rejecting the explanations of the assessee proceeded to impose penalty of ` 4,02,490, in assessment year 2009–10 and ` 4,07,911, in assessment year 2010–11.

The learned Authorised Representative submitted, while deciding quantum appeals of the assessee, learned Commissioner (Appeals) has restricted the addition to 12.5% of the non–genuine purchases. Whereas, while deciding assessee’s appeals against the said order of the learned Commissioner (Appeals), the Tribunal vide 646/Pun./2016, dated 31st January 2019, has granted further relief to the assessee by directing that the additions should be sustained @ 10% of the non–genuine purchases and restored the issue to the Assessing Officer for re–adjudication in terms with the directions. He submitted, learned Commissioner (Appeals) has disposed of the appeals filed by the assessee against imposition of penalty ex parte without allowing proper opportunity of being heard. Thus, he

The learned Departmental Representative has no objection for re–adjudication of the issue by learned Commissioner (Appeals).

We have considered rival submissions and perused the material on record. Undisputedly, on the basis of information received from the Sales Tax Department the Assessing Officer has treated certain purchases made by the assessee as non–genuine and has accordingly made additions while completing the assessments for the impugned assessment years. However, while deciding assessee’s appeals against such additions, learned Commissioner (Appeals) had restricted such addition to 12.5% of the non–genuine purchases. It is evident, on the basis of additions sustained by learned Commissioner (Appeals), the Assessing Officer has proceeded to impose penalty under section 271(1)(c) of the Act in both the years under appeal. However, while deciding assessee’s quantum appeals in the order cited supra, the Tribunal has granted further relief to the assessee. Undisputedly, the aforesaid decision of the Tribunal was rendered after the impugned order of learned Commissioner (Appeals) confirming the imposition of penalty under section 271(1)(c) of the Act. Furthermore, it is apparent that learned Commissioner (Appeals) has decided the appeals filed by the assessee challenging levy of penalty ex parte. Therefore,

In the result, appeals are allowed for statistical purposes. Order pronounced in the open Court on 16.08.2019