PREMARAM R. CHOUDHARY,MUMBAI vs. INCOME TAX OFFICER-3(2), THANE

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ITA 1727/MUM/2018Status: DisposedITAT Mumbai16 May 2019AY 2009-104 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found the assessee's explanation of making purchases in bona-fide belief and good faith to be plausible. The Tribunal noted that the suppliers used to visit the assessee's shop and their TIN was active at the time of purchase.

What were the facts?

The assessee's appeal concerns a penalty imposed under Section 271(1)(c) of the Income Tax Act for alleged bogus purchases. The Assessing Officer had made an addition of Rs. 16.62 Lacs on this account, which the assessee initially denied but later accepted for taxation.

What were the issues?

The primary issue was whether the penalty under Section 271(1)(c) was justified when the assessee accepted the addition based on a bona-fide belief, and if the penalty notice was legally valid.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 147,Section 133(6),Section 274

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM

For Respondent: Shri Neil Philip-Ld.DR

आदेश / O R D E R

Per Manoj Kumar Aggarwal (Accountant Member):- 1. Aforesaid appeal by assessee for Assessment Year [in short referred to as ‘AY’] 2009-10 contest the order of Ld. Commissioner of Income-Tax (Appeals)-2, Pune [CIT(A)], Appeal No [New].PN/CIT(A)-2/ITO Wd- 3(2)/THN/185/2017-18 date 03/10/2017 on following grounds of appeal: - I. The Id CIT(A) erred in confirming the order of Assessing officer imposing penalty u/s. 271(1)(c) of the Act amounting to Rs. 5.74,340/- in respect of the alleged addition of Rs.16,62,119/- without appreciating that there is no concealment of any income nor has the assessee furnished any inaccurate particulars of his income.

1.

2. The assessing officer erred in levying penalty u/s. 271(1)(c) of Act in respect of alleged purchase without appreciating that the assessee had submitted all details and evidences merely because the assessee has agreed to offer the same for taxation , the levy of penalty is not justified, moreso when in all cases of bogus purchases from Hawala dealers Tribunal has consistently sustaining GP /estimated addition .

3. The notice for levying penalty under Section 271(1)(c) of the Act is bad in law and not sustainable in law.

The Ld. Authorised Representative for Assessee [AR] has sought withdrawal of Vakalatnama vide letter dated 10/05/2019. Accordingly, we proceed to dispose-off the appeal ex-parte qua the assessee on the basis of material on record and after hearing Ld. DR, who justified the impugned penalty u/s 271(1)(c).

2.

Facts leading to levy of penalty are that the assessee was saddled with certain quantum addition of Rs.16.62 Lacs on account of alleged bogus purchases in an assessment framed u/s 143(3) r.w.s.

147.

Although the assessee denied the same, however, notices u/s 133(6) were returned back and the parties were not found traceable at the given addresses. The assessee submitted that the purchases were made under bona-fide belief in good faith assuming the suppliers to be genuine one and the suppliers used to visit assessee’s shop to supply the goods. The same could not find favor with Ld. AO. Therefore, while disallowing these purchases, penalty u/s 271(1)(c) was initiated against the assessee for concealment of income and show-cause notice u/s 274 r.w.s. 271(1)(c) was issued in due course of time. The perusal of record, prima-facie reveal that the quantum addition has been accepted by the assessee. Finally, the assessee has been saddled with impugned penalty of Rs.5.74 Lacs u/s 271(1)(c) vide order dated 25/09/2014. The same, upon confirmation by Ld. first appellate authority, is under challenge before us.

3.

Upon careful consideration, upon perusal of assessee’s submissions during appellate proceedings, we find that the assessee’s plea revolve around the fact that the purchases were made under bona-fide belief and in good faith that the suppliers were genuine. The suppliers used to visit assessee’s shop to supply the material as per routine practice. The TIN of the suppliers was found active at the time of purchase of goods. We find the explanation to be plausible one and the overall conduct of the assessee do not inspire us to confirm the penalty. By deleting the same, we allow ground nos. 1 & 2. Nothing on record suggest that the notice for levying penalty was bad in any manner and therefore, ground no. 3 stands dismissed.

4.

The appeal stands partly allowed. Order pronounced in the open court on 16/05/2019 Sd/- Sd/- (Saktijit Dey) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांकDated : 16/05/2019 Sr.PS:-Jaisy Varghese आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6.

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