ITO-13(1)(1), MUMBAI, MUMBAI vs. P-CUBE CONSTRUCTION PRIVATE LIMITED, MUMBAI

Briefly stated, facts of the case are that in view of information Briefly stated, facts of the case are that in view of information Briefly stated, facts of the case are that in view of information received by the Assessing Officer that the assessee had obtained received by the Assessing Officer that the assessee had obtained received by the Assessing Officer that the assessee had obtained bogus accommodation entry bill bogus accommodation entry bills, the Assessing Officer in the he Assessing Officer in the assessment completed u/s 143(3) r.w.s. 147 of the Act dated assessment completed u/s 143(3) r.w.s. 147 of the Act dated assessment completed u/s 143(3) r.w.s. 147 of the Act dated 12.03.2016 made the addition amounting to Rs.11,30,963/- and 12.03.2016 made the addition amounting to Rs.11,30,963/ 12.03.2016 made the addition amounting to Rs.11,30,963/ initiated initiated initiated the the the penalty penalty penalty proceedings proceedings proceedings for for for furnishing furnishing furnishing inaccurate inaccurate inaccurate particulars of income. particulars of income.

On further appea On further appeal by the assessee against the addition made l by the assessee against the addition made in the assessment order, the Ld. First Appellate Authority partly in the assessment order, the Ld. First Appellate Authority partly in the assessment order, the Ld. First Appellate Authority partly confirm the addition to the extent of Rs.1,41,374/ confirm the addition to the extent of Rs.1,41,374/- (being 12.5% of Rs.11,30,995/-). In view of the part disallowance sustained by the ). In view of the part disallowance sustained by the ). In view of the part disallowance sustained by the Ld. CIT(A), the Assessing Officer issued a fresh show cause notice the Assessing Officer issued a fresh show cause notice the Assessing Officer issued a fresh show cause notice proposing to levy of penalty u/s 271(1)(c) of the Act. The assessee proposing to levy of penalty u/s 271(1)(c) of the Act. The assessee proposing to levy of penalty u/s 271(1)(c) of the Act. The assessee submitted his explanation his explanation before the Assessing Officer before the Assessing Officer, but submissions of the assessee were rejected and of the assessee were rejected and the AO the AO held the assessee was guilty of filing inaccurate particulars under the guilty of filing inaccurate particulars under the guilty of filing inaccurate particulars under the provisions of Act and liable for levy of Act and liable for levy of penalty ranging ranging from 100% of the tax sought to be evaded to 300% the tax sought to be evaded to 300% of tax sought to be evaded. The sought to be evaded. The Assessing Officer noted that assessee had deliberately misguided Assessing Officer noted that assessee had deliberately misguided Assessing Officer noted that assessee had deliberately misguided the revenue by indulging fraudulent method for inflating the the revenue by indulging fraudulent method for inflating the the revenue by indulging fraudulent method for inflating the expenses showing bogus purchases to reduce the income and expenses showing bogus purchases to reduce the income and expenses showing bogus purchases to reduce the income and

On further appeal, the Ld. CIT(A) deleted the penalty following On further appeal, the Ld. CIT(A) deleted the penalty following On further appeal, the Ld. CIT(A) deleted the penalty following the decision of the Hon’ble Madras High Court in the case of the decision of the Hon’ble Madras High Court in the case of the decision of the Hon’ble Madras High Court in the case of Bombay Hardware Syndicate v CIT 114 ITR 586 (Mad) and CIT v P Bombay Hardware Syndicate v CIT 114 ITR 586 (Mad) Bombay Hardware Syndicate v CIT 114 ITR 586 (Mad) Rojes [2013] 31 taxmann.com 253 (Mad) wherein it is held that no [2013] 31 taxmann.com 253 (Mad) wherein it is held that no [2013] 31 taxmann.com 253 (Mad) wherein it is held that no penalty could be levied lty could be levied for the additions sustained on estimate the additions sustained on estimate basis. The Co-ordinate Bench of the Tribunal in the case of Jatin ordinate Bench of the Tribunal in the case of Jatin ordinate Bench of the Tribunal in the case of Jatin Enterprises, Mumbai v. ACIT order dated 21.03.2024 in ITA No. Enterprises, Mumbai v. ACIT order dated 21.03.2024 Enterprises, Mumbai v. ACIT order dated 21.03.2024 3885/MUM/2023 held that where the Ld. CIT(A) has restricted the held that where the Ld. CIT(A) has restricted the held that where the Ld. CIT(A) has restricted the addition to 12.5% of the bogus purchases, t o 12.5% of the bogus purchases, the addition sustained he addition sustained being on the estimate basis being on the estimate basis, no penalty u/s 271(1)(c) of the Act no penalty u/s 271(1)(c) of the Act could survive. The Co survive. The Co-ordinate Bench of the Tribunal in the case lf ordinate Bench of the Tribunal in the case lf Orient Fabritech Pvt. Ltd. in ITA No. 1425/Mum/2021 for Orient Fabritech Pvt. Ltd. in ITA No. 1425/Mum/2021 Orient Fabritech Pvt. Ltd. in ITA No. 1425/Mum/2021 assessment year 2009 assessment year 2009-10 has observed that no penalty u/s 10 has observed that no penalty u/s 271(1)(c) of the Act can be levied where additions made on estimates 271(1)(c) of the Act can be levied where additions made on estimates 271(1)(c) of the Act can be levied where additions made on estimates basis. The relevant finding of the Tribunal is reproduced as under: . The relevant finding of the Tribunal is reproduced as under: . The relevant finding of the Tribunal is reproduced as under:

In the result, the appeal of the Rev In the result, the appeal of the Revenue is dismissed. enue is dismissed.