Deputy Commissioner of Income Tax, Panvel Circle, Raigad V. Shri Dhondiram Narayan Limbhore, Raigad

ITA 165/PUN/2023

AI Insights

The case involves appeals by the Revenue against the orders of the National Faceless Appeal Centre (NFAC), which were based on penalty orders issued by the Deputy Commissioner of Income Tax, Panvel Circle. The penalties were initially imposed following a disallowance of certain purchases deemed bogus, based on information from the Sales Tax Department of Maharashtra. The CIT(A) had reduced the disallowance from 100% to 25%. The Revenue challenged this reduction, but the Tribunal dismissed the appeal due to the low tax effect, referencing the CBDT Circular 03/2018. The main legal contention was whether the exception in clause 10(e) of the Circular, which allows for appeals despite the low tax effect in cases involving serious tax evasion, applies to penalty proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136239 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-04-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 09-02-2023
• Other Referred Cases: ITA No. 6059/Mum/2019, ITA No. 1956 & 1957/PUN/2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 271(1)(c); 250

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “ए” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE“A” BENCH, PUNE BEFORE HON’BLE SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No.164 & 165/PUN/2023 ननधधारण वषा / Assessment Year : 2011-12 & 2010-11 Dy. Commissioner of Income Tax, Panvel Circle, Raigad. . . . . . . . अपऩलधथी / Appellant बनधम / V/s. Dhondiram Narayan Limbhore At-Dhatav, Post-Dhatav Roha, Raigad-410206. . . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : Shri Subhod Ratnaparakhi Revenue by : Shri Ramnath P Murkunde सपनवधई की तधरऩख / Date of conclusive Hearing : 05/04/2023 घोषणध की तधरऩख / Date of Pronouncement : 05/04/2023 आदेश / ORDER PER G. D. PADMAHSHALI, AM; Both these appeals of the Revenue are directed against the orders of first appellate authority National Faceless Appeal Centre, Delhi [for short “NFAC”] dt. 15/11/2022 passed u/s 250 of the Income-tax Act,1961 [for short “the Act”] which originated out of penalty orders [for short “PO”] of Dy. Commissioner of Income Tax, Panvel Circle, Raigad [for short “AO”] u/s 271(1)(c) of the Act dt. 27/03/2008 Dy. CIT Vs Dhondiram Narayan Limbhore ITA No.164 & 165/PUN/2023 AY: 2011-12 & 2010-11 ITAT-Pune Page 2 of 4 2. Since the substantive issue in both these appeals is identical, with the agreement of rival parties both these matter are heard together for a consolidate order. Resultantly the adjudication laid succeeding paragraphs in relation to lead appeal ITA No. 164/PUN/2023, shall mutatis-mutandis apply to ITA No. 165/PUN/2023. 3. During the course of physical hearing, the Ld. DR argued that, in-spite the tax effect in this case falls below the limit prescribed by CBDT vide circular No. 03/2018 the Revenue continues to contest the same for the reason that, the penalty in this case was levied for the quantum addition made on the basis of information received from Enforcement Wing of Sales Tax Department of State of Maharashtra hence the subject matter is within the exception carved out in clause 10(e) of therein. Per contra, the Ld. AR placing on record the decision of our Co- ordinate Mumbai Bench in ITA No. 6059/Mum/2019 opposing the submission of the department submitted that, the exception carved out in clause 10(e) is restrictive to quantum additions only and can-not be applied to penal proceedings. Dy. CIT Vs Dhondiram Narayan Limbhore ITA No.164 & 165/PUN/2023 AY: 2011-12 & 2010-11 ITAT-Pune Page 3 of 4 4. After hearing to rival contentions of both the parties; and subject to the provisions of rule 18 ITAT, Rules perused the material placed on records; case laws relied upon by parties and duly considered the facts of the case in the light of settled legal position which are forewarned to either party. 5. We note that, upon the receipt of information from Sales Tax Department, the Ld. AO after due inquiries vide para 4.3 of his order disallowed certain purchase fully (100%) treating it as bogus. The said disallowance in an appeal however was restricted to 25% by the Ld. CIT(A). The Revenue challenged the action of Ld. CIT(A) for restricting the disallowance to 25% before the Tribunal in ITA No. 1956 & 1957/PUN/2016. The co-ordinate bench of this Tribunal vide its order dt. 03/08/2018 had dismissed said quantum appeals as not maintainable on account of Low Tax Effect in the light of CBDT Circular 03/2018 dt. 11/07/2018. It is worthy to note that, as at the relevant time of dismissal of quantum appeal by the Tribunal, the clause 10(e) providing the exception to non-applicability of CBDT Circular (supra) was absent. Dy. CIT Vs Dhondiram Narayan Limbhore ITA No.164 & 165/PUN/2023 AY: 2011-12 & 2010-11 ITAT-Pune Page 4 of 4 6. We have given a thoughtful consideration and persuaded by the argument of Ld. AR to the effect that, the credit placed by the Ld. DR on Clause 10(e) (supra) is absolutely misconceived or in fact misplaced for the reason that exception provided in clause 10(e) (supra) is germane only for the quantum proceedings and not for penalty proceedings. Fostering the view canvassed by the co-ordinate bench (supra), we dismiss the appeal of the Revenue as not maintainable. 7. Resultantly, both the appeals of the REVENUE stands DISMISSED in terms of aforestated observation. In terms of rule 34 of ITAT Rules, 1963 the order is pronounced in the open court on this Wednesday 05 th day of April, 2022. -S/d- -S/d- -S/d- -S/d- S.S. VISWANETHRA RAVI G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 05 th day of April, 2022. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपऩलधथी / The Appellant. 2.प्रत्यथी / The Respondent. 3. The NFAC, Delhi (India) 4. The Pr. CIT Concerned 5. DR, ITAT, Pune “A” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. आदेशधनपसधर / BY Order, वररष्ठ ननजऩ सनिव / Sr. Private Secretary आयकर अपऩलऩय न्यधयधनधकरण, पपणे / ITAT, Pune.