ITO, WARD-3(2), KALYAN V. SHRI SAI WORKS, THANE

ITA 2151/MUM/2022

AI Insights

The case involves an appeal by the Income Tax Officer (ITO), Ward-3(2), against Shri Sai Works concerning penalty proceedings under section 271(1)(c) of the Income Tax Act for the Assessment Year 2010-11. The penalty was originally levied due to a Gross Profit (GP) addition on alleged unproved purchases amounting to Rs. 9,47,471. The assessee, Shri Sai Works, engaged in engineering and electrical contracts, had their case reopened based on information from the Sales Tax department about bogus purchase bills. The AO made an addition of the entire purchase amount, which was later partially sustained by the Ld. CIT (A). The Tribunal found that since the additions were made on an adhoc basis estimating GP rates, and the source of purchases was shown from the books, there was no concealment of income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299379 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 02-04-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 28-08-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 147; 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & SHRI PRASHANT MAHARISHI, AM आयकरअपीलसं./ I.T.A. No.2151/Mum/2022 (निर्धारणवर्ा / Assessment Year: 2010-11) ITO, WARD-3(2). 2 nd Floor, Rani mansion, Murbad Road, Kalyan Maharashtra- 421301 बिधम/ Vs. SHRI SAI WORKS THANE. 02, Ground Floor, Radhashri Society, Savarkar Road, Dombivli (E) Thane Maharashtra- 421201 स्थायीलेखासं./जीआइआरसं./PAN No ABBFS0588D (अपीलाथी/Appellant) : (प्रत्यथी / Respondent) अपीलाथीकीओरसे/ Appellant by : None प्रत्यथीकीओरसे/Respondent by : Shri Ram K. Kedia, Sr. AR. सुनवाईकीतारीख/ Date of Hearing : 03.04.2023 घोषणाकीतारीख / Date of Pronouncement : 11.04.2023 आदेश / O R D E R Per Amit Shukla, Judicial Member: The aforesaid appeal has been filed by the Revenue against order dated 15.06.2022, passed by NFAC Delhi, in relation to the penalty proceedings u/s. 271(1)(c) for the AY: 2010-11. 2 I . T . A . N o . 2151/ M u m / 2 022 SHRI SAI WORKS LL 2. The revenue is aggrieved by the deletion of penalty of Rs. 1,15,229/- levied by the AO, on account of GP addition on alleged unproved purchases of Rs. 9,47,471/-. 3. The assessee is engaged in the business of Engineering and Electrical contracts, labour contracts, etc. Earlier the assessee’s case was completed u/s. 143(3) r.w.s 147, vide order dated 13.08.2014, determining the total income at Rs. 11,92,430/- as against the return income of Rs. 2,4,959/-. 4. The assessee’s case was re-opened again u/s 147 on the basis of information received from Sales Tax department Mumbai, that some parties were involved in providing bogus purchase bills and assessee has also shown purchases from them. Thus, it was noted that assessee was also one of the beneficiary who has availed accommodation entry of purchases of Rs. 9,47,471/- from various parties as per the detailed mentioned in the impugned penalty order. The AO in the assessment has made addition of entire purchases of Rs. 9,47,471/-. However, the Ld. CIT (A) in quantum proceedings has sustain 25% of the total addition, i.e., Rs. 2,36,868/- . 5. Accordingly, penalty has been levied by the AO for concealment of income on the amount sustained by the Ld. CIT (A) at Rs. 1,15,229/-. 6. The Ld. CIT (A), had deleted the penalty after referring to the various Tribunal decisions, wherein on similar facts the penalty has 3 I . T . A . N o . 2151/ M u m / 2 022 SHRI SAI WORKS LL been deleted in the cases where addition has been made on adhoc estimation of GP rate on bogus purchases. 7. After hearing both the parties, and on perusal of the impugned order, it is seen that in the quantum proceedings the additions which has been sustained was purely made on adhoc basis. Once the source of purchases have been shown from the books and the addition has been made/sustained purely on adhoc basis by estimating GP rate on such purchases, then it cannot lead to inference of concealment of income an accordingly, penalty levied by the AO has rightly deleted by the Ld. CIT(A). 8. In the result, appeal of the Revenue is dismissed. Orders pronounced in the open court on 11 th April, 2023. Sd/- Sd/- (Prashant Maharishi) (Amit Shukla) Accountant Member Judicial Member मुंबई Mumbai;ददनांक Dated : 11.04.2023 Ms.Urmila आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त (अपील) / The CIT(A) 4 I . T . A . N o . 2151/ M u m / 2 022 SHRI SAI WORKS LL 4. आयकरआयुक्त/ CIT- concerned 5. दवभागीयप्रदतदनदध, आयकरअपीलीयअदधकरण, मुंबई/ DR, ITAT, Mumbai 6. गार्डफाईल / Guard File आदेशधिुसधर/ BY ORDER, .उि/सहधयकिंजीकधर (Dy./Asstt.Registrar) आयकरअिीिीयअनर्करण, मुंबई/ ITAT, Mumbai