ITO 27(2) (1), MUMBAI V. M/S. PADMA INDUSTRIES , MUMBAI

ITA 2366/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2162 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 15-12-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 271(1)(c)

Judgement Text

ITA No. 2366/Mum/2021 A.Y.2009-10 ITO 27(2)(1) Vs. M/s Padma Industries 1 IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER ITA No.2366/Mum/2021 (A.Y. 2009-10) ITO 27(2)(1) Room No. 413, 4 th Floor, Tower No.6, Vashi Railway Station Complex, Vashi, Navi Mumbai -400703 Vs. M/s Padma Industries A/18, Muni Suvrat Darshan, Navroji Lane, (Cama Lane), Ghatkopar (W), Mumbai - 400086 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAIFP9236D Respondent .. Appellant Appellant by : None Respondent by : Ms. Shreekala Pardeshi Date of Hearing 26.07.2022 Date of Pronouncement 28.07.2022 आदेश / O R D E R Per Amarjit Singh (AM): The present appeal filed by the revenue is directed against the order passed by the Ld. CIT(A), NFAC, Delhi, which in turn arises from the order passed by the A.O. u/s 271(1)(c) of the Income Tax Act, 1961, for A.Y. 2009-10. The revenue has assailed the impugned order on the following grounds before us: (i) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 of Rs.1,09,385/- for furnishing inaccurate particulars of income on account of ITA No. 2366/Mum/2021 A.Y.2009-10 ITO 27(2)(1) Vs. M/s Padma Industries 2 bogus purchases, without appreciating the fact that the assessee has failed to discharge the onus to establish the genuineness of the transactions and without considering the latest decision of Hon'ble Apex Court in the case of N.K. Proteins Ltd. wherein it is held that once it is proved that purchases are bogus then addition should be made on entire purchases and not on profit element embedded in such purchases. (ii) On the fact and circumstances of the cases and in law, the Ld. CIT(A) erred in holding that penalty under section 271(1)(c) of the Act cannot be levied where there is disallowance on the basis of estimation without appreciating the fact that the Assessing Officer has not made addition on estimation basis on account of bogus purchase made by the assessee as the assessee failed to discharge onus to establish the genuineness of the transactions. (iii) The appellant prays that the order of the Ld. CIT(A) on the above grounds be reversed and that of the assessing officer be restored.” 2. The fact in brief is that A.O. has made addition of Rs.26,51,768/- holding that assessee had made purchases from certain non-genuine parties. In the appeal the ld. CIT(A) has restricted the addition to the profit element embedded in the said purchases to Rs.3,31,472/- being 12.5% of the said purchases. Thereafter vide order dated 22.03.2019 the A.O has levied penalty of Rs.1,09,38,385/- on the said estimated addition restricted by the ld. CIT(A). 3. The assessee has filed the appeal before the ld. CIT(A). The ld. CIT(A) has deleted the penalty holding that addition made on estimated basis cannot be subjected to penalty for concealment of income or for furnishing inaccurate particulars of income. The ld. CIT(A) has placed reliance on a number of pronouncements of Hon’ble High Courts’ and Tribunals. 4. Heard both the sides and perused the material on record. It is undisputed fact that ld. CIT(A) has restricted the addition to the extent of profit element embedded in the purchases, therefore, the penalty of Rs.1,09,385/- was levied by the A.O on the estimated addition of Rs. ITA No. 2366/Mum/2021 A.Y.2009-10 ITO 27(2)(1) Vs. M/s Padma Industries 3 3,31,472/- being 12.5% of the purchase amount of Rs.26,51,768/-. The ld. CIT(A) had deleted the penalty on the basis of the fact that when the profit was estimated no penalty was levied. The ld. CIT(A) has placed reliance on the decision of Hon’ble Calcutta High Court in the case of Durga Kamal Rice Mills Vs. CIT (2004) 265 ITR 25 (Cal); the Hon’ble Kerala High Court in the case of CIT Vs. P.K. Narayanan (1999) 238 ITR 905 (Ker); Hon’ble Delhi High Court in the case of CIT Vs. Aero Traders Pvt. Ltd. (2010) 322 ITR 316 (Del); Hon’ble Punjab & Haryana High Court in the case of Harigopal Singh Vs. CIT (2002) 258 ITR 85 (P & H), ITAT, Mumbai in the case of ITA Vs. Goldstar Jewellery India Pvt. Ltd., ITA No. 5466/Mum/2019 order dated 27.07.2021. ITAT, Mumbai in the case of Unisynth Chemicals 5967/Mum/2014, ITAT, Mumbai in the case of Ajay Loknath Lohia vide ITA No. 2998/Mum/2017, ITAT Ahd, in the case of Ruchi Developers vide ITA No. 3348/Ahd/2011, ITAT, Mumbai, in the case of ACIT Vs. Redstar ITA No. 6461/Mum/2019, dated 10.06.2021. Apart from this ld. CIT(A) has also placed reliance on number of judicial pronouncements. After considering the aforesaid judicial pronouncements and the finding of ld. CIT(A) holding that when the addition is made on estimated basis, penalty is not sustainable in the eyes of law, we don’t find any reason to interfere in the decision of ld. CIT(A), therefore, ground No. 1 & 2 of the revenue are dismissed. 5. In the result, the appeal of the revenue stand dismissed. Order pronounced in the open court on 28.07.2022 Sd/- Sd/- (KAVITHA RAJAGOPAL) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 28.07.2022 PS: Rohit ITA No. 2366/Mum/2021 A.Y.2009-10 ITO 27(2)(1) Vs. M/s Padma Industries 4 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT 5. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, अहमदाबाद / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशानुसार/BY ORDER, सत्याधपत प्रधत //True Copy// (Asst. Registrar) ITAT, Mumbai