INCOME TAX OFFICER -WARD-41(2)(4), MUMBAI , KAUTILYA BHAWAN, G BLOCK, BKC, BANDRA EAST, MUMBAI V. PUSHPADEVI SANTKUMAR TOLA, MUMBAI

ITA 2762/MUM/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2576 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-03-2024
• Assessment Year: 2009-2010
• Appeal Filed On: 04-08-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Condonation of delay
• Section: 147; 271(1)(c); 143(3); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA no.2762/Mum./2023 (Assessment Year : 2009–10) Income Tax Officer Ward–41(2)(4), Mumbai ................ Appellant v/s Pushpadevi Santkumar Tola Shop no.16, Mulund Sangrilla Co–operative Housing Society Ltd., Mulund (West) Mumbai 400 080 PAN – AAEPT3550E ................ Respondent Assessee by : Shri S.L. Jain Revenue by : Shri H.M. Bhatt Date of Hearing – 21/03/2024 Date of Order – 02/05/2024 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the Revenue challenging the impugned order dated 04/05/2023, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2009-10, which in turn arose from the penalty order dated 23/03/2018 passed under section 271(1)(c) of the Act. 2. The present appeal is delayed by 33 days. In the application seeking condonation of delay filed by the Revenue, it has been submitted that due to internal restructuring and transfer of case records and other material, the Pushpadevi Santkumar Tola ITA no.2762/Mum./2023 Page | 2 limitation period for filing the present appeal expired. Having considered the submissions made in the aforesaid application, we are of the considered view that there is sufficient cause for not preferring the appeal within the prescribed limitation period. Accordingly, the delay in filing the present appeal is condoned. 3. The only grievance of the Revenue is against the deletion of penalty levied under section 271(1)(c) of the Act. 4. We have considered the submissions of the learned DR and perused the material available on record. During the year under consideration, the assessee had shown purchases of Rs.88,29,205 from various parties. Vide assessment order passed under section 143(3) read with section 147 of the Act, the Assessing Officer (“AO”), in the absence of a reply from the alleged vendors regarding various queries pertaining to purchase transactions by the assessee, treated the aforesaid purchases as non-genuine and made an addition of 12.5% of suspicious purchases. In further appellate proceedings, the Tribunal held that since the assessee has disclosed Gross profit on bogus purchases of 2.55% and therefore to give credit for the same, the estimation of profit @10% will be sufficient. Meanwhile, penalty proceedings under section 271(1)(c) of the Act were initiated separately. After considering the submissions of the assessee, the AO vide order dated 23/03/2018 passed under section 271(1)(c) of the Act levied a penalty of Rs.2,64,920. Pushpadevi Santkumar Tola ITA no.2762/Mum./2023 Page | 3 5. The learned CIT(A), vide impugned order, deleted the penalty levied by the AO on the basis that the addition on account of bogus purchases is made on an estimated basis. Being aggrieved, the Revenue is in appeal before us. 6. During the hearing, the learned Departmental Representative submitted that since the addition to an extent of 10% of the aforesaid purchases has been affirmed by the Tribunal, therefore the penalty should be sustained to that extent. On the other hand, the learned Authorised Representative submitted that in the present case, all the required details were furnished by the assessee, and in the assessment order the AO also noted that the assessee is having healthy net profit and Gross profit ratio for the year under consideration as compared to the earlier years. It was further submitted that the AO has not doubted the evidence submitted by the assessee. However, merely in the absence of confirmation from the vendors, made an addition to an extent of 12.5% of the total suspicious purchases. Thus, it was submitted that the entire addition made by the AO is on an ad hoc basis and is merely an estimate. 7. We find that the coordinate bench of the Tribunal in Mun Gems v/s ACIT, [2023] 108 ITR(T) 276 (Mumbai - Trib.) held that ad hoc GP rate applied on alleged bogus purchases to factor in the suppression of alleged gross profit could not be the basis of levying penalty for furnishing of inaccurate particulars of income or concealing particulars of income. The relevant findings of the coordinate bench, in the aforesaid decision, are reproduced as under:- “4. After hearing both the parties and perused the material on record, we find that before the ld. AO not only during the course of assessment proceedings Pushpadevi Santkumar Tola ITA no.2762/Mum./2023 Page | 4 but also during the penalty proceedings assessee had submitted the explanation that all the purchases were from the books and payments have been made through account payee cheques and ultimately addition has been sustained on purely adhoc estimate of gross profit rate. From the perusal of the records, it is seen that the assessee has submitted the quantitative details of purchases alongwith stock register entry and corresponding export sales which was also verified from the customer appraisal report. Once, the source of payment of purchases have been made through books of accounts and through account payee cheques and there is corresponding sales, then merely because some adhoc GP rate has been applied on such alleged bogus purchases to factor in suppression of alleged gross profit, no penalty can be levied for furnishing of inaccurate particulars of income or concealing particulars of income, which ld. AO has held in his penalty order that penalty is being levied under both the limbs, which itself shows his satisfaction is vague. Accordingly, penalty levied on such adhoc estimate cannot be sustained in the present case and hence same is deleted. Since, we have already deleted the penalty, the legal issue raised in the additional ground become purely academic.” 8. It is evident from the record that the learned CIT(A) has deleted the penalty following the decisions of the coordinate bench of the Tribunal. Accordingly, in view of the aforesaid findings, the impugned order deleting the penalty levied under section 271(1)(c) of the Act is upheld. As a result, grounds raised by the Revenue are dismissed. 9. In the result, the appeal by the Revenue is dismissed. Order pronounced in the open Court on 02/05/2024 Sd/- PRASHANT MAHARISHI ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 02/05/2024 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order Vijay Pal Singh Sr. Private Secretary Assistant Registrar ITAT, Mumbai Pushpadevi Santkumar Tola ITA no.2762/Mum./2023 Page | 5 Date Initial 1. Dictated on Dragon Legal 29.04.2024 Sr.PS 2. Draft placed before author 30.04.2024 Sr.PS 3. Draft proposed & placed before the second member – – JM/AM 4. Draft discussed / approved by Second Member – – JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Date of pronouncement Sr.PS 7. File sent to the Bench Clerk Sr.PS 8. Date on which file goes to the Head Clerk 9. Date of dispatch of Order