SAWAILAL BHATTI , Mumbai V. ITO- 20(3)(2), Mumbai

ITA 3190/MUM/2022

AI Insights

The case involves Sawailal Bhatti, the appellant, who faced penalty proceedings under section 271(1)(c) of the Income Tax Act for the assessment years 2009-10, 2010-11, and 2011-12. The penalties were imposed following the addition of gross profit (GP) rates on what were deemed bogus purchases, based on information from Sales Tax authorities. The Assessing Officer (AO) initially applied a GP rate of 12.5% on these purchases, which was later reduced to 5% by the Tribunal in quantum proceedings for some of the assessment years. The CIT(A) had dismissed the appeal on the grounds of delay, citing the appeal was filed late by 3563 days due to the appellant's financial distress and health issues. However, the Tribunal, after considering the circumstances and the merits of the case, decided to set aside the dismissal on delay and allowed the appeals, deleting the penalties imposed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299388 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 29-03-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 15-12-2022
• Laws Referred To: Section 271(1)(c) of the Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

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.3188,3190 & 3192/Mum/2022 (निर्धारणवर्ा / Assessment Year: 2009-10,2010-11 & 2011-12) SAWAILAL BHATTI 161, 4 TH Floor, Panchshil Niwas, 5 th Floor Kamathipura, Mumbai-400008 बिधम/ Vs. ITO-20(3)(2) MUMBAI Matru Mandir, Parel, Mumbai- 400007 स्थायीलेखासं./जीआइआरसं./PAN No. AEMPB3718G (अपीलाथी/Appellant) : (प्रत्यथी / Respondent) अपीलाथीकीओरसे/ Appellant by : Shri. Dhaval Shah प्रत्यथीकीओरसे/Respondent by : M/s. Deepika Arora- Sr. AR सुनवाईकीतारीख/ Date of Hearing : 30.03.2023 घोषणाकीतारीख / Date of Pronouncement : 31.03.2023 आदेश / O R D E R Per Amit Shukla, Judicial Member: The aforesaid appeals have been filed by the assesses against separate impugned order of even date, 19.10.2022 in relation to the penalty proceedings u/s 271 (1)(c) for the AY 2009-10, 2010-11 & 2011-12. On merits facts and issues involved in all the three appeals are common arising out of identical set of facts and 2 I . T . A . N o . 3 1 8 8 , 3 1 9 0 & 3 1 9 2/ M u m / 2 022 SAWAILAL BHATTI LL findings, therefore, same were heard together and appeal is disposed of by way of the consolidated order. In all the year the penalty has been levied on account of adhoc addition of GP rate on bogus purchases. 2. In the assessment order, the addition have been made by the AO on the basis of certain information received from Sales Tax authorities that assessee had made purchases from various suspicious parties. The Assessing Officer accordingly applied GP rate on adhoc basis at the rate of 12.5% of the bogus purchases and same was also confirmed by the Ld. CIT (Appeals). In Tribunal, in the quantum proceedings for the AY 2009-10 & 2011-12, the Tribunal has reduced the addition by holding that GP rate of 5% should be estimated. Accordingly, the disallowance has restricted to 5% while order dated 10.02.2023 pass in ITA No. 3189 & 3193/Mum/2022. In so far as, appeal for AY 2010-11 is concerned the same has been stated to be pending, even though hearing was concluded on 09.03.2023. 3. Be that as may be, on the perusal of the relevant finding, we find that the assessee had filed all the details of purchases and 3 I . T . A . N o . 3 1 8 8 , 3 1 9 0 & 3 1 9 2/ M u m / 2 022 SAWAILAL BHATTI LL corresponding sales had not been doubted. The sources of purchases are from the books and overall trading results have been accepted. Only allegation is that assessee has taken accommodation bills for the purchase of items to suppress the profits. Once, the addition has been made on adhoc and estimate which has been reduced by the Tribunal, then it cannot be held that there is any concealment of income so as to warrant any penalty u/s 271(1)(c), Accordingly, on merits the penalty is deleted. 3. In AY 2009-10 the Ld. Counsel submitted that, Ld. CIT(A) apart from that, deciding the issue on merits, has held that the appeal of the Assessee was barred by limitation by 3563 days and therefore, on this ground also, he has dismissed the appeal. 4. The Ld. Counsel submitted that, the assessee had discontinued the business due to paucity of funds and he was going through serious financial distress and he was struggling to satisfy the basic needs of his large family. It also impacted on his health and had very tough time in this period. Accordingly, he could not file the appeal in time. Thus, on this ground, appeal dismissed by the Ld. CIT(A) on the ground of delay should be set aside and 4 I . T . A . N o . 3 1 8 8 , 3 1 9 0 & 3 1 9 2/ M u m / 2 022 SAWAILAL BHATTI LL appeal should be decided on merits. Looking to the aforesaid circumstances and the fact that we have already deleted the penalty on merits, therefore dismissal of appeal on delay by the Ld. CIT (A) is rejected. 5. Accordingly, all the appeals filed by the Assesses are allowed. Orders pronounced in the open court on 31 st March, 2023. Sd/- Sd/- (Prashant maharishi) (Amit Shukla) Accountant Member Judicial Member मुंबई Mumbai;ददनांक Dated : 31.03.2023 Ms.Urmila आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त(अपील) / The CIT(A) 4. आयकरआयुक्त/ CIT- concerned 5. दवभागीयप्रदतदनदध, आयकरअपीलीयअदधकरण, मुंबई/ DR, ITAT, Mumbai 6. गार्डफाईल / Guard File आदेशधिुसधर/ BY ORDER, 5 I . T . A . N o . 3 1 8 8 , 3 1 9 0 & 3 1 9 2/ M u m / 2 022 SAWAILAL BHATTI LL .उि/सहधयकिंजीकधर (Dy./Asstt.Registrar) आयकरअिीिीयअनर्करण, मुंबई/ ITAT, Mumbai