INCOME TAX OFFICER, WARD-2(3)(6), SURAT, ADAJAN, SURAT V. DEEPAK BANWARILAL AGARWAL, SURAT

ITA 42/SRT/2024

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 1355 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-03-2024
• Assessment Year: 2007-2008
• Appeal Filed On: 15-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Bogus
• Section: 143(3); 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 42/Srt/2024 (Assessment Year 2007-08) (Physical hearing) I.T.O., Ward 2(3)(6), Surat. Vs. Deepak Banwarilal Agarwal, 103, Devsagar Apartment, Dalgiya Sheri, Mahidharpura, Surat-395003 (Gujarat) PAN No. AFPPA 6178 M Appellant/ Revenue Respondent/Assessee Department represented by Shri Ravi Kant Gupta, CIT-DR Assessee represented by Shri Bipin Jariwala, A.R. Date of Institution of Appeal 16/01/2024 Date of hearing 19/03/2024 Date of pronouncement 19/03/2024 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the Revenue is directed against the order of National Faceless Appeal Centre, Delhi (NFAC/learned Commissioner of Income Tax (Appeals) [in short, the ld. CIT(A)] dated 21/11/2023 for the A.Y. 2007-08. The revenue has raised following grounds of appeal: “i) Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A)is justified in directing the Assessing Officer to restrict the quantum of penalty u/s.271(1)(c) of the Act to extent penalty imposable on the quantum addition confirmed by the Hon'ble ITAT when the penalty was imposed on the estimated income based upon evidences of bogus purchases shown by the assessee, ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the penalty levied by the A.O. u/s 271(1)(c) of the I.T. Act, 1961 without appreciating the fact that the assessee claimed bogus purchases in its Return of Income in order to suppress ITA No. 42/Srt/2024 ITO Vs Deepak Banwarilal Agarwal 2 taxable income thereby making himself liable for Penalty u/s 271(1)(c) of the Income-tax Act, 1961. iii) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in restricting the penalty levied by the AO u/s.271(1)(c) of the Act without appreciating the fact that the Assessing Officer has correctly held that the assessee has failed to substantiate the transactions claimed in its return of income thereby evaded taxes to that extent, iv) The appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 2. Rival submission of both the parties have been heard and record perused. The learned Commissioner of Income Tax-Departmental Representative (ld.CIT-DR) for the revenue submits that in the quantum assessment completed under Section 143(3) of the Income Tax Act, 1961 (in short, the Act) r.w.s 147 of the Act on 09/05/2015. The Assessing Officer made total addition of Rs. 8.78 crores on account of disallowance of purchases by taking a view that the assessee has shown purchase of rough and polished diamonds from Pravin Kumar Jain and company and such purchases are bogus. Praveen Kumar Jain & Co were engaged in providing bogus bills. However, on appeal before the ld. CIT(A), the disallowance was restricted to 5% of total turnover. On further appeal before the Tribunal, by both the parties, the disallowance was restricted to the extent of 5% of disputed/bogus purchases only vide order dated 18/07/2019 passed in ITA No. 2932 & 3277/Ahd/2016. The Assessing Officer in the meantime levied the penalty under section 271(1)(c) @ 100% of tax sought to be evaded, on the said disallowances. The ld. CIT(A) directed to recalculate penalty qua the ITA No. 42/Srt/2024 ITO Vs Deepak Banwarilal Agarwal 3 additions sustained by Tribunal. The ld. CIT-DR for the revenue submits that he relied upon the order of Assessing Officer that the assessee in fact furnished inaccurate particulars of income to suppress the taxable income and penalty order may be restored. 3. On the other hand, the learned Authorised Representative (ld. AR) of the assessee submits that against the order of ld. CIT(A) which is impugned in the present appeal dated 21/11/2023, the assessee also filed appeal before the Tribunal vide ITA No. 827/Srt/2023, which was adjudicated by order dated 27/02/2024. In the order dated 27/02/2014, this Bench has already deleted the entire penalty levied by Assessing Officer by taking a view that no penalty is leviable on the addition made on ad hoc/estimated basis, therefore, the appeal filed by Revenue after decision of this Bench dated 27/02/2024 has become infructuous. In fact when the appeal of assessee was heard, the revenue has not pointed out pendency of their present appeal before Tribunal. 4. We have considered the submissions of both the parties and perused the orders of the lower authorities carefully. There is no dispute that the Assessing Officer while passing the assessment order made addition on account of bogus purchases, which was shown from the entities managed by Pravin Kumar Jain and his associates. The Assessing Officer made addition to the extent of Rs. 8.78 crores. The Assessing Officer levied penalty on such disallowances/additions @ 100% of tax sought ITA No. 42/Srt/2024 ITO Vs Deepak Banwarilal Agarwal 4 to be evaded vide his order dated 20/03/2018. Admittedly on second appeal before the Tribunal, the addition in quantum assessment was restricted to 5% of disputed/tempted/bogus purchases shown from Pravin Kumar Jain and company. It is matter of record that against the order of ld. CIT(A) which is challenged in the present appeal, the assessee also filed appeal before the Tribunal vide ITA No. 827/Srt/2023 which has already been adjudicated by deleting the entire penalty levied under Section 271(1)(c) of the Act. Therefore, the present appeal filed by the Revenue have become infructuous. 5. In the result, this appeal of revenue is dismissed. Order pronounced in the open court on 19 th March, 2024. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 19/03/2024 *Ranjan Copy to: 1. Assessee – 2. Revenue – 3. CIT 4. DR 5. Guard File By order Sr. Private Secretary, ITAT, Surat