ITO WARD - 3(2), KALYAN V. RAVINDRA P. JADHAV, DOMBIVALI

ITA 594/MUM/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7226 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 19-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c); 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D”, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER & SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO.596/MUM/2021 (A.Y.2009-10) ITA NO.594/MUM/2021 (A.Y.2010-11) ITA NO.595/MUM/2021 (A.Y.2011-12) ITO, Ward-3(2), 2 nd Floor, Rani Mansion, Murbad Road, Kalyan West-421301 ............ Appellant Vs. Ravindra P. Jadhav, 26, Silver Coin, Bhagat Singh Road, Dombivali (E)-421204. PAN: AARPJ3618E ............ Respondent Appellant by : Sonia Kumar, Sr. DR Respondent by : None Date of hearing : 29/11/2021 Date of pronouncement : 30/11/2021 ORDER PER LALIET KUMAR, J.M: All these three appeals are filed by the Revenue challenging the order passed by the Commissioner of Income Tax (Appeals)-1, Thane [hereinafter referred to as ‘the CIT(A)’] vide order dated 13.02.2020 on the ground mentioned in the respective appeals. 2 ITA NOS.594 to 596/MUM/2021 (A.Y.2009-10 to 2011-12) 2. None was present at the time of hearing the appeal on behalf of the assessee and on account of smallness of quantum involved in the appeals of the Revenue. We have decided to hear these appeals. 3. We have heard the ld. DR on behalf of the Revenue. 4. The ld. Departmental Representative (DR) for the Revenue submitted that the CIT(A) while allowing the appeal of the assessee had wrongly deleted the penalty and our attention was drawn to para-6.4 of the order passed by the CIT(A) to the following effect: “6.4. The levy of penalty is merely on disallowance of purchases and not finding of concealment of any particular of mala-fide intention to reduce taxable income. Addition made on account of disallowance of purchases are bogus automatically cannot justify the penalty levied u/s 271(1)(c) of the Act. Accordingly, the penalty of Rs. 94,800/-, Rs. 7,82,510/- and Rs. 1,56,080/- imposed u/s 271(1)(c) of the I.T. Act, by the AO for A.Ys. 2009-10, 2010-11 & 2011-12 , are hereby deleted and these grounds of appeal are allowed.” 5. It was submitted by the ld. DR that though the quantum in all the appeals is less than the threshold limit fixed by the Board for filing the appeal, however, the appeal is maintainable on account of the reasons given in the CBDT Circular. 6. We have heard the rival contentions of the parties and perused the material available on record. Paragraph no.3 of the impugned order of CIT(A) records as under: “3. The facts of the cases are that in these the returns of income declaring total income at Rs. 7,60,200/-, Rs. 13,33,990/- and Rs. 17,99,880/- for A.Ys. 2009-10, 2010-11 and 2011-12 respectively were e-filed and the same were processed u/s 143(1) of the Act. The assessment u/s 143(3) r.w.s. 147 of the Act was finalized on 13.06.2014 for all the three A.Ys., assessing the total income at Rs. 10,67,000/-, Rs. 38,66,390 and Rs. 23,05,000/after making addition of Rs. 3,06,800/-, Rs. 25,32,400/- and Rs. 5,05,120/for A.Ys. 2009-10, 3 ITA NOS.594 to 596/MUM/2021 (A.Y.2009-10 to 2011-12) 2010-11 and 2011-12 respectively, on account of bogus purchases made from the alleged hawala dealers and initiated penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961. During the course of Penalty Proceedings, the A.O. did not accept the submission filed by the assessee and levied penalty of Rs. 94,800/-, Rs. 7,82,510/- and Rs. 1,56,080/- for A.Ys. 2009-10, 2010-11 and 2011-12. Aggrieved with the Penalty Orders, the Appellant preferred the present appeals and raised the above grounds of appeal.” 7. From the perusal of the above-said paragraph, it is abundantly clear that the additions were made in the hands of the assessee on the basis of the estimate, based of the information received from the Sales Tax Department, Government of Maharashtra mentioning therein that some bogus purchases were shown through the bogus invoices and accordingly, the penalty for all the three years of Rs. 94,800/-, Rs. 7,82,510/- and Rs. 1,56,080/- were levied on the assessee. 8. In our considered opinion, the penalty is leviable under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on account of the two reasons namely the assessee concealed the income and also filed the inaccurate particulars of the income. In the present case, the reasons for imposing of penalty was premised on the Assessment Order, which in turn was based on the information received from the Sales Tax Department, Government of Maharashtra. In our considered opinion, the reasons were based on the information of making bogus sale with the help of bogus invoices, before the Sales Tax Department and were not arising out of the facts before the Income Tax Department. Further, the income as well as penalty were imposed on the basis treating the entire sale bills as bogus and estimating the income on the basis of the said bills. 9. In our considered opinion, no penalty can be levied on estimate basis, as if cannot be alleged on estimate basis that the assessee had filed 4 ITA NOS.594 to 596/MUM/2021 (A.Y.2009-10 to 2011-12) inaccurate particular of income on estimate basis, therefore, the penalty for all the three years are required to be deleted. 10. There is one more reason for us to delete the penalty, as in all the three years, the penalty imposed is well below the threshold limit of Rs. 10,00,000/- fixed for filing the appeal before us. 11. In the present case, the penalty imposed is less than the threshold limit and further the penalty was imposed on the basis of the material based on the outside information. The same is not sustainable in the eyes of law and accordingly the penalty imposed in all the three years is required to be deleted, as the appeals are not maintainable as per CBDT Circular issued in this regard, hence, the appeals are required to be dismissed being below the tax effect. 12. In the result, all the appeals of the Revenue are treated as dismissed. Order pronounced in the court at the time of hearing itself on 30.11.2021. Sd/- Sd/- (SHAMIM YAHYA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER मुंबई/Mumbai, SK, PS ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. आयकर आयुᲦ(अ)/ The CIT(A)- 4. आयकर आयुᲦ CIT 5. िवभागीय ᮧितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai