ITO 26(1)(5), MUMBAI, MUMBAI V. SHRI ISRAR AHMED J B CHOUDHARY, MUMBAI

ITA 7119/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6796 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 10-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (V I RTUAL COURT) , C BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI PAVAN KUMAR GADALE , JM ITA NO. 7119 /MUM/ 20 18 ( ASSESSMENT YEAR : 2011 - 12 ) ITO - 26(1)(5) ROOM NO.708, 7 TH FLOOR PRATYAKSHAKAR BHAVAN BKC, BANDRA MUMBAI 400 051 VS. SHRI ISRAR AHMED J B CHOUDHARY 23, VALLABHAI HALDERBHAI COMPOUND, LBS MARG, KURLA (W) MUMBAI 400 070 PAN/GIR NO. AAAP15555Q (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI AMIT PRATAP SINGH ASSESSEE BY NONE D ATE OF HEARING 09 / 09 /2020 DATE OF PRONOUNCEMENT 09 / 09 /2020 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 7119/MUM/2018 FOR A.Y. 2011 - 12 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 38, MUMB AI IN APPEAL NO. CIT(A) - 38/ITO - 26(1)(5)/IT - 206/2016 - 17, DATED 21/06/2017 (LD. CIT(A) IN SHORT) IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961. ITA NO . 7119/MUM/2018 SHRI ISRAR AHMED J B CHOUDHARY 2 2. THE ONLY EFFECTIVE ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER THE LD. CI T(A) WAS JUSTIFIED IN REDUCING THE AMOUNT OF PENALTY LEVIED U/S 271(1)(C ) OF THE ACT FOR D ISALLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASES. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSMENT WAS COMPLETED U/S.143(1) OF THE ACT WHEREIN THE ADDITION WAS MADE ON ACCOUNT OF BOGUS PURCHASES IN THE SUM OF RS.3,90,021 / - . PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WERE INITIATED FOR THE SAME AND PENALTY WAS LEVIED FOR RS . 1,42,000 / - BY THE LD. AO. WE FIND THAT THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES WAS MADE ON ESTIMATED BASIS . 3.1. THE LD. CIT(A) IN ITS ORDER HAS CONCLUDED THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE EXPLANATION PUT FORTH IS BONAFIDE AND SUBMI SSIONS AND CONTENTIONS OF THE ASSESSEE ARE NOT FOUND TO BE ACCEPTABLE AND THEREFORE, THEY ARE REJECTED AND THE PENALTY IMPOSED BY THE AO IS CONFIRMED. HOWEVER, IN VIEW OF THE FACT THAT THE ADDITION MADE TO TOTAL INCOME ON ACCOUNT OF DISALLOWANCE OF EXPENSE S BEING BOGUS PURCHASE HAS BEEN REDUCED TO RS.3,90,201 AS AGAINST THE AMOUNT OF RS.5,87,652/ - ADDED BY THE AO AND DIRECTED THE AO TO COMPUTE THE AMOUNT OF PENALTY LEVIABLE. BY THIS PROCESS, ONLY THE QUANTUM OF PENALTY WAS DIRECTED TO BE REDUCED BY THE LD . CIT(A). 3.2. WE FIND THAT ULTIMATELY, THE PENALTY HAS BEEN LEVIED ON THE DISALLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASES WHICH WAS DONE ON AN ESTIMATED BASIS. IT IS TRITE LAW THAT NO PENALTY WOULD SURVIVE ON AN ADDITION / DISALLOWANCE MADE ON AN ESTIM ATED BASIS. HENCE, WE DO NOT ITA NO . 7119/MUM/2018 SHRI ISRAR AHMED J B CHOUDHARY 3 HAVE ANY HESITATION IN CANCELLING THE LEVY OF PENALTY IN THE INSTANT CASE. WE ALSO FIND THAT THE REVENUE CANNOT HAVE ANY GRIEVANCE ON THE ORDER PASSED BY THE LD. CIT(A) IN AS MUCH AS THE LD. CIT(A) HAD ONLY DIRECTED THE LD. AO TO REDUCE THE QUANTUM OF PENALTY DUE TO REDUCTION IN THE ADDITION AMOUNT. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 09/09 /2020. SD/ - ( PAV AN KUMAR GADALE ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 09 / 09 / 2020 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//