PRABHULAL KALJI DOSHI, MUMBAI V. ITO -19(2)(5), MUMBAI

ITA 745/MUM/2021

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 1798 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 10-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 271(1)(c); 143(3)

Judgement Text

P म ु ंबई ठ “स ” स , स ं म ज त "सं#, $% स $ सम& IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “ C”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI AMARJIT SINGH , ACCOUNTANT MEMBER सं.745/म ु ं/2021 ( ,. . 2011-12) ITA NO.745/MUM/2021(A.Y.2011-12) Prabhulal Kalji Doshi, Room NO.65, Moti Mention, 5 th Khetwadi Lane, Mumbai 400 004 PAN: ADWPD-9204-C ...... . /Appellant ब, म Vs. I.T.O 19(2)(5), 2 nd Floor, Matru Mandir, Tardeo Road, Mumbai 400 051. ..... / त /Respondent . 0 / Appellant by : None / त 0 /Respondent by : Shri R.A.Dhyani स ु , ई 1 त / Date of hearing : 02/06/2022 234 1 त / Date of pronouncement : 02/06/2022 $श/ ORDER PER VIKAS AWASTHY, JM: 745/21 – 11-12 This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi dated 17/03/2021 for the assessment year 2011-12, confirming levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 [in short ‘the Act’]. 2 ITA NO.745/MUM/2021(A.Y.2011-12) 2. File record shows that the notice of hearing of appeal sent to the assessee through RPAD on earlier two occasions were returned back by Postal Authorities with remarks “Unclaim Rtd. To Sender”. On the last date of hearing, the notice was ordered to be served through the office of Departmental Representative. The ld. Departmental Representative has placed on record service report. As per service report dated 26/05/2022 the notice of hearing fixed for 02/06/2022 was served on the assessee on the address mentioned in Form No.36 on 05/05/2022. Despite service of notice, neither the assessee nor any authorized representative of the assessee appeared. It seems that the assessee is not keen to pursue the appeal before the Tribunal. Therefore, this appeal is taken up for adjudication with the assistance of ld. Departmental Representative and material available on records. 3. Brief facts of the case as emanating from records are: The assessment in the case of assessee for assessment year 2011-12 was reopened on the basis of information received from DGIT(Investigation) that the assessee has obtained bogus purchase bills from various dealers declared as hawala operators by the Sales Tax Department, Government of Maharashtra. During the course of assessment proceedings the assessee failed to discharge his onus in proving genuineness of purchases. The Assessing Officer made estimated addition of 12.5% of alleged bogus purchases. Against the assessment order dated 08/01/2016 passed under section 143(3) r.w.s. 147 of the Act, the assessee filed appeal before the CIT(A). The CIT(A) granted part relief to the assessee by restricting addition on bogus purchases by estimating suppressed profit on bogus purchases @ 6.5%. The assessee filed appeal before the Tribunal assailing the addition confirmed by the CIT(A) in ITA 3 ITA NO.745/MUM/2021(A.Y.2011-12) No.3501/Mum/2017. The Tribunal vide order dated 03/11/2017 confirmed the findings of CIT(A). The Assessing Officer vide order dated 23/03/2018 levied penalty under section 271(1)(c) of the Act on the addition confirmed by Tribunal. Against the penalty order, the assessee filed appeal before the CIT(A) . The CIT(A) vide impugned order dismissed the appeal of assessee and confirmed levy of penalty, hence, the present appeal. 4. Shri R.A.Dhyani representing the Department vehemently defended the impugned order. The ld.Departmental Representative submitted that the assessee has failed to substantiate genuineness of purchases and the dealers from whom alleged purchases were made. The Assessing Officer levied penalty on addition confirmed by the Tribunal. The ld.Departmental Representative prayed for dismissing the appeal of assessee. 5. We have heard the submissions made by ld.Departmental Representative and have examined the orders of authorities below. Undisputedly, penalty has been levied on the addition made merely on estimations. The Assessing Officer made estimation of suppressed profits at 12.5%. In the First Appellate proceedings the estimation was restricted to 6.5% of the alleged bogus purchases. It is trait law that penalty on addition based on mere estimations is unsustainable. 6. The Hon'ble Rajasthan High Court in the case of CIT vs. Krishi Tyre Retreading and Rubber Industries reported as 360 ITR 580 has held that where addition is made purely on estimate basis, no penalty u/s. 271(1)(c) of the Act is leviable. Similar view has been expressed by Ho’ble Punjab & Haryana High Court in the case of CIT vs. Sangrur Vanaspati Mills Ltd. reported as 303 ITR 53. The Hon’ble High Court approving the order of Tribunal held that when the addition has been made on the basis of estimate and not on any concrete evidence of concealment, penalty u/s. 271(1)(c) of the Act is not leviable. The 4 ITA NO.745/MUM/2021(A.Y.2011-12) Hon'ble Gujarat High Court in the case of CIT vs. Subhash Trading Co. Ltd. reported as 221 ITR 110 has taken a similar view in respect of penalty levied u/s. 271(1)(c) of the Act on estimated additions. There are catena of decisions by different Hon’ble High Courts and various Benches of the Tribunal wherein penalty levied u/s. 271(1)(c) of the Act on estimated additions has been held to be unsustainable. 7. Thus, in view of the facts of the case and decisions referred above, we see no reason to uphold penalty under section 271(1)(c) of the Act. Consequently, the impugned order is set-aside and the appeal of the assessee is allowed. 8. In the result, appeal by assessee is allowed. Order pronounced in the open court on Thursday the 02 nd day of June, 2022. Sd/- Sd/- ( AMARJIT SINGH ) (VIKAS AWASTHY) $% स /ACCOUNTANT MEMBER स /JUDICIAL MEMBER म ु ंबई/ Mumbai, 6 , ं /Dated 02/06/2022 Vm, Sr. PS(O/S) त ल प अ े षतCopy of the Order forwarded to : 1. ./The Appellant , 2. / त / The Respondent. 3. ु 7त( )/ The CIT(A)- 4. ु 7त CIT 5. 8 9 / त , , . . ., म ु बंई/DR, ITAT, Mumbai 6. 9 :; < = /Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai