ITO 32(1)(1), MUMBAI V. M/S ABHAY AUTOMOTIVE COMPANY , MUMBAI

ITA 780/MUM/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9301 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KARTIK KATMUTIA
• Keywords: Bogus purchase; Tax effect
• Section: 148; 271(1)(c); 69C; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM (Hearing through Video Conferencing Mode) आयकर अपील सं/ I.T.A. No. 780/Mum/2020 (निर्धारण वर्ा / Assessment Year: 2009-10) ITO-32(1)(1) Room No.703, 7 th Floor, Kautilya Bhavan, Bandra Kurla Complex, Bandra (E), Mumbai-400051. बिधम/ Vs. M/s. Abhay Automotive Company B/402, Sumer Nagar Building No.3, SV Road, Borivali East, Mumbai-400092. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAJFA3745K (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 11/08/2021 घोषणा की तारीख /Date of Pronouncement: 27/10/2021 आदेश / O R D E R PER AMARJIT SINGH, JM: The revenue has filed the present appeal against the order dated 29.11.2019 passed by the Commissioner of Income Tax (Appeals)-44, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y. 2009-10 in which the penalty levied by AO has been ordered to be deleted. 2. The revenue has raised the following grounds: - “1. Grounds of appeal, On the and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty levied by the AO u/s 271(1)(c) of the Income Tax Act 1961, of Rs. 1,81,613/- without appreciating the facts that the Assessing Officer has Revenue by: Shri Brajendra Kumar (DR) Assessee by: Shri Kartik Katmutia (AR) ITA. No.780/Mum/2020 A.Y. 2009-10 2 correctly held that the assessee has failed to substantiate the transactions claimed in its return of income thereby evaded taxes to that extent. 2. " On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that the act of assessee clearly falls within the ambit of provisions of Explanation -1 of the Act as the assessee had failed to offer an explanation or which was found by the AO to be false." 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied by the AO u/s 271(1)(c) of the Act, 1961 of Rs.1,81,613/- without appreciating the facts that the assessee claimed bogus purchases in its Return of Income thereby making himself liable for Penalty u/s.271(IXc) of the I.T. Act. 1961. 4. " On the facts and in the circumstances of the case, the Hon'ble ITAT is requested to entertain this appeal though the tax effect is below the monetary limit prescribed in the CBDT Circular no.17/2019 dated 08.08.2019 r.w. Circular No.3/2018 dtd. 11.07.20 19 as amended on 20.08.2019 as the case falls in the exception provided in para I0(e) of the said Circular in as much as the addition is based on information received from external sources in the nature of law enforcement agencies, namely, Sales Tax Authorities." 5. "The appellant prays that the order of the Id. CIT(A) on the grounds be set aside and that of the Assessing Officer be restored." ITA. No.780/Mum/2020 A.Y. 2009-10 3 6. "The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 4. The brief facts of the case are that the assessee filed its return of income on 29.09.2009 declaring total income to the tune of Rs.1,60,016/- for the A.Y.2009-10. The return was processed u/s 143(1) of the Act. The case of the assessee was reopened u/s 148 of the Act and the assessment u/s 143(3) r.w.s 147 of the I. T. Act, 1961 was completed by raising the addition of Rs.43,87,622/- on account of bogus purchase u/s 69C of the Act. The penalty proceeding was initiated. After the reply of the assessee, the AO levied the penalty to the tune of Rs.1,81,613/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who deleted the penalty, therefore, the revenue has filed the present appeal before us. 5. We have heard the argument advanced by the Ld. Representative of the parties and perused the record. All the issues are in connection with the deletion of the penalty of Rs.1,81,163/-. The AO levied the penalty on account of addition of bogus purchase in sum of Rs.43,87,622/-. No doubt, the CIT(A) deleted the penalty by virtue of order dated 29.11.2019. Before going further, we deem it necessary to advert the finding of the CIT(A) on record: - “6.4.1 I have considered the submissions of the appellant and perused the materials available on record. The appellant has requested to delete the impugned penalty levied u/s 271(1)(c) of the Act at Rs. 1,81.613/-. The main contentions of the Appellant are that it has neither concealed particulars of income nor furnished inaccurate particulars of income, mere rejection of appellant's claim would not ITA. No.780/Mum/2020 A.Y. 2009-10 4 automatically lead to levy of penalty and it had submitted necessary evidences in support of its claim, but the same was not accepted by the Ld. AO and where the addition has been made or sustained on estimation basis the penalty u/s 271(1)(c) of the Act is not leviable. In support of its claim the appellant has placed reliance on various judicial precedents as detailed above. The contentions of the appellant have been considered carefully. The Ld. AO had made the addition on account of bogus purchases u/s 69C of the Act at Rs. 43,87,622/-. However, the Ld. CIT(A) has restricted the same to 13.76% of such purchases/ accommodation entries. Further. the Honible ITAT. Mumbai vide its order dated 17.03.2017 in ITA No 4939/M/2016 has dismissed the appeal filed by the Revenue. The facts of the case suggest that the Ld AO had made said addition on the ground that the appellant could not prove the purchases tinder consideration from the parties concerned. It is also an admitted fact that the Ld. CIT(A) has restricted said addition to 13.76%. on estimated/ad-hoc basis. In the case of M/s Earthmoving Equipment Service Corporation in ITA No. 6617/2014, the Honble ITAT Mumbai vide its order dated 02.05.2017 has deleted the penalty levied Ws 271(1)(c) of the Act, where the addition uis 690 of the Act was made on account of bogus purchases, on the ground that the assessee made a claim which was bonafide and the same was coupled with documentary evidences but the same remained inconclusive for want of confirmation from the suppliers as they could not be traced at given address. Further, the Honible ITAT, Mumbai In the case of Ajay Loknath Lohia in ITA No. 2998/Mum/2017, vide its order dated 05.10.2018 has deleted the penalty levied u/s 271(1)(c) of the Act, on the disallowance/addition made @25% on alleged bogus purchases made from hawala dealers ITA. No.780/Mum/2020 A.Y. 2009-10 5 based on the information received from the Sales Tax Department and where the appellant had accepted such estimated addition, after holding that though the AO had estimated 25% gross profit on alleged bogus purchases, never made any observations with regard to the incorrectness in details filed by the assessee to prove such purchases. 6.4.2 From the above it is evident that the facts and circumstances of the present case are similar as to the facts adjudicated by the Hon'ble ITAT Mumbai in above referred cases Respectfully following the same, I am 01 the considered opinion that this is not a fit case to levy penalty u/s 271(1)(c) of the Act. Hence, the impugned penalty levied u/s 271(1)Cc at Rs 1 81.613/- is DELETED. Accordingly the Ground No 1 raised in appeal is ALLOWED.” 6. On appraisal of the above said finding, we noticed that the AO has raised the addition of Rs.43,87,622/- which was restricted to the extent of 13.76% of bogus purchase by CIT(A). The income was estimated and addition was raised. No penalty is leviable when the income has been estimated. In this regard, we find support of the decision of Hon’ble Punjab & Haryana High Court in the case of Harigopal Singh Vs. CIT (2002) 258 ITR 85 (P & H), CIT vs. Aero Traders Pvt. Ltd., 322 ITR 316 (Del) & CIT Vs. Subhash Trading Co., 221 ITR 110 (Guj.) in which it is specifically held that the penalty is not leviable when the profit was estimated on estimation basis. Taking into account all the facts and circumstances of the case, we are of the view that the finding of the CIT(Appeals) is quite justifiable which is not liable to be interfere with at this appellate stage. Accordingly, appeal of the revenue is hereby dismissed. ITA. No.780/Mum/2020 A.Y. 2009-10 6 7. In the result, the appeals filed by the revenue is hereby dismissed. Order pronounced in the open court on 27/10/2021. Sd/- Sd/- (SHAMIM YAHYA) (AMARJIT SINGH) लेखध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; ददनांक Dated : 27/10/2021 Vijay Pal Singh (Sr. PS) आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदध, आयकर अपीलीय अदधकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधिक िंजीकधर /(Dy./Asstt. Registrar) आिकर अिीलीि अनर्करण, मुंबई / ITAT, Mumbai