FORBES PHARM CHEM TECHNOLOGIES, Mumbai V. National Faceless Assessment Centre, Delhi, Delhi

ITA 821/MUM/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1894 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 27-05-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 18-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Difference of opinion; Bogus
• Section: 147; 271(1)(c); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.821/MUM/2024 Assessment Year: 2010-11 Forbes Pharm Chem Technologies 201/202, Shree Sai Krupa Co-op Soc., Hingwala Cross Lane, Ghatkoper East, Mumbai – 400 077 (PAN : AACFF0558L) Vs. National Faceless Assessment Centre, Delhi (Appellant) (Respondent) Present for: Assessee : Shri Mehul Shah, FCA Revenue : Ms. Rajeshwari Menon, Sr.DR Date of Hearing : 28.05.2024 Date of Pronouncement : 31.05.2024 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER : This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2023-24/1059941119(1), dated 19.01.2024 passed against the assessment order by the Assessing Officer, National Faceless Assessment Centre, Delhi, u/s.271(1)(c) the Income- 2 ITA No.821/MUM/2024 Forbes Pharm Chem Technologies, AY 2010-11 tax Act(hereinafter referred to as the “Act”), dated 09.09.2021 for Assessment Year 2010-11. 2. Grounds taken by the assessee are reproduced as under: “1. On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in upholding action of the Assessing Officer in imposing penalty under section 271 (1) (c) of the Income-tax Act 1961 amounting to RS. 154,250 being tax sought to be evaded on estimated addition sustained @ 6% of alleged bogus purchases without appreciating that the addition of alleged non-genuine purchases was made on a difference of opinion; and there was neither concealment of income nor filing of inaccurate of income, as the Appellant had furnished all material particulars in support of its claim of purchases further supported by the order of MAVT Department accepting the same purchases which the Assessing Officer treated as non genuine. 2. On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in not appreciating that, the notice issued by the Assessing officer initiating penalty under section 274 read with section 271 (1) (c) was bad in law as the Assessing Officer did not cancel the irrelevant portion in the notice as to whether Your Appellant has concealed the income or filed inaccurate particulars of income, and thereby no specific charge was created against Your Appellant.” 2.1 The issue raised in this appeal is towards imposition of penalty of Rs.1,54,250/- u/s. 271(1)(c) of the Act. 3. Brief facts of the case are that the assessee filed its return of income on 17.09.2010, reporting total income at Rs. 12,710/-. Case if the assessee was reopened u/s. 147 of the Act on the basis of information received from the Investigation Wing of the Department, which revealed that assessee had taken accommodation bills for purchase through parties declared as hawala operators by the Maharashtra Sales Tax Department. After examining the details filed by the assessee and considering the submissions made, assessment was completed u/s.143(3) r.w.s. 147 vide order dated 10.11.2015 wherein addition of Rs. 10,13,496/- was made being 12.5% of Rs.81,07,970/- held as unproved/unexplained purchases. Consequently, penalty proceedings u/s.271(1)(c) were initiated by issuing a notice u/s.274 r.w.s.271(1)(c) of the Act. 3 ITA No.821/MUM/2024 Forbes Pharm Chem Technologies, AY 2010-11 4. In the quantum appeal, before the ld. CIT(A) the addition made was reduced to Rs.4,86,478/- by adopting 6% instead of 12.5% on the unproved/unexplained purchases of Rs.81,07,970/-. Assessee took up the matter before the Co-ordinate Bench of ITAT, Mumbai in appeal No. ITA 5473/Mum/2018 which was dismissed vide order dated 11.09.2019 by confirming the percentage adopted by ld. CIT(A) of 6%. 4.1. Subsequent to the order of Tribunal, penalty proceedings were taken up by the ld. Assessing Officer who levied a penalty of Rs.1,54,250/- being 100% of the tax sought to be evaded. Aggrieved, assessee went in appeal before the CIT(A), who confirmed the levy of said penalty. Aggrieved, assessee is in appeal before the Tribunal. 5. Before us, ld. Counsel for the assessee contended that it is a case of estimation of arriving at income component in the purchases treated as unproved/unexplained which initially was taken at 12.5% by the ld. Assessing Officer and was subsequently reduced to 6% by the ld. CIT(A) and confirmed by the coordinate bench. He thus, submitted that addition made at the rate of 6% of alleged bogus purchases is on account of difference of opinion, there being no concealment of particulars of income or filing of inaccurate particulars of income by the assessee. Ld. Counsel also asserted that assessee has disclosed all the facts before the authorities below. He thus claimed that penalty imposed is on an addition made on an estimate basis by applying 6%. 4 ITA No.821/MUM/2024 Forbes Pharm Chem Technologies, AY 2010-11 6. Per contra ld. Sr. DR placed reliance on the orders of the authorities below and asserted that it is not a case of estimation. The addition was made because assessee could not substantiate his claim by bringing on record relevant documents. 7. We have heard the rival contentions and perused the material on record and have taken note of the fact about the decision of Co-ordinate Bench in the quantum appeal whereby to meet the ends of justice, addition was sustained at 6% of the alleged bogus purchases. Before us, ld. Counsel for the assessee had submitted that in a case of estimation of income/disallowance, no penalty u/s. 271(1)(c) is warranted. In the present case, the explanation of the assessee though not accepted in its entirety, there is no material on the basis of which it would be held that the same was not bonafide. In other words, the explanation given by the assessee has not been disproved. 7.1. It is a settled position that on the addition /disallowance made on an estimate basis, no penalty u/s. 271(1)(c) is leviable. For the purpose of levying penalty under 271(1)(c), the AO has to clearly prove that the assessee has concealed the particulars of his income or has furnished inaccurate particulars of his income. Considering the undisputed fact that addition on which the penalty has been imposed is on an estimate basis i.e. 6% of bogus purchases, we are of the view that penalty so imposed u/s. 271(1)(c) is not justified. Accordingly, we delete the penalty imposed on the assessee. Thus, the ground no.1 taken by the assessee is allowed. 7.2. Assessee has also challenged vide ground no.2 on the defective notice issued by the Assessing Officer for initiating penalty proceedings wherein, specific charge has not been created against the 5 ITA No.821/MUM/2024 Forbes Pharm Chem Technologies, AY 2010-11 assessee. Since we have already deleted the penalty imposed in terms of our above observations and findings on the merits of the case, the legal issue so raised is left open and not adjudicated upon. 8. In the result, appeal of the assessee is allowed. Order is pronounced in the open court on 31 May, 2024 Sd/- Sd/- (Pavan Kumar Gadale) (Girish Agrawal) Judicial Member Accountant Member Dated: 31 May, 2024 MP, Sr.P.S. Copy to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai