RONAK METAL INDUSTRIES,MUMBAI V. ITO WD.23(3)(6), MUMBAI

ITA 170/MUM/2025

AI Insights

The case involves M/s. Ronak Metal Industries appealing against a penalty imposed under section 271(1)(c) following an addition of Rs.22,70,666 to their income, which was based on an estimated GP rate of 12.5% applied to alleged bogus purchases. The penalty was contested on the grounds that the company had been dissolved and the order was served to a personal email of a partner, leading to a delay in filing the appeal. The Tribunal found that the books of accounts showed the source of purchases and there was no doubt on the corresponding sales, thus the penalty for concealment of income was not justified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473404 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH PARDESHI
• Assessee Lawyers: PARAG K. SHAH
• Keywords: Condonation of delay; Revised return; Accommodation entries; Bogus
• Section: 271(1)(c)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No.170/Mum/2025 (Assessment Year :2010-11) Ronak Metal Industries 3rd Floor, 137/139 Kika Street Gulal Wadi Mumbai Maharashtra-400004 Vs. ITDWD 23(3)(6) Mumbai PAN/GIR No.AAAFR1206M (Appellant) .. (Respondent) Assessee by Shri Parag K. Shah Revenue by Shri Rajesh Pardeshi, Sr. DR Date of Hearing 24/02/2025 Date of Pronouncement 25/02/2025 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 30/09/2024 passed by NFAC, Delhi in relation to penalty proceedings u/s. 271(1)(c) for the A.Y.2010-11. 2. The assessee is aggrieved by levy of penalty u/s.271(1)(c) on account of addition of Rs.22,70,666/- which was made by ITA No.170/Mum/2025 M/s. Ronak Metal Industries 2 applying the estimated GP rate of 12.5% on alleged bogus purchases. 3. At the outset, assessee’s appeal is time barred by 40 days. In the petition for condonation of delay assessee has stated that the assessee company was dissolved w.e.f. 31/03/2018 and at the time of filing of appeal in Form No.35 e-mail ID was provided as [e-mail], however, the order was served through e-mail on 30/09/2024 on personal e-mail ID of partner Mr.Pankaj Shivlal Shah: [e-mail] instead of [e-mail]. Since it was sent on personal e-mail ID of partner therefore, it skipped the attention of the assessee and it is only when authorised representative opened the portal to find out the possibility of filing benefit under DTSVS revised scheme 2024, it came to his knowledge that ld. CIT(A) has already passed the order on 30/09/2024. It was on receiving of this order, appeal has been filed immediately. Under these circumstances, delay of 40 days is condoned. 4. The brief facts are that assessee has filed its revised return of income at Rs.4,75,660/- within the prescribed time limit whch was accepted. However, subsequently, the case was reopened by issuance of notice u/s.148 on 14/10/2014 on the ground that information has been received from DG (Investigation) for bogus accommodation entries in respect of purchase parties. It was noted that assessee has made purchases from six parties for amounts aggregating to Rs. 1,81,65,330/-. The ld. AO estimated GP rate of 12.5% while making the addition and such an ITA No.170/Mum/2025 M/s. Ronak Metal Industries 3 addition was confirmed from the stage of appellate authority wherein GP rate of 12.5% was confirmed. Now on such estimated GP rate, penalty u/s 271(1)(c) of Rs.7,01,635/- has been levied. 5. From the perusal of the facts brought on record and the finding given in the impugned orders, it is seen that the source of purchases have been shown from the books and the only allegation was that assessee might have suppressed the profit by inflating the purchases on alleged bogus parties. Once source of purchases are from the books and corresponding sales have not been doubted and merely because addition has been made by applying the same adhoc GP rate to factor any suppression of alleged bogus profit, no penalty can be levied for concealment of income and accordingly, the penalty levied by the ld. AO is deleted. 6. In the result, appeal of the assessee is allowed. Order pronounced on 25th February, 2025. Sd/- (PADMAVATHY S) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 25/02/2025 KARUNA, sr.ps Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT ITA No.170/Mum/2025 M/s. Ronak Metal Industries 4 BY ORDER, (Asstt. Registrar) ITAT, Mumbai 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// "