SANDEEP KEWALCHAND MEHTA,MUMBAI V. ACIT - 31(3), MUMBAI

ITA 6465/MUM/2024

AI Insights

The case involves Sandeep Kewalchand Mehta, the appellant, who contested a penalty imposed by the Assessing Officer (AO) following the discovery of bogus purchases amounting to Rs. 43,48,834. Initially, the entire amount was added to the assessee's income, but the Tribunal later restricted this addition to 12.5%, representing the profit element from these purchases. The penalty was contested on the grounds that it was based on an estimated addition, which the assessee argued should not attract a penalty. However, the Tribunal found that the penalty was rightly levied as the assessee had concealed income under the guise of these bogus purchases.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 28582 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Other Referred Cases: DCIT vs. M/s. Unisynth Chemicals, Reliance Petro Products Pvt. Ltd. (2010) 322 ITR (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BHANGEPATIL PUSHKARAJ RAMESH; DR
• Assessee Lawyers: BHUPENDRA SHAH; AR
• Keywords: Bogus purchase; Bogus
• Section: 143(3); 271(1)(c)

Judgement Text

" | आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 6465/Mum/2024 Assessment Year: 2009-10 Sandeep Kewalchand Mehta B-3, Bldg No. 3 SaiBaba Enclave Behind CITI Centre, Goregaon West Maharashtra - 400062 [PAN: AFNPM2440Q] Vs ACIT – 31(3) अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Bhupendra Shah, A/R Revenue by : Shri Bhangepatil Pushkaraj Ramesh, Sr. D/R सुनवाई की तारीख/Date of Hearing : 13/02/2025 घोषणा की तारीख /Date of Pronouncement: 19/02/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 01/10/2024 by NFAC, Delhi [hereinafter ‘the ld. CIT(A)], pertaining to AY 2009-10. 2. The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the levy of penalty u/s 271(1)(c) of the Act amounting to Rs. 1,84,771/- on alleged estimated profits on the addition of unverified purchases. The roots of the levy of penalty lie in the assessment order dated 30/03/2015 framed u/s 143(3) r.w.s. 147 of the Act wherein, during the course of the scrutiny assessment proceedings, on the basis of the information received from the Sales-tax authorities, the AO came to know that the assessee has made bogus I.T.A. No. 6465/Mum/2024 2 purchases from hawala parties amounting to Rs.43,48,834/-. The entire amount was added to the income of the assessee. 3. The quarrel travelled up to the Tribunal and the Tribunal vide its order dated 31/10/2017, restricted the quantum addition at 12.5% of the bogus purchases. 3.1. Pursuant to the order of the Tribunal, penalty proceedings were initiated u/s 271(1)(c) of the Act, and a penalty of Rs.1,84,771/- was levied. 4. Before us, the ld. Counsel for the assessee vehemently stated that since the quantum addition has been estimated, no penalty should be levied on estimation of profit. Strong reliance was placed on the decision of the Co-ordinate Bench in the case of DCIT vs. M/s. Unisynth Chemicals in ITA No. 5967/Mum/2014 and the judgment of the Hon’ble Supreme Court in the case of Reliance Petro Products Pvt. Ltd. (2010) 322 ITR (SC). It is the say of the ld. Counsel that considering several precedents, penalty should not be levied for the impugned estimated addition. 5. Per contra, the ld. D/R pointed out that no estimation was made. The AO added the entire bogus purchases whereas the Tribunal restricted the addition to 12.5% of the bogus purchases being the profit element imbibed in such bogus purchases. Therefore, it cannot be said that the profit has been estimated and the penalty has been levied on estimated profits. 6. We have given thoughtful consideration to the rival contentions. The undisputed fact is that the additions were made on account of I.T.A. No. 6465/Mum/2024 3 bogus purchases and the quarrel travelled up to the Tribunal and the Tribunal restricted the quantum addition at 12.5% of the bogus purchases. We do not find any merit in the contention of the ld. Counsel that the profit has been estimated and the penalty has been levied on estimated profit. Facts on record show that there were bogus purchases and only the profit element has been added which means that the assesse has concealed the income to this extent in the garb of purchases which turned out to be bogus. Therefore, considering the facts of the case in totality, we have no hesitation in confirming the penalty so levied u/s 271(1)(c) of the Act. Accordingly, the effective ground/s raised by the assessee are dismissed. 7. In the result, the appeal of the assessee is dismissed. Order pronounced in the Court on 19th February, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 19/02/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs I.T.A. No. 6465/Mum/2024 4 आदेश की \u0014ितिलिप अ\u0019ेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001b / The Appellant 2. \u0014\u001cथ\u001b / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभागीय \u0014ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड% फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "