Pavan Kumar Gadale ORDER
Pavan Kumar Gadale, Member (J)
1. The revenue has filed the appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi/CIT(A) passed u/sec 250 of the Act. The revenue has raised the fallowing grounds of appeal:
1. On the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in not considering that the penalty was levied in respect of the addition made on the basis of information received from the Sales Tax Department, Maharashtra with regard to bogus purchase made by the assessee from dealers without supply of actual goods.
2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty by not appreciating the fact that the assessee could not substantiate the genuineness of purchases from the said parties during assessment proceedings as well as penalty proceedings.
3. It is respectfully submitted that the penalty was levied for the additions made on the basis of information received from Law enforcement agency of the State Government of Maharashtra i.e. Sale Tax Department.
4. It is humbly requested that present appeal is being filed in accordance with the CBDT's Instruction No. 3/2018 dated 11/07/2018 amended vide letter dated 20.08.2018 as per para 10(e) of the said circular. Therefore, the order of the CIT(A) may be vacated & that of the Assessing Officer may be restored.
5. The appellant craves leave to add, amend or alter any ground/grounds, which may be necessary.
2. The brief facts of the case are that the assessee is engaged in the business of reseller in chemicals & fuels. The assessee has filed the return of income for the A.Y. 2009-10 on 30.09.2009 disclosing a total income of Rs. 6,06,148/-.Subsequently the AO has received the information from Sales Tax Department, that the assessee has obtained bogus purchase bills from M/s. Neptune Corporation aggregating to Rs. 5,44,589/-.The Assessing Officer (AO) has reason to believe that the income has escaped assessment and issued notice u/s. 148 of the Act, in compliance the assessee has filed the revised return of income disclosing total income of Rs. 6,06,148/-,further the notice u/s. 143(2) and 142(1) of the Act are issued. In compliance, the Ld. AR of the assessee appeared from time to time and submitted the information and the case was discussed. Whereas, the AO has issued notice U/sec 133(6) of the Act on the party to examine the genuineness of the purchases but there was no response. The assessee has filed detailed letters on 26.03.2015 & 27.03.2015 with the supporting evidences. But the AO was not satisfied with the explanations and the information and finally made an addition of Rs. 5,44,589/- and assessed the total income of Rs. 11,50,740/- and passed the order u/s. 143(3) r.w.s. 147 of the Act dated 30.03.2015.
3. Subsequently, the AO has initiated the penalty proceedings u/s. 271(1)(c) of the Act. In the course of penalty proceedings it was brought to the knowledge of the Assessing officer that the assessee has filed an appeal with the CIT(A) on quantum addition of bogus purchases. Whereas, the CIT(A) has relied on the facts and judicial decisions and restricted the addition to the extent @ 25% of purchases and on further appeal the Honble Tribunal has restricted the addition to the extent of 12.5%. The A.O. has considered these facts and observed that none appeared on behalf of the assessee nor any explanations were filed in respect of penalty notice. The A.O. dealt on the facts and the findings of the scrutiny assessment and levied a penalty of Rs. 21,034/- and passed the order u/s. 271(1)(c) of the Act dated 21.03.2018.
4. Aggrieved by the penalty order, the assessee has filed an appeal with the CIT(A), the CIT(A) has considered the grounds of appeal, findings of the A.O. and the submissions of the assessee and observed that the A.O. has made addition of bogus purchases in the assessment U/sec 143(3) r.w.s. Sec. 147 of the Act. Further, the Ld. CIT(A) in quantum appeal has restricted the addition by estimating gross profit/income @ 25% and further appeal to Honble Tribunal it was restricted to 12.5%. But the A.O. has levied the penalty u/sec 271(1)(c) of the Act on the estimated income. The CIT(A) dealt on the provisions of Sec. 271(1)(c) of the Act and relied on the Coordinate Bench of Hon'ble Tribunal and the Hon'ble High Court decisions and observed that no penalty can be levied on estimated income and directed the A.O. to delete the penalty and allowed the assessee's appeal. Aggrieved by the order of the CIT(A), the revenue has filed an appeal with the Hon'ble Tribunal.
5. At the time of hearing, none appeared on behalf of the assessee. The Ld. DR submitted that the CIT(A) has erred in deleting the penalty, whereas the A.O. has received the information that, the assessee has obtained bogus purchase bills and the same could not be overlooked and prayed for allowing the revenue appeal.
6. We heard the Ld. DR submissions and perused the material on record. The sole crux of the disputed issue as envisaged by the Ld. DR that the CIT(A) has erred in deleting the penalty overlooking the transactions of bogus purchases. Whereas, the Ld. CIT(A) considering the facts and circumstances observed that the penalty cannot be levied on estimated income. We are of the opinion that when the addition is on estimated basis, penalty u/s. 271(1)(c) of the Act cannot be levied on such ad hoc estimated income. The disallowance of purchases on ad-hoc basis does not tantamount to furnishing inaccurate particulars of income under the provisions of Section 271(1) (c) of the Act.
The Assessing officer has not doubted the sales and made disallowance of bogus purchases and we rely on the ratio of the Honorable Jurisdictional High Court in the case of M/s. Nikunj Eximp Enterprises vs. Cit (W.P. No. 2860 dated 18-06-2014). Further the assessing officer made an addition based on the information received from Sales tax department Maharashtra since the said information could not conclusively be proved. The Ld. DR could not controvert the findings of the CIT(A) with any new cogent evidences or information to take different view. Accordingly, we are not inclined to interfere with the order of the Ld. CIT(A) and upheld the same and dismiss the grounds of appeal of the revenue.
7. In the result, the appeal filed by the revenue is dismissed.
Order pronounced in the open court on 03.02.2023.
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