TMI Blog2019 (10) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... would be sufficient to sustain penalty. - Decided against assessee. - ITA No. 5367/MUM/2016 - - - Dated:- 30-9-2019 - Shri Pawan Singh (Judicial Member) And Shri N.K. Pradhan (Accountant Member) For the Assessee : Mr. Bhadresh Doshi, AR For the Revenue : Mr. S.K. Mishra, DR ORDER PER N.K. PRADHAN, AM This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax-26, Mumbai [in short CIT(A) ] and arises out of the penalty order u/s 271(1)(c)of the Income Tax Act 1961, (the Act ). 2. The ground of appeal filed by the assessee reads as under : The Ld. CIT(A) has erred in confirming the action of the AO of levying penalty of ₹ 8,56,765/- in respect of disallowance of alleged bogus purchases to the tune of ₹ 27,72,702/-. The said penalty may please be deleted. 3. Briefly stated, the facts are that the assessee filed its return of income for the assessment year (AY) 2010-11 on 15.10.2010 declaring total income of ₹ 2,53 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) of the Act. 5. Before us, the Ld. counsel for the assessee files a copy of the decision in DCIT v. Shri Dhaval D. Shah (ITA No. 1337/Mum/2016 for AY 2009-10) of ITAT D Bench, Mumbai, DCIT v. M/s Ashtavinayaka Construction (ITA No. 3821/Mum/2015 for AY 2011-12) of ITAT F Bench, Mumbai, Ashok Narayanan v. DCIT (ITA No. 6464/Mum/2014 for AY 2010-11) by ITAT A Bench, Mumbai ; Sachin Arora v. ITO (2017) 51 CCH 0615 Agra Trib. Further, the Ld. counsel submits that though the disallowance of bogus purchases to the extent of 100% as made by the AO was not disputed by the assessee for this year, similar disallowance made in the subsequent year was disputed by it. The ITAT vide order dated 09.10.2017 had directed the AO to restrict the disallowance only to the extent of 12.5% of the impugned purchases. Thus it is stated that the disallowance even for the year under appeal should have been restricted to the profit element contained in the bogus purchases estimated at 12.5% and it is well accepted principle that penalty is not leviable when the addition is made on an estimated basis. It is also submitted by the Ld. counsel that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een taken even after referring to this decision in the case of Meherjee Cassinath Holdings Pvt. Ltd. vs. ACIT [ITA No. 2555/M/12] which has been relied upon in the case of Ashok Narayanan vs. DCIT which we have relied upon. 2. R L Traders vs. ITO (2017-TIOL-2583-HC-DEL-IT) Not relevant to the issue under consideration. 3. CIT vs. Zoom Communication (P) Ltd. [2010] 327 ITR 510 (Delhi) It deals with the Explanation 1 deeming concealment of particulars of income whereas in the appellant's case the penalty is levied for furnishing inaccurate particulars of income. 4. CIT vs. Moser Baer India Ltd. [2009] 315 ITR 460 (SC) It is not relevant as the matter was set aside to the Tribunal without giving any findings. 5. CIT vs. Gold Coin Health Food (P) Ltd. [2008] 304 ITR 308 (SC) It deals with the levy of penalty in case of a los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmal Choraria vs. ACIT [2018] 91 taxmann.com 311(Kolkata - Trib.) in detail. The issue has been decided in favour of the assessee in the case of Syed Ahmed Abbas Naqvi vs. ACIT ITA No. 2230/Mum/2014 even after considering this decision. 15. Dilip N. Shroff vs. JCIT (2007) 291 ITR 519 (SC) In fact, the reliance has been placed on this decision while deciding the issue in favour of the assessee in both the cases relied upon by us. 16. CIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) In fact, this decision is in favour of the assessee. 17. UOI vs. Rajasthan Spinning Weaving Mills Not relevant to the issue under consideration as it merely provides that mens rea is not essential. 18. CIT vs. Atul Mohan Bindal (2009) 317 ITR 1 (SC) The matter was remitted back to the High Court on account of subsequent SC decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n why penalty u/s 271(1)(c) should not be levied in its case. The assessee through its authorized representative filed a reply dated 23.09.2013, which is produced below : During the assessment proceedings, we were asked to file details of suppliers from whom the goods were purchased. Out of them, few parties from whom materials worth ₹ 27,72,702/- was purchased were from the list of suspicious dealers published by the Sales Tax Department on its website. Hence the purchases were disallowed as bogus purchases. However we reiterate that the purchases were genuine and the material was received and utilized. It may also please be noted that the list published Sales Tax Authorities is subject to objections raised by the parties. In other words, it is not confirmed that the suppliers are not genuine. Thus the disallowance was itself not correct. Levying of penalty will be further unreasonable. In the light of the foregoing, you are requested to drop the penalty proceedings. 8.1 In the instant appeal, if the case of the assessee is that they have been put to prejudice and the principles of natural justice were violated on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e inaccurate portion cannot by itself invalidate the notice. The entire factual background would fall for consideration in the matter and no one aspect would be decisive. In this context, useful reference may be made to the following observation in the case of CIT v. Mithila Motor's (P.) Ltd. [1984] 149 ITR 751 (Patna) (head note): Under section 274 of the Income-tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the assessee was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings. Thus the instant case is distinguishable from the decisions at para 5 hereinabove relied on by the Ld. counsel in respect of his contentions that the AO neither clarified about a charge in the assessment order nor struck off the concerned details in the notice issued by him u/s 274 of the Act. Following the ratio laid down in Mak Data P. Ltd (supra) and Smt. Kaushalya and Others (supra), we hold that the AO has rightly initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Union of India v. Dharmendra Textiles Processors (2007) 295 ITR 244(SC), the Hon ble Supreme Court has held that penalty u/s 271(1)(c) is a civil liability and the wilful concealment is not an essential ingredient for attracting civil liability, unlike the matter of prosecution u/s 276C. While considering an appeal against an order made u/s 271(1)(c), what is required to be examined is the record which the officer imposing penalty had before him and if that record can sustain the finding that there has been concealment, that would be sufficient to sustain penalty. In CIT v. Atual Mohan Bindal [2009] 183 Taxman 444 (SC), the Hon ble Supreme Court observed at para 11: The penalty spoken of in section 271(1)(c) is neither criminal nor quasi-criminal but a civil liability; albeit a strict liability. Such liability being civil in nature, mens rea is not essential. Having examined the present factual matrix on the anvil of the aforesaid enunciation of law, we uphold the order of the Ld. CIT(A). 9. In the result, the appeal is dismissed. Order pronounced in the open Court on 30/09/2019. - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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