2021 (4) TMI 1340 - AT - Income Tax

Maintainability of appeal on low tax effect - Penalty levied u/s.271(1)(c) - addition made on account of bogus purchases - Penalty deleted by the CIT(A) on the primary ground that no penalty would survive on an estimated addition - HELD THAT - We find that the exception provided in para 10(e) of the Circular 17/2019 dated 08/08/2019 is applicable only for the quantum proceedings and the same cannot be made applicable for penalty proceedings. It is well settled that penalty and quantum assessment proceedings are distinct and separate. Accordingly we dismiss this appeal of the Revenue by following the aforesaid Circular No.17/2019 dated 08/08/2019 and hold that the appeal of the Revenue is not maintainable.

Summary

Issues:
1. Imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961 based on estimated addition made on account of bogus purchases.
2. Applicability of the monetary limit prescribed by CBDT Circular No. 17/2019 for preferring appeal by the Revenue before the Tribunal in penalty proceedings.

Analysis:
1. The appeal before the Appellate Tribunal ITAT Mumbai concerned the imposition of a penalty under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2009-10. The penalty was initially levied by the Assessing Officer on the estimated addition made on account of bogus purchases. However, the Commissioner of Income Tax (Appeals) deleted the penalty on the grounds that no penalty would survive on an estimated addition. This decision by the CIT(A) led to the Revenue filing an appeal before the Tribunal.

2. During the proceedings, the argument arose regarding the monetary limit prescribed by the CBDT in Circular No. 17/2019 for preferring appeals by the Revenue before the Tribunal. The assessee's representative contended that the penalty amount in dispute fell below the prescribed limit. On the other hand, the Revenue's representative argued that an exception provided in para 10(e) of the Circular made the appeal maintainable despite the monetary limit. The Tribunal examined this contention and concluded that the exception in the Circular applied only to quantum proceedings and not to penalty proceedings. The Tribunal emphasized the distinction between penalty and quantum assessment proceedings, ultimately dismissing the Revenue's appeal based on the Circular's provisions.

In conclusion, the Appellate Tribunal ITAT Mumbai dismissed the Revenue's appeal regarding the imposition of a penalty under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2009-10. The Tribunal held that the appeal was not maintainable based on the monetary limit prescribed by CBDT Circular No. 17/2019, as the exception provided in the Circular for exceeding the limit applied only to quantum proceedings and not to penalty proceedings.