2022 (7) TMI 1324 - AT - Income Tax

Rectification of mistake - Levying penalty u/s 271(1)(c) on bogus purchases - HELD THAT - It is evident that there is apparent mistake on record in deciding the appeal of the Tribunal. The Tribunal has decided the appeal assuming the appeal against quantum addition 2021 (7) TMI 1382 - ITAT MUMBAI whereas the appeal was against relief allowed on levying penalty u/s 271(1)(c) - Accordingly, we recall the order of the Tribunal and direct the Registry to fix the appeal in due course under intimation to the assessee. Miscellaneous Application filed by the Revenue is allowed.

Summary

Issues:
- Misinterpretation of the nature of the appeal by the Tribunal leading to an incorrect decision.
- Request for recall of the order by the Revenue based on the above issue.

Analysis:
The judgment pertains to a Miscellaneous Application filed by the Revenue seeking the recall of an order passed by the Tribunal in relation to an appeal against the order passed by the Ld. CIT(A) in penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2009-10. The Ld. DR contended that the Tribunal mistakenly treated the appeal as against quantum addition instead of a penalty proceeding, leading to an erroneous decision. The Ld. Counsel for the assessee did not dispute this assertion.

Upon reviewing the submissions and the relevant records, it was observed that the Ld. CIT(A) had allowed the appeal of the assessee, prompting the Revenue to file an appeal before the Tribunal. The Tribunal, however, in its decision dated 02.07.2021, erroneously treated the appeal as pertaining to quantum addition rather than a penalty proceeding under section 271(1)(c). The Tribunal's decision was based on the interpretation that in cases of bogus purchases, only the profit element embedded in such purchases should be assessed. The Tribunal upheld the Ld. CIT(A)'s order directing the assessment of income at 12.5%, which was deemed reasonable and justified. Consequently, the Tribunal's decision was found to be incorrect due to the misinterpretation of the nature of the appeal.

In light of the above, it was concluded that there was a clear mistake in the Tribunal's decision, and therefore, the order dated 02.07.2021 was recalled. The Registry was directed to fix the appeal for due course under intimation to the assessee. Consequently, the Miscellaneous Application filed by the Revenue was allowed, and the order was pronounced in court on 01/07/2022.