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TMI Blog2014 (9) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the issue is debatable and that therefore, penalty should be deleted - the order of the CIT(A) deleting the penalty only on the ground that substantial question of law has been framed by the Hon’ble High Court in the quantum appeal is not sustainable - the assessee challenged the levy of penalty on other grounds also and it was not decided by the CIT(A) – thus, the issue of levy of penalty u/s 271(1)(c) is remitted back to the CIT(A) – Decided in favour of revenue. - IT(SS) No. 3369/Ahd/2010 - - - Dated:- 24-1-2014 - SHRI N. S. SAINI AND SHRI KUL BHARAT, JJ. For the Appellant : Sh. P.L. Kureel, Sr. D.R. For the Respondent : Sh. S.N. Soparkar with Smt. Urvashi Shodhan, AR ORDER Per: N S Saini: This is an appeal filed by the Revenue against the order of the CIT(A)-VI, Ahmedabad dated 05.10.2010. 2. The sole issue involved in this appeal of the Revenue is that the Ld. CIT(A) erred in facts and on law in deleting the penalty of ₹ 11,78,752/- levied u/s 271(1)(c) for furnishing inaccurate particulars on account of bogus purchase expenses. 3. The brief facts of the case are that during the year under consideration, the assessee had claimed p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per kg whereas in the present year it has been increased to ₹ 21.00 to ₹ 22.50. The Ld. CIT(A) opined that in the given circumstances, the fall in gross profit could not be the ground for making the addition on account of bogus purchases. The Ld. CIT(A) also noted that may be market conditions were such that the real suppliers of the goods were not in a position to supply bills accompanying the goods. On the other hand, there were parties ready to oblige the assessee with bills corresponding to the purchase made by the assessee from the gray market. This would in turn lead to the undisputed fact that the assessee had spent the money for the purchases and just to make the records straight, the bills were obtained and certain commission was paid to them. Although the assessee had challenged the findings of the Assessing Officer that the purchases were not bogus, he was of the view that these purchases were only name lenders, who obliged the assessee with desired amount of bills corresponding with the purchase made from the gray market. He further observed that the question that arises as to why the assessee would resort to purchases from gray market. The CIT(A) opined th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther words, the money has returned back to the assessee. It is not a case where purchases have accounted for and supplier was not traceable or not available at the address given by the assessee. This is a case where the amount has received back to the assessee from the suppliers of which expenditure on account of purchases accounted for in the books of account. Under the circumstances, we are of the considered view that whatever amount received to the assessee to that extent addition is warranted. We accordingly set-aside the order of CIT(A) and restore that of the Assessing Officer. However, for the purpose of calculation of the amount of addition as held above that the amount received back to the assessee to that extent addition is warranted it means the amount of purchase after deducting % will be the amount of addition. We accordingly confirm the addition of ₹ 27,27,479/- 8. Thereafter, the Assessing Officer issued notice u/s 271(1)(c) of the Act to the assessee to show cause as to why penalty should not be levied on account of bogus purchases. The Assessing Officer after considering the submissions of the assessee observed that the Assessing Officer called for info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be frivolous or mala and deleted the penalty levied of ₹ 11,78,752/- by the Assessing Officer u/s 271(1)(c) of the Act. 11. The Ld. DR challenging the order of the CIT(A) filed before us a copy of the order of the Hon ble Gujarat High Court in the case of CIT Vs. Prakash Vyas in Tax Appeal no. 606 of 2010, order dated 15.11.2011 and submitted that the Hon ble High Court at Para 11 of the said order has held that We are of the opinion that the Tribunal erred in deleting the penalty on the sole ground that appeal against addition was admitted by the High Court. The High Court further observed that admission of tax appeal by the High Court in majority cases is ex-parte, and without regarding even prima facie reasons, whether exparte or bi-parte hearing unless some other intention clearly emerges from the order admission of a tax appeal by the High Court only indicates the court s opinion that the issue presented before it required further consideration. It is an indication of the opinion of the High Court that there is a prima facie case made out and questions are required to be decided after admission. Mere admission of an appeal by the High Court cannot without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d back in cash against the cheques paid to these parties for bills was utilized for making payment of the purchases made by the assessee and therefore, he opined that it was not justified to make addition for the entire amount of purchases as in the assessee s line of business, in the given circumstances, the assessee could have saved around 3% of the purchases only, by adopting such means, and therefore, he restricted the addition to 3% of the purchases minus % of the commission paid to the parties for obtaining the bills and thereby sustained addition of ₹ 68,529/-. He, therefore, prayed that the order of the Ld. CIT(A) deleting the levy of penalty of ₹ 11,78,752/- should be confirmed and the appeal of the Revenue should be dismissed. 13. We have heard the rival submission, perused the orders of lower authorities and material available on record. We find that in the instant case, penalty u/s 271(1)(c) levied of ₹ 11,78,752/- by the Assessing Officer was deleted by the Ld. CIT(A) by following the order of the Tribunal in the case Rupam Mercantile Ltd. (supra) where it was held that where the Hon ble High Court has admitted appeal against disallowance finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eleted without any further reasons or grounds emerging from the record. 13. This is precisely what has been done by the Tribunal in the present case. Order of the Tribunal, therefore, cannot be sustained. Question framed is answered in favour of the Revenue and against the assessee. Order of the Tribunal is reversed. Since apparently the assessee had raised other contentions also in support of the appeal before Tribunal, the proceedings are remanded before the Tribunal for fresh consideration and disposal in accordance with law. Tax Appeal is disposed of accordingly. 16. In view of the above recent decision of the Hon ble Gujarat High Court, we find that the order of the Ld. CIT(A) deleting the penalty only on the ground that substantial question of law has been framed by the Hon ble High Court in the quantum appeal is not sustainable. 17. Further, we find from the order of the Ld. CIT(A) that the assessee challenged the levy of penalty on other grounds also and the same was not decided by the Ld. CIT(A) in view of its above finding. In the circumstances, we restore the issue of levy of penalty u/s 271(1)(c) back to the file of the Ld. CIT(A) for adjudication on other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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