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TMI Blog2021 (7) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid CBDT Circular No. 3/2018 (supra), the same applied only to additions that were based on information received from external sources. As noticed by us hereinabove, since the levy of penalty by no means could be construed as an addition within the meaning of Clause 10(e) of the aforesaid circular, therefore, the aforesaid exception carved out in the CBDT Circular No. 3/ would not take within its realm a penalty imposed under Sec. 271(1)(c) w.r.t. the additions made by the A.O. towards bogus purchases on the basis of information received from Sales Tax Department, i.e. an external agency. Accordingly, as the appeal of the revenue is covered by the CBDT Circular No. 17/2019, dated 08.08.2019, the same, thus, in our considered vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 83,418/- without appreciating the facts that the assessee claimed bogus purchases in its Return of Income thereby making himself liable for Penalty u/s. 271(1)(c) of the I.T. Act 1961. 4. On the facts and in the circumstances of N.A. the case, the Hon'ble ITAT is requested to entertain this appeal though the tax effect is below the monetary limit prescribed in the CBDT Circular No. 17/2019 dated 08.08.2019 r.w. circular No. 3/2018 as the case falls in the exception provided in Para 10(3) of the said Circular in as much as the addition is based on information received from external sources in the nature of law enforcement agencies, namely, Sales Tax Authorities. 5. The appellant prays that the order of the Ld. CIT(A) on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,35,378/- u/s. 69C of the Act. Accordingly, the A.O. vide his order passed u/s. 143(3) r.w.s. 147, dated 16.03.2015 assessed the income of the assessee at ₹ 20,91,320/-. 4. On appeal against the quantum assessment, the CIT(A) was of the view that the assessee had purchased the goods under consideration not from the aforementioned hawala parties but at a discounted value from the open/grey market. Accordingly, the CIT(A) was of the view that the addition was liable to be restricted to the extent the assessee would had benefited by procuring the goods at a discounted value from the open/grey market. The CIT(A) backed by his aforesaid conviction restricted the addition to 15% of the impugned purchases of ₹ 18,35,378/- and sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authenticity of the purchase transactions to the satisfaction of the A.O. However, on appeal, the CIT(A) being of the view that the assessee had procured the goods under consideration not from the aforementioned hawala parties but from the open/grey market, thus, on an estimate/adhoc basis restricted the disallowance to the extent the assessee would had benefited from procuring the goods at a discounted value. On the basis of the aforesaid addition sustained by the CIT(A), the A.O. had imposed penalty under Sec. 271(1)(c) of ₹ 83,418/-. But then, the CIT(A) holding a conviction that no penalty u/s. 271(1)(c) could be sustained as regards an addition made on an estimate/ad hoc basis, had thus, vacated the same. 9. Admittedly, the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .................................................................................... (e) Where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ED/DRI/SFIO/Directorate General of GST Intelligence (DGGI) . Admittedly, it is a settled position of law that quantum proceedings and penalty proceedings are independent and distinct proceedings and confirmation of an addition cannot on a standalone basis justify imposition/upholding of a penalty u/s. 271(1)(c) of the Act. Adopting the same logic, we are of the considered view that unless a specific exception is provided in the CBDT Circular No. 3/2018 (supra) with respect to penalty also, it could, by no means be construe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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