The Commissioner Of Income Tax-V v. Harsiddh Specific Family Trust ==========================================================

C/TAXAP/1051/2008 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 1051 of 2008 ========================================================== THE COMMISSIONER OF INCOME TAX-VVersus HARSIDDH SPECIFIC FAMILY TRUST========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1MRS SWATI SOPARKAR(870) for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHIand HONOURABLE MR.JUSTICE B.N. KARIA Date : 13/06/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 15.09.2006. At the time of admission, following question of law was framed: Appellate Tribunal dated 15.09.2006. At the time of admission, following question of law was framed: “Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) cancelling the penalty of Rs. 26,30,006/- imposed u/s. 271(1)(c) of the Act?” 2. Briefly stated the facts are that the respondent-assessee was subjected to scrutiny assessment for the assessment year 1989-90 during which, the Assessing Officer made addition of Rs. 17.73 lacs (rounded off) u/s. 69C of the Income Tax Act towards the purchase of LDPE which the Assessing Officer did not accept and a further sum of Rs. 32.35 lacs by way of subjected to scrutiny assessment for the assessment year 1989-90 during which, the Assessing Officer made addition of Rs. 17.73 lacs (rounded off) u/s. 69C of the Income Tax Act towards the purchase of LDPE which the Assessing Officer did not accept and a further sum of Rs. 32.35 lacs by way of disallowance of assessee's claim u/s. 32AB of the Act. The Assessing Officer also instituted penalty proceedings and eventually imposed penalty of Rs. 26.30 lacs (rounded off) u/s. 271(1)(c) of the Act. The issue ultimately went to the Tribunal. The Tribunal noted that on the head of bogus purchases, the Tribunal given substantial relief to the assessee. It was believed that the purchases were genuine but made without bills in which 12.5% of the entire amount of Rs. 17.73 lacs of addition was sustained. In view of such developments, the Tribunal deleted the penalty qua this head. With respect to the claim u/s. 32AB of the Act, the Tribunal opined that there was no concealment on part of the assessee. Full material facts were placed for claiming the deduction. Supporting decisions were also cited. May be the claim may have been rejected, the same would not give rise to penalty. Assessee also pointed out that against the disallowance, assessee's appeal is entertained by the High Court. Inter alia on such grounds the entire penalty was deleted. It is against such judgement that the Revenue has filed the present appeal. 3. We do not think the Tribunal committed any error. As noted, against the addition of Rs. 17.73 lacs of purchases which the Assessing Officer did not accept as genuine, the Tribunal gave substantial relief to the assessee sustaining only 12.5% thereof on the ground that the purchases were made to the assessee would have benefited by making such purchases without bills. The Assessing Officer had imposed penalty on the entire against the addition of Rs. 17.73 lacs of purchases which the Assessing Officer did not accept as genuine, the Tribunal gave substantial relief to the assessee sustaining only 12.5% thereof on the ground that the purchases were made to the assessee would have benefited by making such purchases without bills. The Assessing Officer had imposed penalty on the entire 3. We do not think the Tribunal committed any error. As noted, against the addition of Rs. 17.73 lacs of purchases which the Assessing Officer did not accept as genuine, the Tribunal gave substantial relief to the assessee sustaining only 12.5% thereof on the ground that the purchases were made to the assessee would have benefited by making such purchases without bills. The Assessing Officer had imposed penalty on the entire against the addition of Rs. 17.73 lacs of purchases which the Assessing Officer did not accept as genuine, the Tribunal gave substantial relief to the assessee sustaining only 12.5% thereof on the ground that the purchases were made to the assessee would have benefited by making such purchases without bills. The Assessing Officer had imposed penalty on the entire amount. When the very basis had been substantially knocked down, the Tribunal rightly deleted the penalty. An interesting question may arise whether to the extent the addition was retained by the Tribunal the penalty could still be saved. However, the remaining amount is extremely small. The possible penalty would be even smaller. This question is therefore not examined in the present proceedings. 4. With respect to the remaining additions, the Tribunal correctly found that the claim was plausible. Full facts were present. The issue is being debatable. On mere non acceptance of the claim, penalty could not be imposed.found that the claim was plausible. Full facts were present. The issue is being debatable. On mere non acceptance of the claim, penalty could not be imposed. 5. In the result, question is answered against Revenue. Tax Appeal is dismissed.Appeal is dismissed. (AKIL KURESHI, J) JYOTI V. JANI (B.N. KARIA, J)