T HE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI SHRI SHAMIM YAHYA ( A M) & SHRI RAVISH SOOD (JM) I.T.A. NO. 1766 /MUM/ 201 9 (ASSESSMENT YEAR 2009 - 10 ) M/S. PRECISE ELECTRICALS PLOT NO. A/64, ROAD NO. 21 WAGLE INDUSTRIAL ESTATE THANE WEST - 400 604. PAN : AAAFP8589K V S . DCIT CIRCLE - 3 6 TH FLOORR.NO. 2 ASHAR I.T. PARK WAGLE ESTATE MIDC, THANE - W 400 604. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI UODAL RAJ SINGH DATE OF HEARING 06 . 1 0 . 20 20 DATE OF PRONOUNCEMENT 07 . 10 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - TH I S IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF LEARNED CIT(A) WHEREIN PENALTY LEVIED OF RS. 30,12,401/ - U/S. 271(1)(C) HAS BEEN CONFIRMED VIDE DATED 5.3.2018 FOR A.Y. 2009 - 10. 2. BRIEF FACTS OF THE CASE LEADING TO THE LEVY OF PENALTY ARE THAT THE ASSESSING OFFICER IN THESE CASES MADE DISALLOWANCE OF 100% ON ACCOUNT OF BOGUS PURCHASES. ASSESSEE HAS SUPPLIED THE PURCHASE VOUCHERS AND THE PAYMENT WHERE SHOWN TO HAVE BEEN MADE BY BANKING CHANNEL. HOWEVER DRAWING ADVERSE INFERENCE FOR THE NON - PRODUCTION OF THE SUPPLIERS THE ASSESSING OFFICER DISALLOWED 100% OF THE BOGUS PURCHASES. HOWEVER, THE ASSESSING OFFICER DID NOT DOUBT THE SALES. THE LEARNED CIT(A) CONFIRMED THE ADDITION. THE ITAT IN APPEAL , HAS RED UCED THE ADDITION TO 12.5% OF THE BOGUS PURCHASES. BUT PENALTY AMOUNTING TO RS. 30,12,401/ - U/S. 2 71(1)(C) WAS ALSO LEVIED BEFORE THE ORDER OF ITAT . THIS PENALTY WAS CONFIRMED BY LEARNED CIT(A). 3. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. M/S. PRECISE ELECTRICALS 2 4. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS. AS CLEAR FROM THE FACTS RECORDED AB O V E , THE DISALLOWANCE HAS BEEN MADE ON ACCOUNT OF THE NON - PRODUCTION OF SUPPLIERS BEFORE THE ASSESSING OFFICER. THE PURCHASE VOUCHERS WERE DUL Y PRODUCED AND THE PAYMENTS WERE MADE THROUGH BANKING CHANNEL. THE SALES ARE NOT DOUBTED AND THE ITAT HAS REDUCED THE DISALLOWANCE OF BOGUS PURCHASE TO 12.5%. S INCE THE PENALTY WAS LEVIED AT ADDITION OF 100% FOR BOGUS PURCHASES, THE SAME WOULD NO LONGER SU RVIVE AS THE ITAT HAS REDUCED THE ADDITION TO 12.5% OF BOGUS PURCHASES . THE QUANTUM OF PENALTY WOULD THEN AUTOMATIC ALLY BE CORRESPONDINGLY REDUCED. MOREOVER IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN OUR CONSIDERED OPINION ASSESSEE CANNOT AT ALL VISITED WIT H THE RIGOURS OF PENALTY UNDER SECTION 27 1(1)(C) . AS A MATTER OF FACT ON MANY OCCASIONS ON SIMILAR CIRCUMSTANCES IN QUANTUM PROCEEDINGS THE DISALLOWANCE ITSELF HAS BEEN DELETED. IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE ASSESSEE CANNOT BE SAID TO HAVE BEEN GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD WE DRAW SUPPORT FROM T HE DEC ISI ON OF A LARGER B ENCH OF THE HONOURABLE SUPREME COURT IN THE CASE OF THE HINDUSTAN STEEL VS. STATE OF ORISSA V S. (83 ITR 26) . WHERE IN IT WAS HELD THAT THE AUTHORITY MAY NO T LEVY THE PENALTY IF THE CONDUCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMACIOUS. 5. I N T H E BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT WE SET AS IDE THE ORDERS OF AUTHORITIES B E L OW AND DE LETE THE LEVY OF PENALTY. 6. I N THE RESULT ASSESSEE'S APPEAL IS ALLOWED ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULES ON 07.10.2020. SD/ - SD/ - ( RAVISH SOOD) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 07 / 1 0 / 20 20 COPY OF THE ORDER FORWARDED TO : M/S. PRECISE ELECTRICALS 3 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI