What constitutes as 'current repairs' to claim deduction u/s.30(a)(ii) of the Income Tax Act?

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘A‘ BENCH
MUMBAI

BEFORE: SHRI MAHAVIR SINGH, VICE PRESIDENT
 &
 SHRI M.BALAGANESH, ACCOUNTANT MEMBER

ITA No.6370/Mum/2019
(Assessment Year :2009-2010)

Shri Alamgir Kasam Ali
Hadis Subedar Industrial
Compound, Gala No.14,
Qureshi Nagar
Kurla, Mumbai – 400 070
PAN/GIR No. AABPA7164N
(Appellant) .. 

Vs. 

Income Tax Officer26(1)(1)
Pratakshyakar Bhavan
Bandra Kurla Complex
Bandra (E)
Mumbai – 400 051
(Respondent)

Assessee by Ms. Shreya Doshi
Revenue by Shri Brajendra Kumar

Date of Hearing 21/06/2021
Date of Pronouncement 01/07/2021

 O R D E R

PER M. BALAGANESH (A.M):

This appeal in ITA No.6370/Mum/2019 for A.Y.2009-10 arises outof the order by the ld. Commissioner of Income Tax (Appeals)-38,Mumbai in appeal No.CIT(A)-38/ITO-26(1)(2)/IT-10062/2018-19 dated14th May 2019 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as Act).

2. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the levy of penalty on an estimated addition made to the extent of 12.5% of value of bogus purchases.

3. We have heard rival submissions and perused the materials available on record. We find that assessee is a proprietor of M/s. Indian Steels Forging Company engaged in the business of manufacturing of tube fittings flanges. We find that during the year under consideration assessee has purchased materials from five parties whose names have been reported as tainted dealers in the website of Government of Maharashtra Sales Tax department and the total value of such purchases were Rs.40,62,462/-. The ld. AO in respect of outstanding purchases (i.e. purchases for which payments were not made as on 31/03/2009 and remaining as sundry creditors) to the extent of Rs.11,16,232/- sought to add the same as cessation of liability in terms of Section 41(1) of the Act. In respect of remaining purchases of Rs.29,46,224/- (Rs.40,62,224 – 11,16,232) , the ld AO resorted to estimate the profit element embedded thereon @25% and completed the quantum assessment. The ld. CIT(A) applied the profit percentage of 25% on the total disputed purchase value of Rs.40,62,462/- and sustained the addition only to the extent of Rs.10,15,615/- (Rs.40,62,462 x 25%). On further appeal by the assessee to this Tribunal, this profit percentage was reduced to 12.5% in quantum proceedings. The ld. AO levied penalty on this ultimate estimated addition of 12.5% and levied penalty u/s.271(1)(c) of the Act. This penalty was sustained by the ld. CIT(A). The law is very well settled that penalty would not be levied on an estimated addition and accordingly, we hereby direct the ld. AO to delete the penalty u/s.271(1)(c) of the Act. Accordingly, grounds of assessee are allowed.

4. In the result, appeal of the assessee is allowed.

Order pronounced on 01/07/2021 by way of proper mentioning in the notice board.
 
Sd/-                                                  Sd/-
(MAHAVIR SINGH)                         (M.BALAGANESH)
VICE PRESIDENT                          ACCOUNTANT MEMBER

Mumbai; Dated 01/07/2021
KARUNA, sr.ps

Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.
//True Copy//

BY ORDER,

(Asstt. Registrar)
ITAT, Mumbai