M/s. Piyush Developers Pvt. Ltd., New Delhi V. DCIT, Faridabad

CO 154/DEL/2013

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1201 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 27-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIVEK WADEKAR
• Keywords: Bogus purchase

Judgement Text

ITA NO. 1949/DEL/2013 & CO NO. 154/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI I NTURI RAMA RAO , ACCOUNTANT MEMBER I.T.A. NO. 1949/DEL/2013 A.Y. : 2008 - 09 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, FARIDABAD VS. M/S PIYUSH DEVELOPERS PVT. LTD., A - 16/B - 1, MOHAN COOPERATIVE INDUSTRIAL ESTATE, MATHURA ROAD, NEW DELHI AND C . O . NO. 154 /DEL/2013 (IN ITA NO. 1949/DEL/2013) A.Y. : 2008 - 09 M/S PIYUSH DEVELOPERS PVT. LTD., A - 16/B - 1, MOHAN COOPERATIVE INDUSTRIAL ESTATE, MATHURA ROAD, NEW DELHI VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, FARIDABAD (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. VIVEK WADEKAR, CIT(DR) ASSESSEE BY : SH. SUNIL MATHUR, A.R. DATE OF HEARING : 27 - 0 8 - 201 5 DATE OF ORDER : 0 1 - 0 9 - 201 5 ORDER PER H.S. SIDHU, JM REVENUE HAS FILED TH E APPEAL AND ASSESSEE HAS FILED THE CROSS OBJECTION AGAINST THE O RDER DATED 17 . 1. 201 3 PASSED BY THE LD. ITA NO. 1949/DEL/2013 & CO NO. 154/DEL/2013 2 COMMISSIONER OF INCOME TAX (APPEALS ) (CENTRAL), GURGAON P ERTAINING TO ASSESSMENT YEAR 200 8 - 09 . 2. THE GROUNDS RAISED BY THE DEPARTMENT READ AS UNDER: - I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY OF RS. 22,63,450/ - IMPOSED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ESPECIALLY WHEN THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE AN RELIABLE AND AN ADDITION ON ACCOUNT OF LOW G.P. WAS CONFIRMED BY THE CIT(A)? (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY OF RS. 22,63,450/ - IMPOSED BY THE AO U/S 271 (1)(C) OF THE INCOME TAX ACT , 1961 ESPECIALLY WHEN: - (A) THE ASSESSEE FAILED TO CONCLUSIVELY ESTABLISH THE GENUINENESS OF THE PARTIES FROM WHOM PURCHASES WERE MADE. (B) FAILED TO PRODUCE THE PARTIES CONCERNED. (C) FAILED AUTHENTICATE WHAT WAS SHOWN IN THE BOOKS OF ACCOUNT (D) FAILED TO JUSTIFY THE TRADING RESULTS AND BOOKS OF ACCOUNTS WERE NOT SHOWING THE RESULTS AS FREE FROM BLEMISHES AND IN SUCH A SITUATION IT WAS DIFFICULT TO AGREE WITH THE CONTENTION OF THE ASSESSEE THAT SINCE THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE C HEQUE, IT WOULD BE GENUINE (III) THAT THE APPELLANT CRAVES TO ADD, DELETE OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. THE GROUNDS TAKEN BY THE ASSESSSEE IN ITS CROSS OBJECTION READ AS UNDER: - ITA NO. 1949/DEL/2013 & CO NO. 154/DEL/2013 3 1. THE C.LT. (A), O N THE FACTS AND CIRCUMSTANCES OF THE CASE, WAS JUSTIFIED IN DELETING PENALTY OF RS.22,63,450 / - IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT,1961 AS ENTIRETY OF THE CIRCUMSTANCE POINT TO THE CONCLUSION THAT THE TRADING ADDITION WHICH HAS BEEN SUSTAINED ON IMAGINARY ESTIMATE BASIS BY TAKING AN AVERAGE OF THE GROSS PROFIT RATES SHOWN BY THE VARIOUS CONCERNS OF THE SAME GROUP IN THE ASSESSMENT YEAR DOESN'T REPRESENT INCOME. 2 . THE C I T(A), ON THE FACTS AND CIRCUMSTANCES OF THE CASE WAS J USTIFIED IN DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 BY RELYING UPON THE JUDGMENTS OF JURISDICTIONAL PUNJAB AND HARYANA HIGH COURT RELIED UPON IN THE ORDER AND IN THE CASE OF M.M. RICE MILLS REPORTED IN 253 ITR 17 IN WHICH IT HAS BEEN HELD THAT WHERE THE ADDITION WAS MERELY SUSTAINED ON ACCOUNT OF APPLICATION OF GROSS PROFIT, THE PENALTY WOULD NOT BE L EVIABLE. 3. THE C I T(A), ON THE FACTS AND CIRCUMSTANCES OF THE CASE WAS JUSTIFIED IN DELETING P ENALTY AS NO SATISFACTION TO INITIATE PENA LTY U/S 271(1)( C) WAS RECORDED BY THE C I T(A) AT THE TIME OF GIVING DIRECTION TO MAKE TRADING ADDITION PURELY ON ESTIMATE BASIS. 4. THE C I T(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WAS RIGHT IN DELETING PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT W HICH WAS IMPOSED BY THE ASSESSING OFFICER IN RESPECT OF TRADING ADDITION AS PER DIRECTIONS OF CI.T.(APPEALS) WHILE THE SATISFACTION TO INITIATE PENALTY HAS BEEN RECORDED IN RESPECT OF UNVERIFIED PURCHASE IN THE ASSESSMENT ORDER. 5. THE CI.T.(A) ,ON THE FA CTS AND CIRCUMSTANCES OF THE CASE, WAS JUSTIFIED IN DELETING PENALTY, THE ASSESSING OFFICER HAD FAILED APPRECIATE THE CONCLUSION OF THE CI T(A) THAT SUFFICIENT PROCESS OF THE EVIDENCES OF TRANSACTION OF THE PURCHASES MADE FROM VARIOUS PARTIES HAS BEEN PRODUCED BY THE ASSESSEE WHICH HAVE ITA NO. 1949/DEL/2013 & CO NO. 154/DEL/2013 4 NOT BEEN DENIED BY THE ASSESSING OFFICER AND HAVE NOT BEEN FOUND TO BE FALSE. 6. THE C I T(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE WAS, JUSTIFIED IN DELETING THE PENALTY. U/S 271(1)(C) OF THE INCOME TAX HOLDING THA T SINCE BASIS OF INITIATION OF PENALTY ON ACCOUNT OF B O GUS PURCHASE HAS BEEN DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND HENCE NO PENALTY IS LEVIABLE. 7. THAT THE RESPONDENT CRAVES THE LEAVE TO ADD, MODIFY, AMEND ANY OF THE GROUNDS OF CROSS OB JECTIONS APPEAL BEFORE THE APPEAL IS DISPOSED OF AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 4 . THE FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NOT DISPUTED, THEREFORE, THE SAME ARE NOT REPEATED HERE FOR THE SAKE OF CONVENIENCE. 5 . LD . COUNSEL FOR THE ASSESSEE STATED THAT QUANTUM ON WHICH THE PENALTY HAS BEEN IMPOSED, HAS ALREADY BEEN DELETED BY THE ITAT. HE REQUESTED THAT THE PENALTY IN DISPUTE MAY KINDLY BE DELETED. HE HAS ALSO FILED THE COPY OF THE ORDER DATED 8.7.2015 PASSED BY T HE ITAT, DELHI BENCH H IN ITA NO. 5599/DEL/2010 & OTHERS (AY 2008 - 09) IN ASSESSEE S OWN CASE. 6 . LD. DR RELIED UPON THE ORDER OF THE AO, BUT COULD NOT CONTROVERT THE SUBMISSION MADE BY THE ASSESSEE S COUNSEL. 7 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS, WE FIND THAT AO HAD INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) AS THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS TAXABLE INCOME BY TREATING THE PURCHASES FROM THREE PARTIES AS BOGUS. A S PER SEC 271(L)(C), PENALTY IS TO BE LEVIED IF THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE ITA NO. 1949/DEL/2013 & CO NO. 154/DEL/2013 5 PARTICULARS OF SUCH INCOME. IN THIS CASE AT HAND, THE ISSUE BOILS DOWN TO THE FACT THAT THE WHOLE BASIS OF LEVYING THE PENALTY WER E UNVERIFIABLE PURCHASES FROM CERTAIN PARTIES WHICH HAS BEEN DELETED EMPHATICALLY BY THE CIT(A) IN A DETAILED MANNER AND THE ADDITION WHICH HAS BEEN SUSTAINED IS ONLY ON THE BASIS OF ESTIMATION OF AVERAGE G.P. RATE OF THE FIVE CONCERNS OF THE GROUP. IN OTH ER WORDS, THE WHOLE BASIS OF MAKING THE ADDITION BY THE AO HAS BEEN SET ASIDE. MOREOVER, THE WORK PERFORMED AS REFLECTED IN THE TRADING ACCOUNT HAS BEEN ACCEPTED BY THE AO WHICH IMPLIES THAT WORK COULD BE COMPLETED ONLY AFTER HAVING TAKEN INTO ACCOUNT THE OSTENSIBLE BOGUS PURCHASES. THUS WITHOUT THE PURCHASES, THE WORK EXECUTED AS WELL AS THE CLOSING STOCK WHICH HAS BEEN ACCEPTED BY THE AO COULD NOT HAVE BEEN POSSIBLE. THESE PURCHASES ARE BUILDING MATERIALS AND THE ASSESSEE IS STATED MAINTAINING STOCK REGI STER WHICH WERE ALSO FILED BEFORE THE AO. NO DOUBT THE BOOKS OF ACCOUNTS WERE HELD NOT REFLECTING THE CORRECT STATE OF AFFAIRS OF THE ASSESSEE'S BUSINESS BUT THERE HAS BEEN NO REJECTION OF THE SAME. N EEDLESS TO SAY ASSESSMENT PROCEEDINGS A RE INDEPENDENT FR OM PENALTY PROCEEDINGS AND IMPOSITION OF THE PENALTY DEPENDS ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IN THIS CASE AT HAND, THE ADDITION MADE BY THE AO WAS RIGHTLY DELETED IN APPEAL TO BE REPLACED BY A TRADING ADDITION BY APPLYING AN ESTIMATION OF TH E GP RATE OF 27% INSTEAD OF 16% AS SHOWN BY THE ASSESSEE. THIS NATURALLY BECOMES AN ADDITION ITA NO. 1949/DEL/2013 & CO NO. 154/DEL/2013 6 SUSTAINED ON ESTIMATE BASIS. A FACT OR ALLEGATION BASED ON ESTIMATION CANNOT BE SAID TO BE CORRECT ONLY; IT CAN ALSO BE INCORRECT RELIANCE BY THE ASSESSEE ON VARIO US JUDGMENTS OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF PARKASH INDUSTRIES AS REPORTED IN 322 ITR 622 AND M/S SANGRUR VANASPATI MILLS LTD. AS CITED SUPRA ARE FOUND CLEARLY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. EVEN THE JUDGMENT OF P UNJAB AND HARYANA HIGH COURT IN THE CASE OF MM RICE MILLS AS REPORTED IN 253 ITR 17 IS QUITE RELEVANT IN WHICH IT HAS BEEN HELD THAT WHERE THE ADDITION MERELY SUSTAINED ON ACCOUNT OF APPLICATION OF GP., THE PENALTY WOULD NOT BE LEVIABLE. IN VIEW OF THE L D. CIT(A) HAS RIGHTLY HELD THAT THERE IS NO JUSTIFICATION OF LEVYING THE PENALTY U/S. 271(1)(C) SINCE THE VERY BASIS OF INITIATION OF PENALTY ON ACCOUNT OF BOGUS PURCHASES HAS BEEN DELETED. WE ALSO FIND CONSIDERABLE COGENCY IN THE ASSESSEE S COUNSEL CO NTENTION THAT SINCE THE ITAT H BENCH, DELHI IN ASSESSEE S OWN CASE IN THE QUANTUM APPEAL IN ITA NO. 5599/DEL/2010 (AY 2008 - 09) VIDE ORDER DATED 8.7.2015 HAS DELETED THE ADDITION IN DISPUTE AND , THEREFORE, PENALTY IN DISPUTE DOES NOT SURVIVE. THER EFORE, IN VIEW OF THE ABOVE, WE FIND THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE AFFIRM THE SAME BY DELETING THE PENALTY IN DISPUTE AND DECIDE THE ISSUE IN DISPUTE AGAINST THE AGAINST THE R EVENUE. ITA NO. 1949/DEL/2013 & CO NO. 154/DEL/2013 7 ASSESSEE S CROSS OBJECTION 8 . THE ASSESSEE S COUNSEL HAS NOT PRESSED THE CROSS OBJECTION, HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 9 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED AS WELL AS ASSESSEE S CROSS OBJECTION ALSO STANDS DISMISSED, AS NOT PRESSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 0 1 / 0 9 /20 1 5 . SD / - S D / - [ I NTURI RAMA RAO ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 0 1 / 9 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES