ITO 33(1)(7), MUMBAI V. ROYAL ENTERPRISES , MUMBAI

ITA 1000/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5947 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 07-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MA NISH SHETH
• Section: 271(1)(c); 139(1); 147

Judgement Text

1 ITAS 1000, 1001 & 1002/MUM/2020 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) I.T.A. NOS.1000, 1001 & 1002/MUM/2020 (ASSESSMENT YEARS 2010-11, 2011-12 & 2009-10) INCOME-TAX OFFICER-33(1)(7) MUMBAI VS ROYAL ENTERPRISES D/41, PLOT NO.602, SUPANTH CHS LTD SECTOR 6, CHARKOP, KANDIVALI(W) MUMBAI-400 067 PAN : AAEFR7910G APPELLANT RESPONDENT APPELLANT BY SHRI BHARAT ANDHLE, DR RESPONDENT BY SHRI MANISH SHETH, AR DATE OF HEARING 08-09-2021 DATE OF PRONOUNCEMENT 16-09-2021 O R D E R PER SAKTIJIT DEY (JM) CAPTIONED APPEALS BY THE REVENUE ARE IN RESPECT OF THE SAME ASSESSEE AND ARISE OUT OF THREE SEPARATE ORDERS, ALL DATED 11-11 -2019, OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-45, MUMBAI DELETING THE PEN ALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR THE ASSES SMENT YEARS 2010-11, 2011-12 AND 2009-10. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE, A PARTNERSH IP FIRM, IS STATED TO BE ENGAGED IN THE BUSINESS OF TRADING IN AGRICULTURAL CHEMICALS. FOR THE ASSESSMENT 2 ITAS 1000, 1001 & 1002/MUM/2020 YEARS UNDER APPEAL, ASSESSEE FILED ITS RETURNS OF I NCOME IN REGULAR COURSE UNDER SECTION 139(1) OF THE ACT. SUBSEQUENTLY, BASED ON I NFORMATION RECEIVED FROM THE SALES-TAX DEPARTMENT THROUGH DGIT (INV), MUMBAI THA T CERTAIN PURCHASES MADE BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEARS ARE N ONGENUINE, THE ASSESSING OFFICER REOPENED THE ASSESSMENTS UNDER SECTION 147 OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLE D UPON THE ASSESSEE TO FURNISH SOME DOCUMENTARY EVIDENCES TO PROVE THE PURCHASES; HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED AND ULTIMATELY HELD THAT THE PURCHASES ARE NON GENUINE. BUT, CONSIDERING THE FACT THAT THE ASSESSEE HAS EFF ECTED THE CORRESPONDING SALES, THE ASSESSING OFFICER RESTRICTED THE ADDITION TO TH E PROFIT ELEMENT EMBEDDED IN THE ALLEGED NON GENUINE PURCHASES BY ESTIMATING AT 12.5% IN ALL THE YEARS. ASSESSEE CONTESTED THE AFORESAID ADDITIONS BEFORE L EARNED COMMISSIONER (APPEALS). FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10, THOUGH, LEARNED COMMISSION ER (APPEALS) APPROVED ESTIMATION OF PROFIT ELEMENT AT 12.5%; HOWEVER, HE DIRECTED THE ASSESSING OFFICER TO REDUCE THE GROSS PROFIT ALREADY DECLARED BY THE ASSESSEE. THUS, ULTIMATELY, THE ADDITIONS ON ACCOUNT OF ALLEGED NONGENUINE PURCHAS ES WERE RESTRICTED TO 3.12% IN ASSESSMENT YEAR 2009-10; 4.34% IN ASSESSMENT YEA R 2010-11 AND 3.90% IN ASSESSMENT YEAR 2011-12. BASED ON THE ADDITIONS SUS TAINED BY LEARNED COMMISSIONER (APPEALS), THE ASSESSING OFFICER INITI ATED PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ALLEG ING FURNISHING OF INACCURATE PARTICULARS OF INCOME AND ULTIMATELY PASSED ORDERS IMPOSING PENALTY IN DIFFERENT ASSESSMENT YEARS AS UNDER:- ASSESSMENT YEAR 2009-10 RS. 45,717/- ASSESSMENT YEAR 2010-11 RS.1,20,070/- 3 ITAS 1000, 1001 & 1002/MUM/2020 ASSESSMENT YEAR 2011-12 RS. 52,354/- 3. AGAINST THE AFORESAID ORDERS OF THE ASSESSING OF FICER IMPOSING PENALTY, ASSESSEE PREFERRED APPEALS BEFORE LEARNED COMMISSIO NER (APPEALS). BEING CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THAT NO OFFENCE IN TERMS OF SECTION 271(1)(C) OF THE ACT HAS BEEN COMMITTED, LE ARNED COMMISSIONER (APPEALS) DELETED THE PENALTY IMPOSED IN ALL THE ASSESSMENT Y EARS UNDER CHALLENGE. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. UNDISPUTEDLY, BASED ON CERTAIN INFORMATION RECEIVED FROM SALES-TAX AUTHORITIES, THE ASSESSING OFFICER HAS TREATED CERTAIN PURCHASES AS NON GENUINE. HOWEVER, HE HAS ACCEPTED THAT THE ASSESSEE HAS EFFECTED THE COR RESPONDING SALES, MEANING THEREBY, THE GOODS MIGHT HAVE BEEN PURCHASED FROM U NVERIFIED SOURCES. FOR THIS REASON ALONE, THE ASSESSING OFFICER, INSTEAD OF DIS ALLOWING THE ENTIRE PURCHASES HAD RESTRICTED THE DISALLOWANCE TO THE PROFIT ELEME NT EMBEDDED IN SUCH PURCHASES BY ESTIMATING AT 12.5%. IN APPELLATE PROC EEDINGS, THE DISALLOWANCE HAS BEEN FURTHER REDUCED BY LEARNED COMMISSIONER (APPEA LS). 5. BE THAT AS IT MAY, THE FACTS ON RECORD REVEAL TH AT THERE IS NO DOUBT THAT THE ASSESSEE HAD PURCHASED THE GOODS IN DISPUTE. THE DO UBT, IF ANY, IS WITH REGARD TO THE SOURCE OF PURCHASES. INABILITY OF THE ASSESSEE TO PROVE THE SOURCE OF PURCHASE COULD BE DUE TO VARIOUS FACTORS. HOWEVER, THAT BY I TSELF, CANNOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURA TE PARTICULARS OF INCOME SO AS TO VISIT HIM WITH PENALTY UNDER SECTION 271(1)(C) O F THE ACT. MORE SO, WHEN THE ADDITIONS HAVE BEEN MADE PURELY ON ESTIMATE BASIS. THEREFORE, FOR THE FORETASTED REASONS, WE DO NOT FIND ANY INFIRMITY IN THE DECISI ON OF LEARNED COMMISSIONER (APPEALS) IN DELETING THE PENALTY IMPOSED UNDER SEC TION 271(1)(C) OF THE ACT. GROUNDS ARE DISMISSED. 4 ITAS 1000, 1001 & 1002/MUM/2020 6. IN THE RESULT, APPEALS ARE DISMISSED. ORDER PRONOUNCED ON 16/09/2021. SD/- SD/- (RAJESH KUMAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 16 /09/2021 PAVANAN COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI