Pr. CIT-9, MUMBAI V. ARCO ELECTRO TECHNOLOGIES P. LTD, MUMBAI

ITA 1055/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8356 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 25-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALD
• Assessee Lawyers: DHIRENDRA M SHAH
• Keywords: Bogus purchase
• Section: 201; 13; 27

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & PAWAN SINGH (JM) I.T.A. NO. 1055 /MUM/ 201 9 (ASSESSMENT YEAR 20 09 - 10 ) PRINCIPAL CIT - 9 ROOM NO. 210 2 ND FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. V S . M/S. ARCO E L E CTRO TECHNOLOGIES PVT. LTD. PLOT NO. 123, ROAD NO. 17 MIDC MAROL, ANDHERI EAST MUMBAI - 400 093. PAN : AAACA4336L ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI DHIRENDRA M. SHAH DEPARTMENT BY SHRI MICHAEL JERALD DATE OF HEARING 03.02 . 20 20 DATE OF PRONOUNCEMENT 20.4 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - THI S APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDER OF LEARNED CIT (A) DATED 28.12.2018 AND PERTAINS TO ASSESSMENT YEAR 2010 - 11. 2. T HE ISSUE RAISED IS THAT TEAMED CIT ( APPEALS ) ERRED I N DELETING THE PENALTY OF RS. 1,15,760/ - LEVIED UNDER SECTION 27 1(1)(C) OF THE IT A CT . 3. B RIEF FACTS OF THE CASE LEADING TO THE LEVY OF PENALTY ARE THAT THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES WAS DONE BY THE ASSESSING OFFICER IN THE COURSE OF ASS ESSMENT. THE ASSESSING OFFICER HAS RECEIVED INFORMATION FROM THE SAL ES TAX DEPARTMENT THAT ASSESSEE HAS MADE PURCHASES FROM A LLEGED BOGUS SUPPLIERS. THE TOTAL PURCHASE S CAME TO RS. 10,86,158/ - 4. T HE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 13 3(6) TO THESE PARTIES. THE NOTICE REMAINED RESPONDED. THE ASSESSEE SUBMITTED ALL THE NECESSARY DOCUMENTARY EVIDENCE FOR THE PURCHAS E. THE ASSESSING OFFICER HAD NOT DISPUTE D THE SALES. HE HELD THAT ASSESSEE HAS SHOWN GROSS PROFIT RATE OF 34.4 9 % FOR A.Y. M/S. ARCO EL E CTRO TECHNOLOGIES PVT. LTD . 2 2010 - 11. H ENCE HE DISALLOWED 34.49% OF RS. 10,86,158 / - AMOUNTING TO RS. 3,74,616/ - . O N THE ADDITION PENALTY UNDER SECTION 271 (1)(C) WAS ALSO LEVIED. 5. UPON ASSESSEE'S APPEAL LEARNED CIT (A) DELETED THE ADDITION . 6. A GAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE COUN SE L AND PERUSED THE RECORDS. WE FIND ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOU NT . HE HAS ALSO NOT DISPUTED THE SALES. HONOURABLE JURISDICTIONAL HIGH COURT IN THE NIKUNJ EXEMP ENTERPRISES (IN WRIT PETITION NO 2 860, ORDER DT . 18.6.2014) HAS HELD THAT NO DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE CAN BE DONE IF SALES ARE NOT DOUBTED. IN THIS VIEW OF THE MATTER THE ADHOC DISALLOWANCE MADE BY THE ASSESSING OFFICER MADE ON ESTIMATE BASIS CANNOT LEAD TO AN INFERENCE TH AT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME. IN OUR CONSIDERED OPINION THE CONDUCT OF THE ASSESSEE IS BONAFIDE AND THE ASSESSEE DOESN'T DESERVED TO BE VISITED WITH THE RIGOURS OF PENALTY UNDER S ECTION 271 (1)(C). I N THIS REGARD WE PLACED RELIANCE UPON THE DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA ( 83 ITR 26) FOR THE PROPOSITION THAT THE AUTHORITY MAY NOT LEVY PENALTY IF THE CONDUCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMACIOUS. 8. IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) HAS RIGHTLY DELETED THE PENALTY. THIS ORDER DOESN'T NEED ANY INTERFERENCE IN OUR PART. HENCE WE UPHOLD THE S AME . 9. I N THE RESUL T THIS APPEAL BY THE REVENUE STANDS DISMISSED . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 20.4 . 20 20 . SD/ - SD/ - ( PAWAN SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 20 / 0 4 / 20 20 M/S. ARCO EL E CTRO TECHNOLOGIES PVT. LTD . 3 COPY OF THE ORDER FORWARDED TO : 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