NILESH TEXTILES PVT LTD, THANE V. ACIT CIRCLE-1, KALYAN

ITA 1081/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6714 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIKLD
• Assessee Lawyers: PRACHI TAMBE LD
• Keywords: Bogus purchase; Reasonable cause; Reassessment proceedings
• Section: 271(1)(c); 274

Judgement Text

NILESH TEXTILES PRIVATE LIMITED ITA NO.1081/MUM/2019 ASSESSMENT YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.1081/MUM/2019 ( / ASSESSMENT YEAR: 2009-10) NILESH TEXTILES PVT. LIMITED, HOUSE NO.1504, GUPTA COMPOUND KHOKHA COMPOUND, AGRA ROAD BHIWANDI, THANE-421 302. / VS. ACIT - CIRCLE - 1 , 1 ST FLOOR, MOHAN PLAZA WAYALE NAGAR, KHADAKPADA KALYAN (W), THANE-421 301. PAN/GIR NO. AAACN - 4630 - J ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : MS. PRACHI TAMBE LD. AR REVENUE BY : MS. KAVITA P. KAUSHIK-LD. DR / DATE OF HEARING : 10/09/2020 / DATE OF PRONOUNCEMENT : 10/09/2020 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR [AY] 2009- 10 CONTEST IMPOSITION OF PENALTY U/S 271(1)(C) FOR RS.6,12,977/- AS LEVIED BY LD. ASSESSING OFFICER [AO] VIDE ORDER DATED 28/0 8/2014 WHICH HAS BEEN CONFIRMED BY THE LD. COMMISSIONER OF INCOME TA X (APPEALS)-2, PUNE [CIT(A)], VIDE APPEAL NO.177/2017-18 DATED 04/12/2018 . NILESH TEXTILES PRIVATE LIMITED ITA NO.1081/MUM/2019 ASSESSMENT YEAR: 2009-10 2 THE GROUND RAISED BY THE ASSESSEE READS AS UNDER: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, PUNE HAS ERRED IN CONFIR MING THE PENALTY OF RS.6,12,977/- LEVIED U/S 271(1)(C) BY ASSESSING OFF ICER WITHOUT SPECIFYING THE SPECIFIC CHARGE FOR WHICH PENALTY IS LEVIED. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2,PUNE HAS ERRED IN CONFIRM ING THE PENALTY OF RS.6,12,977/- LEVIED U/S 271(1)(C) BY ASSESSING OFF ICER WITHOUT APPRECIATING THE MERITS OF THE CASE AND WITHOUT ESTABLISHING A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. 2. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], MS. PRACHI TAMBE, DRAWING ATTENTION TO QUANTUM ASSESSMENT ORDE R, SHOW-CAUSE NOTICE U/S 274 R.W.S. 271(1)(C) & PENALTY ORDER ADV ANCED ARGUMENTS TO SUBMIT THAT LD. AO FAILED TO FRAME SPECIFIC CHARGE AGAINST THE ASSESSEE WHILE LEVYING THE PENALTY AND THEREFORE, THE PENALT Y STOOD INITIATED ON LEGAL GROUNDS IN TERMS OF THE DECISION OF THIS TRIB UNAL IN NITIN DESAI & SANDEEP SHIRKE ASSOCIATES V/S ACIT (ITA NO. 3786/MU M/2018 ORDER DATED 17/10/2019). A COPY OF THE ORDER HAS BEEN PLACED ON RECORD. THE LD. AR FURTHER SUBMITTED THAT BESIDES LEGAL INFIRMI TIES, THE PENALTY OUGHT TO HAVE BEEN DELETED ON MERITS ALSO. OUR ATTENTION WAS DRAWN TO THE FACT THAT THE PENALTY WAS LEVIED ON ACCOUNT OF ADDITION OF ALLEGED BOGUS PURCHASES DESPITE THE FACT THAT THE ASSESSEE WAS IN POSSESSIO N OF PRIMARY PURCHASE DOCUMENTS. ON THE OTHER HAND, LD. DR SUBMITTED THAT QUANTUM AD DITIONS HAVE BEEN ACCEPTED BY THE ASSESSEE AND THEREFORE, PENALTY WAS TO BE CONFIRMED. 3.1 UPON CAREFUL CONSIDERATION OF MATERIAL ON RECOR D, WE FIND THAT AN ASSESSMENT WAS FRAMED AGAINST THE ASSESSEE U/S.143( 3) R.W.S. 147 VIDE ORDER DATED 11/03/2014. THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE WAS STATED TO BE ENGAGED IN THE BUSINESS O F DYING AND NILESH TEXTILES PRIVATE LIMITED ITA NO.1081/MUM/2019 ASSESSMENT YEAR: 2009-10 3 PROCESSING OF YARN. THE REASSESSMENT PROCEEDINGS WE RE TRIGGERED PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SAL ES TAX DEPARTMENT, MAHARASHTRA WHEREIN IT WAS ALLEGED THAT ASSESSEE WA S INVOLVED IN MAKING BOGUS PURCHASES OF RS.19.83 LACS FROM AN ENT ITY NAMELY M/S. BHARAT INDUSTRIAL CORPORATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE STATEMENT OF THE ASSESSEES DIRECT OR WAS RECORDED. IN THE SAID STATEMENT, THE PURCHASES WERE JUSTIFIED BY SUBMITTING THAT THE ASSESSEE WAS IN POSSESSION OF ORIGINAL PURCHASE BIL LS AND THE PAYMENT TO THE SAID SUPPLIER WAS THROUGH BANKING CHANNELS. HOWEVER, SINCE THE PURCHASES WERE NOT SUPPORTED / BACKED BY EXTERNAL D OCUMENTS VIZ. WEIGHING SLIPS, GOODS RECEIPT NOTES, TRANSPORTATION RECEIPTS ETC., LD. AO CHOSE TO REJECT ASSESSEES SUBMISSIONS AND DISALLOW ED THESE PURCHASES WHILE FRAMING THE ASSESSMENT. THE ASSESSEE HAS NOT CONTESTED THE QUANTUM ADDITIONS ANY FURTHER. 3.2 CONSEQUENTLY, PENALTY PROCEEDINGS WERE INITIATE D BY LD.AO IN THE QUANTUM ASSESSMENT ORDER BY OBSERVING AS UNDER: - FOR FILING OF INACCURATE PARTICULARS OF INCOME LEAD ING TO CONCEALMENT OF INCOME, PENALTY PROCEEDINGS U/S. 271(1)(C) ARE INITIATED SEPARATELY . ACCORDINGLY, A SHOW CAUSE NOTICE U/S 274 R.W.S. 271 (1)(C) DATED 11/03/2014 WAS ISSUED TO THE ASSESSEE, A COPY OF WH ICH IS ON RECORD. UPON PERUSAL OF THE SAME, IT IS EVIDENT THAT THE PA RTICULAR LIMB I.E. CONCEALED HE PARTICULARS OF INCOME OR FURNISHED INA CCURATE PARTICULARS OF INCOME HAS NOT BEEN SPECIFIED. 3.3 DURING PENALTY PROCEEDINGS, THE ASSESSEE, INTER-ALIA, SUBMITTED THAT THERE WAS NO CLINCHING EVIDENCE REGARDING CONCEALME NT. THE PURCHASE TRANSACTIONS AS WELL AS PAYMENT TO THE SUPPLIER WAS DULY RECORDED IN THE NILESH TEXTILES PRIVATE LIMITED ITA NO.1081/MUM/2019 ASSESSMENT YEAR: 2009-10 4 BOOKS OF ACCOUNT AND MERE FACT THAT SALES TAX DEPAR TMENT DECLARED THE SUPPLIER TO BE A HAWALA DEALER, THE SAME SHOULD NOT BE ANY GROUND TO HOLD THAT THERE WAS CONCEALMENT OF INCOME BY THE AS SESSEE. 3.4 HOWEVER THE ASSESSEES SUBMISSIONS COULD NOT CO NVINCE LD. AO AND AN OPINION WAS FORMED THAT THE ASSESSEE, WITHOU T ANY SUFFICIENT AND REASONABLE CAUSE, COMMITTED DEFAULT BY FURNISHING I NACCURATE PARTICULARS OF INCOME AS DEFINED U/S. 271(1)(C) OF THE ACT. HO WEVER, IN PARA-6, IT WAS CONCLUDED THAT THE AMOUNT OF RS.19,83,743/- REP RESENTED CONCEALED INCOME OF THE ASSESSEE AND THE SAME WAS RIGHTLY TAX ED AS SUCH. UPON FURTHER APPEAL, LD. CIT(A) HELD THAT THAT THE ASSES SEE WAS CLEARLY LIABLE FOR CONCEALMENT OF PARTICULARS OF INCOME AND THE LD . AO WAS JUSTIFIED IN LEVYING THE PENALTY. AGGRIEVED AS AFORESAID, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. UPON CAREFUL CONSIDERATION OF FACTUAL MATRIX AS ENUMERATED IN PRECEDING PARAGRAPHS, WE CONCUR WITH LD. ARS SUBMI SSIONS THAT LD. AO FAILED TO FRAME SPECIFIC CHARGE AGAINST THE ASSESSE E WHILE LEVYING THE PENALTY. THE PENALTY WAS INITIATED IN QUANTUM ASSES SMENT ORDER FOR BOTH THE LIMBS. THE SHOW-CAUSE NOTICE ALSO DID NOT SPECI FY THE APPLICABLE LIMB AND FINALLY, IN THE PENALTY ORDER, BOTH THE LIMBS H AVE BEEN USED INTER- CHANGEABLY. THESE TWO LIMBS, AS PER SETTLED LEGAL P OSITION, CARRY DIFFERENT MEANING / CONNOTATION AND THE FAILURE TO FRAME SPEC IFIC CHARGE WOULD VITIATE THE PENALTY PROCEEDINGS. THE CITED CASE LAW DULY SUPPORTS THE LEGAL GROUNDS OF THE ASSESSEE. 5. PROCEEDING FURTHER, THE PENALTY IS NOT SUSTAINAB LE ON MERITS ALSO SINCE THE ONLY BASIS TO MAKE THE ADDITION IS INFORM ATION OF SALES TAX NILESH TEXTILES PRIVATE LIMITED ITA NO.1081/MUM/2019 ASSESSMENT YEAR: 2009-10 5 DEPARTMENT AND THERE IS NO EFFECTIVE INVESTIGATION BY LD. AO WHILE MAKING THE ADDITION. AS AGAINST THIS, THE ASSESSEE WAS IN POSSESSION OF PURCHASE INVOICES AND THE PAYMENT TO THE SUPPLIER W AS THROUGH BANKING CHANNELS. 6. THUS, VIEWING FROM ANY ANGLE, THE PENALTY IS NOT SUSTAINABLE IN LAW. BY DELETING THE SAME, WE ALLOW THE APPEAL. 7. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED ON 10 TH SEPTEMBER, 2020. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 10/09/2020 SR.PS, JAISY VARGHESE !'#' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' ( ) / THE CIT(A) 4. ' / CIT CONCERNED 5. () , , / DR, ITAT, MUMBAI 6. )+,- / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.