ITO WARD 3(3), Thane V. M/S SINGH INFRASTRUCTURE DEVELOPERS , Mumbai

ITA 1258/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3621 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 06-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c); 27

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI RAMLAL NEGI (JM) I.T.A. NO. 1258/MUM/2019 (ASSESSMENT YEAR 2011-12) ITO, WARD-3(3) ROOM NO. 8 6 TH FLOOR, B-WING WAGLE INDUSTRIAL ESTATE, THANE WEST PINCODE-400 604. VS. M/S. SINGH INFRASTRUCTURE DEVELOPERS PROP. M/S. SUVAS ELECTRICALS, JAYDEEP EMPHASIS, UNIT NO. 405 PLOT NO. A-9, MIDC WAGLE ESTATE, OPP. PUNJAB NATIONAL BANK, NR. DATTA MANDIR, THANE WEST PINCODE : 400 604. PAN ABRPT9466F (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI T.S. KHALSA DATE OF HEARING 08.03.2021 DATE OF PRONOUNCEMENT 09 .03.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE REVENUE IS AGAINST ORDER'S LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEARNED CIT(A)] WHER EIN FOLLOWING PENALTY LEVIED UNDER 271(1)(C) OF THE INCOME TAX ACT (IN SHORT AC T) HAS BEEN CONFIRMED AS UNDER :- ASSESSMENT YEAR AMOUNT OF PENALTY 2011-12 1,20,660/- 2. BRIEF FACTS OF THE CASE LEADING TO THE LEVY OF P ENALTY ARE THAT THE ASSESSING OFFICER IN THIS CASE MADE DISALLOWANCE OF 12.5% ON ACCOUNT OF BOGUS PURCHASES. ASSESSEE HAS SUPPLIED THE PURCHASE VOUCH ERS AND THE PAYMENT WHERE SHOWN TO HAVE BEEN MADE BY BANKING CHANNEL. H OWEVER DRAWING ADVERSE INFERENCE FOR THE NON-PRODUCTION OF THE SUP PLIERS THE ASSESSING OFFICER DISALLOWED 12.5% OF THE BOGUS PURCHASES. HOWEVER TH E ASSESSING OFFICER DID M/S. SINGH INFRASTRUCTURE DEVELOPERS 2 NOT DOUBT THE SALES. THE LEARNED CIT(A) CONFIRMED T HE ADDITION. PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS ALSO LEVIED. LD CI T(A) DELETED THE PENALTY HOLDING AS UNDER :- 6. THE SUPREME COURT HAS RECENTLY REITERATED THE LAW I N CASE OF DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519 BY HOLDING IN PARA 62 THAT FINDING IN ASSESSMENT PROCEEDINGS CANNOT AUTOMATICALLY ADOPTED IN PENALTY PROCEEDINGS AND THE AUTHORITIES HAVE TO CONSIDER THE MA TTER AFRESH FROM DIFFERENT ANGLE. MOREOVER, IN THE CASE OF AJAY LOKNAT H LOHIA, ORDER DATED 5.10.2018, MUMBAI ITAT HAS ADDRESSED THAT WHEN AO H AD ESTIMATED COST GP ON ALLEGED PURCHASES, SUCH DISALLOWANCE DOES NOT TANTA MOUNT TO WILLFUL FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE INCOME TAX , 1961. THIS WAS ALSO EC HOED IN THE CASE OF ETCO PROFILES PVT. LTD. VS. ACIT, MUMBAI ITAT. 7. IN THE CASE OF CIT V. RELIANCE PETRO PRODUC TS (P) LTD. (2010) 312 ITR 158 (SC) IT WAS HELD AS UNDER: 'WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL TH E DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETA ILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE A UTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTE D OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACC EPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEAR LY NOT THE INTENDMENT OF THE LEGISLATURE'. 8. THE LEVY OF PENALTY IS MERELY ON DISALLOWANCE OF PURCHASES AND NOT FINDING OF CONCEALMENT OF ANY PARTICULAR OR MALA-FIDE INTENTI ON TO REDUCE TAXABLE INCOME. ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PURCHASES AS BOGUS AUTOMATICALLY CANNOT JUSTIFY THE PENALTY LEVIED U/S 27 1(1)(C) OF THE ACT. ACCORDINGLY, THE PENALTY OF RS. 1,20,660/-, IMPOSED U/S 271(1)(C) OF THE IT. ACT, BY THE AO, IS HEREBY DELETED AND THE GROUND OF APPEAL, RAISED AS ABOVE, IS ALLOWED. 3. AGAINST THIS ORDER REVENUE IS IN APPEAL BEFORE U S. 4. WE HAVE HEARD LD DR AND PERUSED THE RECORDS. AS CLEAR FROM THE FACTS RECORDED ABOVE THE DISALLOWANCE HAS BEEN MADE ON AN ESTIMATED BASIS ON ACCOUNT OF THE NON-PRODUCTION OF SUPPLIERS BEFORE T HE ASSESSING OFFICER. THE PURCHASE VOUCHERS WERE DULY PRODUCED AND THE PAYMEN TS WERE THROUGH BANKING CHANNEL. IN THESE BACKGROUNDS IN OUR CONSID ERED OPINION ASSESSEE M/S. SINGH INFRASTRUCTURE DEVELOPERS 3 CANNOT BE VISITED WITH THE REGOURS OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AS A MATTER OF FACT ON MANY OCCASIONS ON SIMILAR CI RCUMSTANCES IN QUANTUM PROCEEDINGS THE DISALLOWANCE ITSELF HAS BEEN DELETE D. IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE ASSESSEE CANNOT BE SAID TO HAVE BEEN GUILTY OF CONCEALMENT OR FURNISHING OF INACCUR ATE PARTICULARS OF INCOME. IN THIS REGARD WE DRAW SUPPORT FROM THE DECISION OF A LARGER BENCH OF THE HONOURABLE SUPREME COURT IN THE CASE OF THE HINDUST AN STEEL LTD. VS. STATE OF ORISSA (83 ITR 26) WHERE IN IT WAS HELD THAT THE AU THORITY MAY NO T LEVY THE PENALTY IF THE CONDUCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMACIOUS. 5. WE FURTHER NOTE THAT TAX EFFECT IN THIS CASE IS BELOW THE LIMIT FIXED BY CBDT FOR FILING APPEALS BEFORE ITAT. THE REVENUE HA S TRIED TO MAKE OUT A CASE THAT SINCE THE ADDITION WAS MADE PURSUANT TO INFORM ATION FROM SALES TAX DEPARTMENT, THIS PENALTY APPEAL FALLS IN THE EXCEPT ION CARVED OUT IN THE CBDT CIRCULAR REGARDING APPEALS ARISING OUT OF ADDITIONS MADE PURSUANT TO INFORMATION FROM OUTSIDE AGENCIES. WE ARE OF THE OP INION THAT THIS PLEA IS NOT TENABLE INASMUCH AS ONCE REVENUE ACCEPTS THAT PENAL TY IS LEVIED ON OUTSIDE AGENCY INFORMATION ,THE PENALTY LEVIED WILL HAVE NO LEGS TO STAND. 6. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PR ECEDENT WE UPHOLD THE ORDER'S OF LD CIT(A) AND DELETE THE LEVY OF PENALTY . 7. IN THE RESULT REVENUES 'S APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 9.3.2021. SD/- SD/- (RAMALAL NEGI) (SHAMIM YA HYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 09 /03/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) M/S. SINGH INFRASTRUCTURE DEVELOPERS 4 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI