RELIABLE METAL INDUSTRIES, MUMBAI V. ASST CIT 25(3), MUMBAI

ITA 1261/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0016 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI G S PANNU, ACCOUNTANT MEMBER & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 1261/MUM/2017 ASSESSMENT YEAR : 2009 2010 RELIABLE METAL INDUSTRIES, 21 CHANDRA MILAN, M G ROAD, VILE PARLE (E) MUMBAI 400 057 PAN AAACFR6082K VS ASST CIT 25(3) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MEHUL SHAH RESPONDENT BY : SHRI V JUSTIN DATE OF HEARING : 23 . 08 .2017 DATE OF PRONOUNCEMENT : 30 .0 8 .2017 O R D E R PER PAWAN SINGH, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE U/S. 253 OF THE I T A CT, IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-37, MUMBAI, DATED 13.12.201 6 FOR A Y 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS, AND IN CIRCUMSTANCES OF THE CAS E, AND IN LAW, LEARNED COMMISSIONER OF INCOME-TAX (APPEAL) ERRED I N UPHOLDING ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT 1961 AMOUNTING TO R S. 89,580 WITHOUT APPRECIATING THAT THE ADDITION OF ALLEGED N ON-GENUINE PURCHASES WAS MADE ON A DIFFERENCE OF OPINION; AND THERE WAS NEITHER CONCEALMENT OF INCOME NOR FILING OF INACCUR ATE OF INCOME, AS THE APPELLANT HAD FURNISHED ALL MATERIAL PARTICULAR S IN SUPPORT OF ITS CLAIM OF PURCHASES FURTHER SUPPORTED BY THE ORDER O F MAVT ITA NO.1261/MUM/2017 RELIABLE METAL INDUSTRIES 2 DEPARTMENT ACCEPTING THE SAME PURCHASES WHICH THE A SSESSING OFFICER TREATED AS NON-GENUINE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT FOR THE RELEVANT ASSESSMENT YEAR WAS COMPLETED ON 12.03.2015 U/S. 14 3(3) R.W.S 147 OF THE I T ACT, 1961. WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER MADE ADDITION OF ` 2,89,894/- ON ACCOUNT OF NON-GENUINE/BOGUS PURCHAS ES. THE SAID ADDITION WAS MADE ON ESTIMATE BASIS. THE ASSESSING OFFICER ISSUED NOTICE U/S. 274 R.W.S. 271(1)(C) OF THE ACT ON 12.0 3.2015. THE ASSESSEE VIDE ITS REPLY DATED 07.08.2015, STATED THAT IT HAS PROD UCED VARIOUS DOCUMENTS LIKE INVOICES ISSUED BY THE SUPPLIER, LEDGER ACCOUN TS, BANK STATEMENTS TO SHOW THAT PAYMENTS HAVE BEEN MADE BY CHEQUES. IT ALSO S TATED THAT ITS BOOKS OF ACCOUNTS WERE ALSO AUDITED U/S. 44AB OF THE I T ACT . HOWEVER, THE REPLY WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND HE INFERR ED THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION AND THAT IT ALSO DID NOT CONTEST THE STATUS OF THE PARTY AS BEING A HAWALA T RADER. THE ASSESSING OFFICER LEVIED PENALTY @100% OF THE TAX SOUGHT TO B E EVADED AND LEVIED PENALTY OF ` 89,580/-. ON APPEAL, THE CIT(A) CONFIRMED THE ACT ION OF THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN A PPEAL BEFORE US. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED AR OF THE ASSESSE E ARGUED THAT THE ASSESSING OFFICER LEVIED PENALTY ON THE DISALLOWANC E MADE ON ESTIMATE BASIS. IT WAS ARGUED THAT NO PENALTY IS LEVIABLE ON THE FA CTS OF THE CASE. MERELY ITA NO.1261/MUM/2017 RELIABLE METAL INDUSTRIES 3 BECAUSE APPEAL WAS NOT FILED IN THE QUANTUM ASSESSM ENT WOULD NOT AMOUNT TO ACCEPTANCE OF THE ADDITION MADE ON ACCOUNT OF BO GUS PURCHASES. IN SUPPORT OF HIS CONTENTION, THE LEARNED AR RELIED ON THE DECISIONS OF MUMBAI BENCHES OF THIS TRIBUNAL DATED 7 TH MAY 2010, IN THE CASE OF M/S. CHEMPURE VS. ITO IN ITA NOS. 451, 452 & 453/MUM/2006 & ORDER DATED 02.05.2017 IN THE CASE OF EARTHMOVING EQUIPMENT SERVICE CORPORATI ON IN ITA NO. 6617/MUM/2014; AHMEDABAD BENCH DECISION DATED 05.06 .2015 IN THE CASE OF RUCHI DEVELOPERS VS. ITO IN ITA NO 3348/AHD/2011 AN D 1170/AHD/2014; AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. NALIN P SHAH (HUF) IN ITA (LOD) NO. 49 OF 2013 DATED 04.03. 2013. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. IT WAS ARGUED THAT THE INVESTIG ATION WING OF THE I T DEPARTMENT MADE FULL FLEDGE INQUIRY AND UNEARTHED T HE MODUS OPERANDI OF HAWALA DEALER. THE ASSESSEE WAS ONE OF THE BENEFIC IARY TO AVAIL THE ACCOMMODATION ENTRY TO INFLATE THE GROSS PROFIT RAT IO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSMENT W AS REOPENED ON THE BASIS OF THE INFORMATION RECEIVED FROM THE DGIT (INVESTIG ATION) THAT DURING THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE MADE PURCHAS ES FROM THE DEALERS, WHO WERE SHOWN AS HAWALA DEALERS IN THE WEBSITE OF THE SALES TAX DEPARTMENT OF STATE OF MAHARASHTRA. DURING THE COU RSE OF ASSESSMENT ITA NO.1261/MUM/2017 RELIABLE METAL INDUSTRIES 4 PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE PURCHASES AMOUNTING TO ` 23,19,151/- FROM FOUR PARTIES VIZ. NISHA ENTERPRIS E, DHANERA METAL CORPORATION, MANISH INDUSTRIAL CORPOR ATION AND SHIDHSILA TRADELINKS PRIVATE LTD. THE ASSESSING OFFICER, ON THE BASIS OF THE GROSS PROFIT PERCENTAGE, DISALLOWED 12.5% OUT OF THE TOTAL PURCH ASES MADE FROM THE FOUR SUCH HAWALA DEALERS. ADMITTEDLY, THE ADDITION WAS MADE ON ESTIMATION BASIS. THE CO-ORDINATE BENCH OF THE AHMEDABAD TRIBUNAL IN THE CASE OF RUCHI DEVELOPERS VS. ITO (SUPRA), AND THE MUMBAI BENCH IN THE CASE OF EARTHMOVING EQUIPMENT SERVICE CORPORATION (SUPRA), HAS TAKEN A VIEW THAT WHEN A ASSESSEE MADE A BONA FIDE CLAIM COUPLED WITH DOCUMENTARY EVIDENCE BUT THE SAME REMAINED INCONCLUSIVE FOR WANT OF CONF IRMATION FROM THE SUPPLIERS AND THE ASSESSING OFFICER HAS NOT MADE FU RTHER INQUIRY TO VERIFY THE CORRECTNESS OF THE CONFIRMATION, THE IMPOSITION OF PENALTY IS NOT JUSTIFIABLE. THUS, RESPECTFULLY FOLLOWING THE DECISIONS OF THE C O-ORDINATE BENCHES OF THIS TRIBUNAL, WE FIND THAT THE PENALTY MADE ON ESTIMATE D DISALLOWANCE IS NOT SUSTAINABLE. AS A RESULT, THE PENALTY LEVIED IS SE T ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF AUGUST, 2017. SD/- SD/- (G S PANNU) (PAWAN S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 30 TH AUGUST, 2017 ITA NO.1261/MUM/2017 RELIABLE METAL INDUSTRIES 5 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, E BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI