ACIT, CIRCLE-3, KALYAN V. MOHAN BALKRISHNA KARVE, MUMBAI

ITA 1291/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2798 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED RIZWAN
• Keywords: Bogus purchase
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI R.C. SHARMA (ACCOUNTANT MEMBER) AND SHRI PAWAN SINGH (JUDICIAL MEMBER) ITA NO. 1291/MUM/2019 ASSESSMENT YEAR: 2009-10 ACIT, CIRCLE-3, 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN WEST- 421301. VS. MOHAN BALKRISHNA KARVE, KARVE BUNGLOW, OPP. SHANTI NAGAR, NANDIVALI ROAD, DOMBIVALI (E)-421201. PAN NO. ACHPK9603L APPELLANT RESPOND ENT REVENUE BY : MR. MOHAMMED RIZWAN, DR ASSESSEE BY : MR. S.L. JAIN, AR DATE OF HEARING : 04/03/2020 DATE OF PRONOUNCEMENT: 04/03/2020 ORDER PER PAWAN SINGH, JUDICIAL MEMBER; THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(A)-1, THANE DATED 03.12.2018 FOR ASSESSMENT YEAR 2009-10. THE LD. CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER IN LEVYING THE PENALTY UNDER SECTION 271(1)(C). THE REVENUE HAS RAISED THE FOLLOWING GRO UNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A)WAS JUSTIFIED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) WITHOUT PROPERLY APPRECIATINGTHE DECISIONS OF THE HON'BLE APEX COURT IN THE CASE OF MAK DATA PVT. LTD. VS CIT(CIVIL APPEAL NO. 9772 OF 2013)', THE HON'BLE GUJARAT HIGH COURT'S DECISION IN THECASE OF N. K. PROTEINS LTD, TAX APPEAL NO. 242 O F 2003 DATED 20/06/2016 AGAINST MOHAN BALKRISHNA KARVE ITA NO. 1291/MUM/2019 2 WHICHTHE SLP WAS DISMISSED BY THE HON'BLE SUPREME C OURT AND ALSO IGNORING THE FACT THATDEPARTMENT RECEIVED SPECIFIC CREDIBLE INFO RMATION IN THIS CASE FROM THE SALES TAXDEPARTMENT OF THE STATE GOVERNMENT OF MAHA RASHTRA' IN RESPECT OF NON- GENUINEPURCHASES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A)WAS JUSTIFIED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) WITHOUT APPRECIATING THE FACTTHAT THERE WAS A DEFINITE FIND ING IN THE ASSESSMENT ORDER IN RESPECT OF BOGUS PURCHASESAND OF FURNISHING INACCUR ATE PARTICULARS OF INCOME RELATING TO PURCHASES RESULTING INTOCONCEALMENT OF INCOME. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING O FFICER (AO) WHILE PASSING THE ASSESSMENT ORDER MADE DISALLOWANCE @ 25% OF THE IMPUGNED/BOGUS PURCHASES SHOWN FROM HAWALA DEALERS. THE ASSESSING OFFICER INITIATED PENALTY UNDER SECTION 271(1) OF THE ACT, WHILE PASSING THE ASSESSMENT ORDER. THE ASSESSING OFFICER LEVIED PENALTY VIDE ITS ORDER DAT ED 28.04.2017. THE ASSESSING OFFICER LEVIED PENALTY @ 100% OF TAX SOUG HT TO BE EVADED. ON APPEAL BEFORE THE COMMISSIONER (APPEALS), THE PENALTY WAS DELETED. THE LD. CIT(A) DELETED THE PENALTY BY TAKING VIEW THAT LEVY OF PEN ALTY IS MERELY ON DISALLOWANCE OF PURCHASES AND NOT FINDING OF CONCEA LMENT OF ANY PARTICULAR OR MALA FIDE INTENTION TO REDUCE TAX INCOME. THUS AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BE FORE US. 5. WE HAVE HEARD THE SUBMISSION OF LD. DEPARTMENTA L REPRESENTATIVE (DR) FOR REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. D R FOR THE REVENUE SUBMITS THAT THE ASSESSING OFFICER WHILE PASSING THE ASSESS MENT ORDER MADE THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES. THE ASS ESSEE HAS SHOWN PURCHASES FROM HAWALA TRADERS. THE HAWALA TRADERS W ERE INDULGING IN MOHAN BALKRISHNA KARVE ITA NO. 1291/MUM/2019 3 PROVIDING ACCOMMODATION ENTRY. THE ASSESSEE AVAIL T HE ACCOMMODATION ENTRY TO INFLATE THE EXPENSES. THE ASSESSEE DURING THE AS SESSMENT COULD NOT SUBSTANTIATE THE GENUINENESS OF PURCHASES. THE ASSE SSING OFFICER REASONABLY DISALLOWED THE PURCHASES @ 25% AND IN PENALTY ORDER LEVIED PENALTY ONLY ON AMOUNT OF PURCHASES. THE LD. DR PAID FOR REVERSING THE ORDER OF CIT(A) AND WE RESTORE THE ORDER OF ASSESSING OFFICER. 5. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SU BMITS THAT THE ADDITION IN THE ASSESSMENT ORDER IS PASSED AN ESTIMATED ADDI TION AND NO PENALTY IS LEVIABLE AND ESTIMATED ADDITION. 6. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE T HAT THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER TREATED THE PURC HASES OF ASSESSEE SHOWN FROM THE PERSON WHICH WERE DECLARED HAWALA DEALERS BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. THE ASSESSIN G OFFICER MADE ESTIMATED DISALLOWANCE OF DISPUTED/IMPUGNED/PURCHAS ES SHOWN FROM HAWALA DEALERS @ 25%. THE ASSESSING OFFICER LEVIED PENALTY ON SUCH ESTIMATED DISALLOWANCE. IT IS SETTLED LAW THAT NO PENALTY IS LEVIABLE ON ADDITION MADE ON ESTIMATED BASIS. THEREFORE, WE AFFIRM THE ORDER OF LD. CIT(A) ON AFORESAID OBSERVATION. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DAY OF MARCH 2020. SD/- SD/- (R.C. SHARMA) (PAWAN SI NGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MOHAN BALKRISHNA KARVE ITA NO. 1291/MUM/2019 4 MUMBAI; DATED: 04/03/2020 RAHUL SHARMA, SR. P.S. 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) ITAT, MUMBAI