DCIT 9(3(2), MUMBAI V. G.L. CONSTRUCTIONS P.LTD, MUMBAI

ITA 1357/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6624 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 07-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R AHUL RAMAN
• Assessee Lawyers: N R AGARWAL
• Keywords: Bogus purchase; Set aside
• Section: 271(1)(c); 143(3); 147; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G , MUMBAI BEFORE SHRI RAJESH KUMAR ( AM ) AND SHRI RAM LAL NEGI (JM) ITA NO S . 1358 & 1357/MUM/2019 ASSESSMENT Y EAR S : 2009 - 10 & 2010 - 11 DCIT 9(3)(2), MUMBAI. VS. M/S. G.L. CONSTRUCTION PVT. LTD., PLOT NO. 5, ROAD NO. 6, HATKESH CHS, JVPD SCHEME, VILE PARLE (W), MUMBAI 400 056. PAN : AAACG3438P (APPELLANT) (RESPONDENT) REVENUE BY : SHRI RAHUL RAMAN (CIT DR) ASSESSEE BY : SHRI N.R. AGARWAL DATE OF HEARING: 24/06 /20 20 DATE OF PRONOUNCEMENT: 25 / 06 /20 20 O R D E R PER BENCH THE REVENUE HAS FILED THESE APPEALS AGAINST THE TWO ORDERS DATED 28.12.201 8 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 16 (FOR SHORT THE CIT (A)) , MUMBAI, FOR THE ASSESSMENT YEAR 2009 - 10 & 2010 - 11, WHEREBY THE LD. CIT (A) HAS ALLOWED THE APPEALS FILED BY THE ASSESSEE AGAINST THE PENALTY ORDER S PASSED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. SINCE BOTH THE APPEALS PERTAIN TO THE SAME ASSESSEE COMPANY FOR ASSESSMENT YEARS 2009 - 10 & 2010 - 11 AND THE ISSUES INVOLVED IN BOTH THE CASES ARE IDENTICAL, THESE CASES WERE CLUBBED, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1358/MUM/20 1 9 (A.Y : 2009 - 10) 3. IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERA TION DECLARING THE TOTAL INCOME OF RS.3,73,64,826/ - . THE RETURN WAS PROCESSED AND ASSESSMENT ORDER U/S 143(3) WAS PASSED 2 ITA NOS. 1357 & 1358/MUM/2019 M/S. G.L. CONSTRUCTIONS PVT. LTD. DETERMINING THE TOTAL INCOME AT RS.3,18,38,780/ - . SUBSEQUENTLY , ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX AUTHORITIES , MAHARASHTRA TO THE EFFECT THAT THE ASSESSEE HAD OBTAINED BOGUS/ACCOMMODATION BILLS FROM VARIOUS ENTITIES , WHICH USED TO ISSUE ACCOMMODATION BILLS ON COMMISSION BASIS WITHOUT SUPPLYING ANY GOODS TO VARIOUS ASSESSEES. ACCORDINGLY, THE CASE WAS REOPENED U/S 147 OF THE ACT AFTER ISSUING NOTICE U/S 148. AFTER HEARING THE ASSESSEE AO HELD THAT DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAD OBTAINED BOGUS BILLS FROM DIFFERENT COMPANIES AMOUNTING TO RS.5,03,85,966/ - . HENCE, HE MADE ADDITION OF THE SAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE AND DETERMINED THE TOTAL INCOME AT RS. 8,22,24,750/ - . IN THE FIRST APPEAL, THE L D. CIT ( A ) RESTRICTED THE ADDITION TO 2% OF THE TOTAL AMOUNT OF BOGUS PURCHASE DETERMINED BY AO . THE REVENUE CHALLENGED THE ORDER PASSED BY THE LD. CIT(A) BEFORE THE ITAT. THE TRIBUNAL AFTER HEARING BOTH THE SIDES CONFIRMED THE FINDINGS OF THE LD. CIT(A) 4. ON THE BASIS OF THE ADDITION AFORESAID , THE AO INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S 271(1)(C) OF THE ACT FOR CONCEALING ITS INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE L D. CIT ( A ) . THE L D. CIT (A) AFTER HEARING THE ASSESSEE ALLOWED ITS APPEAL AND DIRECTED THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THE REVENUE IS IN APPEAL AGAINST THE SAID FINDINGS OF THE L D. CIT (A) . 5 . THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THE FOLLOWING GROUND : WHETHER ON THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT THEREBY THE PROVISIONS OF SECTION 271(1)(C). 6 . BEFORE US, THE L D. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED TH AT THE L D. CIT ( A ) HAS WRONGLY DELETED THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT IGNORING THE FACT THAT THE ITAT HAS SUSTAINED THE ADDITION TO THE EXTENT OF 2% OF THE BOGUS PURCHASES MADE BY THE ASSESSEE DURING THE PREVIOUS YEAR. THE L D. DR FURTHER SUBMITTED T HAT THE FINDINGS OF THE L D. CIT (A) ARE CONTRARY TO THE SETTLED PRINCIPLES OF LAW AS ONCE IT IS PROVED THAT 3 ITA NOS. 1357 & 1358/MUM/2019 M/S. G.L. CONSTRUCTIONS PVT. LTD. THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF ITS INCOME, IT BECOMES LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT. THE L D. DR ACCORDINGLY SUBMITTED THAT TH E IMPUGNED ORDER PASSED BY THE L D. CIT ( A ) MAY BE SET ASIDE AND THE ORDER PASSED BY THE AO MAY BE RESTORED. 7 . ON THE OTHER HAND, THE L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE L D. CIT ( A ) HAS DECIDED THE ISSUE IN QU ESTION IN ACCORDANCE WITH THE DECISIONS OF THE JURISDICTIONAL BENCHES OF THE TRIBUNAL . THE L D. COUNSE L FURTHER POINTED OUT THAT THE L D. CIT ( A ) HAS DECIDED THIS ISSUE IN FAVOR OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE ITAT MUMBAI IN THE CASE OF SAME ER D. PUNJABI, ITA NO. 1564/M/2017 AND ETCO TELECOM LTD. VS. ITO, ITA NO. 5243/M/2012. SINCE THE ISSUE INVOLVED IN THE PRESENT APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE TRIBUNAL, THERE IS NO MERIT IN THE REVENUES APPEAL. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE RIVAL CONTENTIONS. WE NOTICE THAT THE L D. CIT ( A ) HAS DECIDED THE ISSUE IN QUESTION BY FOLLOWING THE DECISIONS OF THE COORDINATE BENCH IN THE CASE OF SA MEER D. PUNJABI AND ETCO TELECOM LTD. (SUPRA) . AS POINTED OUT BY THE L D. COUNSEL, THE SOLE GROUND OF THE REVENUES APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION S OF THE COORDINATE BENCH REFERRED ABOVE. IN THE CASE OF SAMEER D. PUNJABI AND ETCO TELECOM LTD. , THE COORDINATE BENCH HAS CATEGORICALLY HELD THAT THE ADDITION MADE ON ESTIMATION BASIS DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. THE FI NDINGS OF THE COORDINATE BENCH IN THE CASE OF SAMEER D. PUNJABI AND ETCO TELECOM LTD. (SUPRA) READ AS UNDER : - 3. A PERUSAL OF THE ORDER OF THE AUTHORITIES BELOW REVEAL THAT PURCHASES EFFECTED BY THE ASSESSEE FROM FOUR PARTIES TOTALING TO RS.4,66,133/ - W ERE FOUND TO BE DOUBTFUL IN VIEW OF THE INFORMATION RECEIVED REGARDING THE FOUR PARTIES FROM THE MAHARASHTRA SALES TAX DEPARTMENT. IN THE ASSESSMENT PROCEEDINGS ASSESSEE WAS NOT ABLE TO PRODUCE THE FOUR PARTIES FOR VERIFICATION AND, THEREFORE, THE ASSESSIN G OFFICER PROCEEDED TO TREAT THE PURCHASES TO THE EXTENT OF RS.4,66,133/ - AS BOGUS. SO HOWEVER, THE ASSESSING OFFICER DID NOT ADD THE ENTIRE 4 ITA NOS. 1357 & 1358/MUM/2019 M/S. G.L. CONSTRUCTIONS PVT. LTD. AMOUNTS OF PURCHASES TO THE RETURNED INCOME BUT ADDED ONLY PROFIT ELEMENT ATTRIBUTABLE TO SUCH PURCHASES, WHICH HE ESTIMATED AT 12.50% THEREBY, RESULTING IN AN ADDITION OF RS.58,266/ - TO THE RETURNED INCOME. SUBSEQUENTLY, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE GROUND THAT ASSESSEE HAD CONCEALED THE INCOME TO THE ABOVE EXTENT AND ACCORDINGLY, A PENALTY OF RS.18,006/ - WAS IMPOSED. THE PENALTY HAS SINCE BEEN AFFIRMED BY THE CIT(A) ALSO. 4. WE FIND THAT THE PLEA OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES HAS BEEN THAT THE LEVY OF PENALTY IS NOT AUTOMATIC AND THAT THE TRANSACTIONS OF PURCHASE EFFECTED FROM THE FOUR PARTIES WERE WELL DOCUMENTED AND THE PAYMENTS WERE ALSO MADE THROUGH BANKING CHANNELS. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE, WE FIND THAT THERE IS NO JUSTIFICATION TO LEVY THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT, INASMUCH AS, IT IS A CASE OF FAILURE OF THE ASSESSEE TO SUBSTANTIATE AN ENTRY OF PURCHASE IN THE BOOKS OF ACCOUNT AND IT IS NOT A CASE WHERE SOME FALSITY OR UNTRUTH HAS BEEN ESTABLISHED. IN FACT, THE ASSESSING OFFICER PROCEEDED TO ADD TO THE RETU RNED INCOME ONLY THE AMOUNT OF PROFIT ELEMENT BECAUSE OF THE FACT THAT THE SALES EFFECTED BY THE ASSESSEE CORRESPONDING TO THE IMPUGNED PURCHASES WERE ACCEPTED. BE THAT AS IT MAY, IT IS A CASE OF MERE NON - SUBSTANTIATION OF AN EXPENDITURE AND NOT A CASE WHE RE FALSITY HAS BEEN PROVED TO THE HILT. EVEN IF ONE HAS TO GO BY THE MANNER IN WHICH THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER BY RESORTING TO ESTIMATING THE PROFIT ELEMENT NO PENALTY IS SUSTAINABLE. THEREFORE, IN THIS VIEW OF THE MATTER, WE SET - ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY OF RS.18,006/ - IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 9 . IN THE PRESENT CASE, THE AO MADE ADDITION OF THE TOTAL AMOUNT OF BOGUS PURCHASES . HOWEVER, THE LD. CIT(A) RESTRICTED THE ADDITION TO 2% OF THE QUESTIONED PURCHASES, WHICH WAS FURTHER CONFIRMED BY THE COORDINATE BENCH. SINCE T HE COORDINATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN CASE OF SAMEER D. PUNJABI AND ETCO TELECOM LTD. (SUPRA) , WE DO NOT FIND ANY REASO N TO TAKE A DIFFERENT VIEW IN THIS CASE. IN OUR CONSIDERED VIEW THE ORDER PASSED BY THE L D. CIT ( A ) IS IN ACCORDANCE WITH THE DECISIONS OF THE COORDINATE BENCH DISCUSSED ABOVE . HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE 5 ITA NOS. 1357 & 1358/MUM/2019 M/S. G.L. CONSTRUCTIONS PVT. LTD. FINDINGS OF THE L D. CIT ( A ) . ACCORDINGLY, WE UPHOLD THE DECISION OF THE L D. CIT ( A ) AND DISMISS THE SOLE GROUND OF APPEAL OF THE REVENUE. ITA NO. 1357 /MUM/20 1 9 (A.Y. 2010 - 11) 10 . THE FACTS AND THE ISSUE RAISED BY THE REVENUE IN THIS CASE ARE IDENTICAL TO THE FACTS AND THE ISSUE RAISED BY THE REVENUE IN ASSESSEES APPEAL ITA NO. 1358/MUM/20 1 9 FOR THE ASSESSMENT YEAR 2009 - 10 EXCEPT THE AMOUNT OF PENALTY DELETED BY THE LD. CIT(A) . SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE IN THE ASSESSE ES CASE F OR THE ASSESSMENT YEAR 2009 - 10 AND SINCE THERE IS NO CHANGE OF FACTS IN THE PRESENT CASE , CONSISTENT WITH OUR FINDINGS WE DISMISS THE REVENUES APPEAL FOR THE ASSESSMENT YEAR 2010 - 11 FOR THE SAME REASONS. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX RULES ON 25 TH JUNE, 2020. SD/ - SD/ - ( RAJESH KUMAR ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 25 / 06/2020 SSL / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI