SUSHIL CHHATRABHUJ RAHEJA, MUMBAI V. ACIT 25(1), MUMBAI

ITA 1375/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9471 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 28-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Principle of natural justice
• Section: 143(3); 147; 37

Judgement Text

ITA NO.1375-77/M/2017 SUSHIL CHHATRABHUJ RAHEJA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH H, MU MBAI BEFORE SH. G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 1375/MUM/2017 (ASSESSMENT YEAR- 2011-12) ITA NO. 1376/MUM/2017 (ASSESSMENT YEAR- 2012-13) ITA NO. 1377/MUM/2017 (ASSESSMENT YEAR- 2010-11) SUSHIL CHHATRABHUJ RAHEJA DARSHAN BHEDA & ASSOCIATES, B-5 & B-7, WADALA SHRI RAM INDUSTRIAL ESTATE, SEWRI WADALA ESTATE, G.D. AMBEKAR MARG, WADALA WEST, MUMBAI -400031 PAN: ADQPR1147Q VS. ACIT -25(1) , BANDRA KULRA COMPLEX, MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE REPRESENTED BY : SH. VIRAJ MEHTA (AR) REVENUE REPRESENTED BY : SH. RAM TIWARI (SR DR) RESERVE FO R ORDER : 24.08.2017 DATE OF ORDER : 29.09.2017 ORDER UNDER SECTION 254(1) OF INCOME-TAX ACT PER PAWAN SINGH JUDICIAL MEMBER ; 1. THIS GROUP OF THREE APPEALS BY ASSESSEE ARE DIRECTE D AGAINST THE DIFFERENT ORDERS OF COMMISSIONER (APPEALS) DATED 28 TH DECEMBER 2016 FOR ASSESSMENT YEAR 2010-11, 2011-12 AND 2012-13. THE L EARNED COMMISSIONER (APPEALS) IN THE IMPUGNED ORDER(S) CON FIRMED THE PENALTY LEVIED BY ASSESSING OFFICER UNDER SECTION 271(1)( C ) OF THE ACT. FACTS OF ALL THE CASES ARE ALMOST SIMILAR EXCEPT VARIATION IN FI GURES OF PENALTY. CONSIDERING THE COMMONALITY OF FACT AND IDENTICAL G ROUNDS OF APPEAL ALL ITA NO.1375-77/M/2017 SUSHIL CHHATRABHUJ RAHEJA 2 THE APPEALS WERE HEARD TOGETHER AND ARE DECIDED BY COMMON ORDER. FOR APPRECIATION OF FACT WE ARE REFERRING THE FACT FOR ASSESSMENT YEAR 2010-11 IN ITA NO.1377/M/2017. THE ASSESSEE HAS RAISED FOLL OWING GROUNDS OF APPEAL; (A) THE LD COMMISSIONER (APPEALS) ERRED IN LEVYING PENA LTY UNDER SECTION 271(1) (C) OF THE ACT ON THE GROUND THAT TH E ADDITIONS HAS BEEN MADE ON AND ESTIMATE BASIS AND THAT IN CASE OF ESTIMATION NO PENALTIES LEVIABLE. (B) THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN CON FIRMING THE PENALTY OF RS. 1,31,810/- LEVIED BY THE ASSESSI NG OFFICER. (C) THE APPELLANT CONTENDS THAT THE ADDITION IS IN CONT RAVENTION TO THE PRINCIPLE OF NATURAL JUSTICE AND TO BE DELETED . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF TRADING AND DISTRIBUTION OF READY-MADE GARMENTS, FI LED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 30 TH SEPTEMBER 2010 DECLARING TOTAL INCOME AT RS. 15,73,500/-. THE RETURN WAS PRO CESSED AND ACCEPTED UNDER SECTION 143(1). SUBSEQUENTLY, THE RETURN OF I NCOME WAS REOPENED UNDER SECTION 147 VIDE NOTICE DATED 27 TH DECEMBER 2013 ISSUED UNDER SECTION 148. THE ASSESSMENT UNDER SECTION 143(3) RE AD WITH SECTION 147 WAS COMPLETED ON 30 JANUARY 2015. THE ASSESSING OFF ICER WHILE PASSING THE ASSESSMENT ORDER MADE THE ADDITION ON ACCOUNT O F BOGUS PURCHASES UNDER SECTION 37 OF THE ACT. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 4,26,571/- BEING 25% OF THE ALLEGED BOGUS PURCH ASES IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER INITIATED P ENALTY WHILE COMPLETING THE ASSESSMENT PROCEEDINGS. THE ASSESSIN G OFFICER LEVIED THE ITA NO.1375-77/M/2017 SUSHIL CHHATRABHUJ RAHEJA 3 PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED VID E ORDER DATED 21 JULY 2015. THE AO LEVIED A PENALTY OF RS. 1,31,810/-. ON APPEAL BEFORE COMMISSIONER (APPEALS) THE ORDER OF PENALTY WAS SUS TAINED. THUS, FURTHER AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) TH E ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD LD AR OF THE ASSESSEE AND DR FOR REVE NUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED AR OF THE ASSESSEE ARGUED THAT THE ASSESSEE HAS NEITHER CONCEALED THE INCOME NOR F URNISHED INACCURATE PARTICULARS THEREOF. THE ASSESSEE FURNISHED COMPLET E DETAIL OF HIS PURCHASES TO SUBSTANTIATE HIS EXPENSES INCURRED ON ACCOUNT OF PURCHASES DURING THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFFICER MADE THE ADDITION ONLY ON THE ESTIMATION BASIS ON ACCOUNT OF THE ALLEGED BOGUS PURCHASES. IT WAS ARGUED THAT NO PENALTY IS LEVIABL E ON THE ADDITION MADE ON THE BASIS OF ESTIMATION/ AD HOC BASIS. IN SUPPORT OF THE SUBMISSION THE LD AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DE CISION; (I) CIT VERSUS RAVAIL SINGH & COMPANY 254 ITR 191(P&H ), (II) HARIGOPAL VS CIT 258 ITR 85 (P&H HC), (III) ITO VS BOMBAYWALA READYMADE STORE[2015]230TAXMAN 31 3(GUJ H C), (IV) NARESH CHAND AGGARWAL VERSUS CIT 357 ITR 515 (ALL H C), (V) DCIT VERSUS MANOHAR MANAK ITA 5586/MUMBAI/2015, (VI) YASHRAJ FILMS PVT LTD VERSUS ACIT ITA 7519/MUMBA I/ 2013, (VII) SARVESH MERCANTILE PRIVATE LTD VS ACIT ITA 6040/M/ 2013 AND (VIII) DCIT VERSUS RISABH IMPEX ITA 93/MUMBAI 2011 . 4. ON THE OTHER HAND THE LEARNED AND AR FOR THE REVEN UE SUPPORTED THE ORDER OF AUTHORITIES BELOW. IT WAS ARGUED THAT THE INVESTIGATION WING OF ITA NO.1375-77/M/2017 SUSHIL CHHATRABHUJ RAHEJA 4 THE INCOME TAX DEPARTMENT MADE THE FULL-FLEDGED ENQ UIRY ABOUT THE RACKET OF HAWALA DEALERS WHO WERE INVOLVED IN PROVIDING AC COMMODATION ENTRIES WITH OF SALE AND PURCHASE OF THE MATERIAL. THE ASSE SSEE WAS ONE OF SUCH BENEFICIARY WHO AVAILED ACCOMMODATION ENTRY FOR INF LATING THE PROFIT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE PERUSA L OF ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER, WHILE PASSING T HE ASSESSMENT ORDER UNDER SECTION 143(3) RWS 147, MADE THE ADDITION ON THE BASIS OF ESTIMATION. THE ASSESSING OFFICER MADE ADDITION @ 2 5% OF THE ALLEGED BOGUS PURCHASES. THE REVENUE HAS NOT DISPUTED THAT ADDITIONS WERE MADE MERELY ON THE BASIS OF ESTIMATION. IT IS SETTLED LA W THAT NO PENALTIES IS LEVIABLE UNDER SECTION 271(1)(C) FOR AD HOC /ESTIMATED ADDITIONS. SIMILAR VIEW HAS BEEN TAKEN IN THE VARIOUS DECISIONS CITED BY LEARNED AR FOR THE ASSESSEE . ACCORDINGLY , WE ARE OF THE OPINION THAT THIS IS NOT A FIT CASE F OR LEVY OF PENALTY . IN THE RESULT THE GROUNDS OF APPEAL RAISED BY THE A SSESSEE IS ALLOWED. ITA NO.1375, 1376/M/2017 FOR AY 2011-12 AND 2012-13 6. THE ASSESSEE HAS RAISED IDENTICAL GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YEARS; THE FACTS OF BOTH THE YEARS ARE A LMOST SIMILAR EXCEPT VARIATIONS OF FIGURE OF PENALTY. CONSIDERING THE FA CTS THAT WE HAVE ALLOWED THE APPEAL FOR AY- AY 2010-11AND DELETED THE PENALT Y; HENCE, FOLLOWING ITA NO.1375-77/M/2017 SUSHIL CHHATRABHUJ RAHEJA 5 THE PRINCIPAL OF CONSISTENCY BOTH THE APPEALS OF TH E ASSESSEE ARE ALLOWED WITH SIMILAR FINDINGS. 7. IN THE RESULT ALL THREE APPEALS FILED BY THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF SEPTEMBER 2017. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 29/09/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT.REGISTRAR) ITA T, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/