HIMANSHU MULJI SHAH, MUMBAI V. DCIT 23(2), MUMBAI

ITA 1395/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0196 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 28-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH H, MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1395/MUM/2017 (ASSESSMENT YEAR- 2010-11) SHRI HIMANSHU MULJI SHAH (PROP. OF MAK AUTOMOBILES), A/222, ANANT RESIDENCY, D.R. N.M.M. ROAD, MULUND (W), MUMBAI-400080 PAN: AKNPS2258P VS. D.C.I.T-23 (2), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAHUL HAKANI ADVOCATE REVENUE BY : SHRI RAM TIWARI (DR) DATE OF HEARING : 24.08.2017 DATE OF PRONOUNCEMENT : 24.08.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE U/S 253 OF THE INCOME-TAX A CT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-40, MUMBAI DATED 19.10.2016 FOR THE AY 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : PENALTY INITIATED ON CHARGE OF CONCEALMENT OF INCOM E BUT LEVIED ON CHARGE OF FURNISHING INACCURATE PARTICULARS OF INCOME. 1. THE LEARNED CIT(A) ERRED IN CONFIRMING ORDER OF LEARNED A.O. LEVYING PENALTY OF RS. 4,00,000/- U/S.271(1)(C) READ WITH E XPLANATION I FOR FURNISHING INACCURATE PARTICULARS OF INCOME ON ADDITION OF RS. 10,42,568/- BEING DIFFERENCE BETWEEN ESTIMATED G.P. OF 14% (RS.85,98,894/-) AND GP SHOWN BY THE ASSESSEE (RS.75,56,326/-) ON ACCOUNT OF UNVERIFIABLE PURCHAS ES WITHOUT APPRECIATING THAT PENALTY WAS INITIATED IN THE ASSESSMENT ORDER AS WE LL AS IN THE SHOW CAUSE NOTICE U/S. 274 DT. 20/3/2014 ON THE CHARGE OF CONC EALMENT OF INCOME BUT PENALTY WAS LEVIED ON THE CHARGE OF FURNISHING INAC CURATE PARTICULARS OF INCOME AND HENCE, PENALTY OF RS. 4,00,000/- OUGHT TO BE DE LETED. ITA NO.1395/M/2017 SHRI HIMANSHU MULJI SHAH 2 EXPLANATION I TO S. 271(1)(C) DOES NOT APPLY TO CHA RGE OF FURNISHING INACCURATE PARTICULARS OF INCOME. 2. WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) F AILED TO APPRECIATE THAT THE DEEMING PROVISION OF EXPLANATION I TO S. 271(1)(C) APPLIES ONLY TO CHARGE OF CONCEALMENT OF INCOME AND NOT TO CHARGE OF FURNISHI NG INACCURATE PARTICULARS OF INCOME AND HENCE, PENALTY OF RS. 4,00,000/- OUGHT T O BE DELETED. NO PENALTY U/S. 271(1)(C) AS ALL BONAFIDE DISCLOSUR ES MADE BY ASSESSEE 3. WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) F AILED TO APPRECIATE THAT THE PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE INDEPENDENT AND ASSESSEE HAD MADE ALL BONAFIDE DISCLOSURES RELATING TO THE P URCHASES IN THE ACCOUNTS OF THE ASSESSEE AS WELL AS DURING THE COURSE OF ASSESS MENT PROCEEDINGS AND ALSO PROVED THE CONSUMPTION OF GOODS PURCHASED TO THE SA TISFACTION OF THE ASSESSING OFFICER AND THUS THERE WAS NO FURNISHING OF INACCUR ATE PARTICULARS OF INCOME AND HENCE PENALTY OF RS.4,00,000/- OUGHT TO BE DELETED. NO PENALTY U/S. 271(1)(C) WHERE ADDITION MADE ON ES TIMATION 4. WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) F AILED TO APPRECIATE THAT THE ADDITION ON THE BASIS OF ESTIMATION DOES NOT TANTAM OUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME AND HENCE, PENALTY OF RS. 4,0 0,000/- OUGHT TO BE DELETED. NO PENALTY U/S. 271(1)(C) ON DEBATEABLE ISSUE. 5. WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) F AILED TO APPRECIATE THAT THE A.O. IN HIS ORDER U/S. 143(3) HAD CLEARLY HELD' THA T PURCHASE ITEMS WERE VERIFIABLE AND THAT THE SAID ITEMS HAD BEEN SUPPLIE D AND THUS ENTIRE ADDITION OUGHT TO HAVE BEEN DELETED IN VIEW OF VARIOUS DECIS IONS OF THE HIGH COURTS AND HENCE, THE ISSUE IS A LEGAL AND DEBATABLE ISSUE AND CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME AND HEN CE, PENALTY OF RS. 4,00,000/- OUGHT TO BE DELETED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR THE RELEVANT AY WAS COMPLETED ON 20.03.2013 U/S 143(3) OF THE ACT. THE ASSESSING OFFICER (AO) WHILE PASSING THE ASSESSMENT ORDER MADE THE ADDITION OF RS. 10,42 ,568/- ON ACCOUNT OF UNVERIFIABLE PURCHASES MADE BY ASSESSEE. THE AO MAD E THE DISALLOWANCE @ 14% ON ACCOUNT OF SAID UNVERIFIABLE PURCHASES. THE ADDI TION WAS MADE ON THE ESTIMATED BASIS. THE AO ISSUED NOTICE DATED 20.03.2013U/S 274 R.W.S. 271(1)(C) OF THE ACT. THE AO ISSUED NOTICE THAT THE ASSESSEE HAS CONCEALE D THE PARTICULARS OF INCOME (PARA 7 OF ORDER). THE AO OBSERVED THAT NO REPLY WA S FILED BY ASSESSEE. THE AO LEVIED THE PENALTY OF RS. 4,00,000/-. WHILE LEVYING THE PENALTY THE AO FURTHER ITA NO.1395/M/2017 SHRI HIMANSHU MULJI SHAH 3 OBSERVED THAT MINIMUM PENALTY ON THE AMOUNT OF TAX SOUGHT TO BE EVADED @ IS RS. 3,25,244/- AND MAXIMUM PENALTY @ 300% IS RS. 9 ,75,732/-. CONSIDERING THE FACT, THE AO LEVIED THE PENALTY OF RS. 4,00,000/-. ON APPEAL BEFORE THE LD. CIT(A), THE ORDER WAS CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE PRESENT APPEAL IS FILED BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARG UED THAT THE DISALLOWANCE IN THE QUANTUM ASSESSMENT WAS BASED ON ESTIMATE BASIS. THE ADDITIONS WERE MADE ONLY ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INV ESTIGATION). THE ASSESSEE HAS SATISFACTORY DISCHARGED HIS ONUS FOR PROVING THE GE NUINENESS OF PURCHASES. THE ENTIRE PURCHASES OF THE ASSESSEE WERE CONSUMED IN T HE WORK OF CIVIL CONTRACT AWAITED FROM MUNICIPAL CORPORATION OF GREATER MUMBA I (MCGM). THE CONSUMPTION OF MATERIAL WAS DULY APPROVED BY THE OF FICE OF MCGM WHILE WORKING THE PAYMENT OF EXECUTIVE CIVIL WORK. IT WAS ARGUED THAT AO HAS INITIATED THE PENALTY WITHOUT RECORDING SATISFACTION IN THE A SSESSMENT ORDER. THUS, INITIATION OF THE PENALTY IS BAD-IN-LAW. THE PENALTY ORDER WAS PASSED WITHOUT GIVING PROPER OPPORTUNITY. IT WAS ARGUED THAT WHILE NOTICE UNDER SECTION 274 RWS271(1) WA ISSUED FOR CONCEALMENT OF INCOME, HOWEVER, THE PENA LTY WAS LEVIED FOR FILING INACCURATE PARTICULAR OF INCOME. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF CO-ORDINATE BE NCH OF TRIBUNAL IN ITA NO. 6617/MUM/2014 IN EARTHMOVING EQUIPMENT SERVICE CORP ORATION VS. DCIT DATED 02.05.2017 AND THE DECISION OF HONBLE JURISDICTION AL HIGH COURT IN CASE OF CIT ITA NO.1395/M/2017 SHRI HIMANSHU MULJI SHAH 4 VS. SAMSON PERINCHERY IN ITA NO. 1154, 953, 1097 & 1226/2014 DATED 05.01.2017. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE SEEN THAT THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER ON 20.03.2013 INITIATED THE PE NALTY FOR CONCEALING THE PARTICULARS OF INCOME. HOWEVER, WHILE LEVYING THE P ENALTY, IT WAS LEVIED FOR FILING OF INACCURATE PARTICULARS OF INCOME. IN OUR VIEW THE ASSESSING OFFICER WAS QUITE UNSURE AS TO WHICH OF THE TWO LIMBS UNDER SEC TION 271(1)(C) OF THE ACT HE WAS INTENDING TO PROCEED. SINCE, AN APPROACH IS REFLECTIVE OF NON APPLICATION OF MIND BY THE ASSESSING OFFICER, THERE FORE, FOLLOWING THE REASONING OF HONBLE BOMBAY HIGH COURT IN THE CASE SHRI SAMSON PERINCHERY (SUPRA) THE ORDER PASSES BY ASSESSING O FFICER UNDER SECTION 271(1)(C) OF THE ACT DATED 20/03/2013 IS UNTENABLE. CONSEQUENTLY, THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECT ION 271(1)(C)OF THE ACT OF THE ACT IS SET- ASIDE. SINCE THE ASSESSEE HAS SU CCEEDED ON LEGAL ISSUE HENCE THE DISCUSSION ON OTHER ALTERNATIVE SUBMISSIO N HAS BECOME ACADEMIC. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH DAY OF AUGUST 2017. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 24/08/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT ITA NO.1395/M/2017 SHRI HIMANSHU MULJI SHAH 5 BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/