ACIT, CIRCLE-9(3)(1), MUMBAI V. FILTERATION ENGINEERS INDIA PVT LTD, MUMNBAI

ITA 1436/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3175 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 11-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Set aside
• Section: 271(1)(c); 143(3); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , F BENCH UMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1436/MUM/2019 FOR ASSESSMENT YEARS: 2011-12 ACIT-9(3)(1), ROOM NO. 215, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS M/S FILTERATION ENGINEERS INDIA PVT. LTD., 28-003, SUNRISE, LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI-400053 PAN : AAACF4084G (APPELLANT) (RESPONDENT) APPELLANT BY : MISS SAMATHA MULLAMUDI (SR. DR) RESPONDENT BY : NONE DATE OF HEARING : 20/02/2020 DATE OF PRONOUNCEMENT : 20/02/2 020 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-16, [CIT(A)], MUMBAI DATED 24.12.2018 FOR ASSESSMENT YEAR 2011-12. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: I. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, WAS LD. CIT(A) RIGHT IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961? II. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A ) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF INDUSTRIAL FILTERS. TH E ASSESSMENT WAS ITA NO. 1436 MUM 2019-M/S FILTERATION ENGINEERS IND IA PVT. LTD. 2 COMPLETED FOR AY 2011-12 WAS COMPLETED UNDER SECTIO N 143(3) R.W.S. 147 DATED 17.03.2016. THE ASSESSING OFFICER WHILE P ASSING THE ASSESSMENT ORDER MADE ADDITION/DISALLOWANCE ON ACCO UNT OF BOGUS PURCHASES. THE ASSESSING OFFICER DISALLOWED 12.5% O F AGGREGATE OF ALLEGED BOGUS PURCHASES OF RS. 1,12,35,102/-. THE A SSESSING OFFICER CALCULATED THE DISALLOWANCE OF RS. 14,04,388/-. 3. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER INITIATED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE SHO W-CAUSE NOTICE UNDER SECTION 271(1)(C) R.W.S 274 DATED 16.05.2017 WAS SE RVED UPON THE ASSESSEE. IN RESPONSE TO THE SHOW-CAUSE, THE ASSESS EE FILED REPLY DATED 22.05.2017. IN THE REPLY, THE ASSESSEE CONTENDED TH AT THE PURCHASES MADE BY ASSESSEE WERE GENUINE. IT WAS STATED THAT THE AS SESSEE MADE THE PAYMENT THROUGH ACCOUNT PAYEE CHEQUES, ALL THE EVI DENCE PERTAINING TO THE PURCHASE BILLS, DELIVERY CHALLANS AND COPY OF L EDGER ACCOUNTS WERE FURNISHED. IT WAS ALSO STATED THAT DUE TO LONG GAP, THE ASSESSEE COULD NOT PRODUCE THE VENDORS AND AGGREGATE FOR DISALLOWANCE @ 12.5% OUT OF THE TOTAL PURCHASES. THE REPLY OF ASSESSEE WAS NOT ACCE PTED BY ASSESSING OFFICER. THE ASSESSING OFFICER LEVIED THE PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED ON DISALLOWANCE OF RS. 14,04,38 8/-. THE ASSESSING OFFICER COMPUTED THE PENALTY OF RS. 4,66,502/- IN I TS ORDER DATED 31.05.2017 PASSED UNDER SECTION 271(1)(C). ITA NO. 1436 MUM 2019-M/S FILTERATION ENGINEERS IND IA PVT. LTD. 3 4. ON APPEAL BEFORE THE LD. CIT(A), THE ENTIRE PENALT Y WAS DELETED. THE LD. CIT(A) WHILE DELETING THE PENALTY FOLLOWED THE DECI SION OF TRIBUNAL IN M/S CHEMPURE VS. ITO (40 SOT 164), EARTHMOVING EQUI PMENT SERVICE CORPORATION VS. DY.CIT [2017] 84 TAXMANN.COM 51 (MU MBAI TRIB.). AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE H AS FILED THE PRESENT APPEAL BEFORE US. 5. NONE APPEARED ON BEHALF OF ASSESSEE; THE NOTICE SEN T THROUGH REGISTERED POST WITH ACKNOWLEDGEMENT DUE (RPAD) RETURNED BACK UN-SERVED WITH THE REMARK OF POSTAL AUTHORITY LEFT. THUS, WE LEF T NO OPTION EXCEPT TO HEAR THE SUBMISSION OF LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE AND DECIDE THE APPEAL ON THE BASIS OF SUBMI SSION OF LD. DR AND THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR TH E REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. THE LD. DR FOR THE REVE NUE SUBMITS THAT THE ASSESSEE ACCEPTED THE ADDITION AND NO FURTHER APPEA L WAS FILED BEFORE THE FIRST APPELLATE AUTHORITY IN QUANTUM ASSESSMENT. TH E ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME AND COULD NOT SUBS TANTIATE THE GENUINENESS OF PURCHASES. 6. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR AND PER USED THE ORDER OF LOWER AUTHORITIES. THERE IS NO DISPUTE THAT WHILE P ASSING THE ASSESSMENT ORDER DATED 17.03.2011 UNDER SECTION 143(3) R.W.S. 147. THE ASSESSING OFFICER MADE THE DISALLOWANCE ON ESTIMATED BASIS. T HE ASSESSING OFFICER DISALLOWED 12.5% OF AGGREGATE OF TOTAL ALLEGED BOGU S PURCHASES. THE ITA NO. 1436 MUM 2019-M/S FILTERATION ENGINEERS IND IA PVT. LTD. 4 ASSESSING OFFICER LEVIED THE PENALTY ON THE DISALLO WANCES MADE WHILE PASSING THE ASSESSMENT ORDER. BEFORE THE LD. CIT(A) , THE ASSESSEE MADE EXHAUSTIVE SUBMISSION AND RELIED UPON THE VARIOUS C ASE LAW INCLUDING THE DECISIONS OF M/S CHEMPURE VS. ITO (SUPRA) & EARTHMO VING EQUIPMENT SERVICE CORPORATION VS. DY.CIT (SUPRA). THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE CONCLUDED THAT NO PENALT Y UNDER SECTION 271(1)(C) CAN BE LEVIED ON ADHOC ADDITION AND DELETED THE ENTIRE PENALTY LEVIED UNDER SECTION 271(1)(C). 7. WE HAVE NOTED THAT THE LD. CIT(A) WHILE PASSING THE IMPUGNED ORDER HAS FOLLOWED THE ORDER OF TRIBUNAL IN M/S CHEMPURE VS. ITO (SUPRA) & EARTHMOVING EQUIPMENT SERVICE CORPORATION VS. DY.CI T (SUPRA). IN OUR VIEW, IT IS NOW SETTLED POSITION UNDER THE LAW THAT NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE ON ADHOC ADDITION. THEREFORE, WE AFFIRMED THE ORDER PASSED BY LD. CIT(A). NO CONTRARY FACTS O R LAW IS BROUGHT TO OUR NOTICE TO TAKE OTHER VIEW. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N THIS 20/02/2020. SD/- SD/- (S. RIFAUR RAHMAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 20.02.2020 SK COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT ITA NO. 1436 MUM 2019-M/S FILTERATION ENGINEERS IND IA PVT. LTD. 5 3. CIT 4. CIT(APPEALS) 5. DR: ITAT BY ORDER ASSISTANT REGISTRAR ITAT MUMB AI