M/S AAREY DRUGS PHARMACUTICALS LTD , MUMBAI V. CENTRAL CIRCLE 2(3), MUMBAI

ITA 1466/MUM/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0529 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 19-06-2024
• Assessment Year: 2009-2010
• Appeal Filed On: 27-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Depreciation; Peak credit; Bogus
• Section: 148; 271(1)(c); 69C; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “A”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND SHRI OMKARESHWAR CHIDARA, ACCOUNTANT MEMBER ITA No.1466/MUM/2024 Assessment Year: 2009-10 M/s. Aarey Drugs Pharmaceuticals Ltd. 1227 Hubtown Solaris, 12 th Floor, N S Phadke Marg, Andheri (East), Mumbai - 400009 PAN: AAACA5253A Vs. Central Circle 2(3), Room No.803, 8 th Floor, Pratishtha Bhavan, Churchgate East, Mumbai – 400020 (Appellant) (Respondent) Present for: Assessee by : None Revenue by : Shri Prashant Barate, SR D.R. Date of Hearing : 20 . 06 . 2024 Date of Pronouncement : 31 . 07 . 2024 O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 23.01.2024, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2009- 10. 2. Though notice for the date of hearing on 20.06.2024 was sent to the Assessee, however the Assessee neither appeared nor filed any adjournment. Hence, in the constrained circumstances, we are inclined to decide this appeal ex-parte. 3. The case of the Assessee was reopened under section 148 of the Act on the basis of survey carried out by the DDIT, Investigation unit 1(3), Mumbai mainly on the ground that a number of concerns were ITA No.1466/MUM/2024 M/s. Aarey Drugs Pharmaceuticals Ltd. 2 found to be accommodation entry providers in the list of hawala/suspicious dealers as enlisted in the website of Maharashtra Sales Tax Department. The Assessee company has also booked the non-genuine purchases under three heads viz. trading material (Rs.16,28,27,016/-), addition to fixed asset (Rs.2,94,86,109/-) and power & fuel (Rs.34,65,946/-). However, no proof of materialistic transaction with regard to these purchases is available other than they are lost in fire at the Boisar Point and no documentation qua fire such as police complaint, fire department’s report etc. were submitted either during the course of survey or till date. Accordingly the statement of Managing Director of the Assessee Company was recorded where from it was noticed by the Assessing Officer (AO) that the Assessee neither produced the documentary evidence in support of the purchases made from various vendors as listed in his statement and nor produced the documentary evidences during the post survey. In the declarations filed by the suppliers who supplied items to the Assessee in fact stated to the Sales Tax Department, Mumbai that they have not supplied any goods to the Assessee under the relevant purchase invoices and also not paid any sales tax on the alleged bills raised on the Assessee and the bills issued by the suppliers are not genuine. On the aforesaid reasons the AO doubted the transactions and asked the Assessee to give the details of working of peak credit and to submit the ledger account and the copies of the parties in question. But the Assessee only submitted the peak calculation. On perusal of the same it was noticed by the AO that the Assessee has worked out the total peak of Rs.8,06,87,690/- while in the survey report the peak has been worked out at Rs.8,27,72,620/-. As the Assessee has not provided the ledger copies of the parties, therefore the AO worked out the peak of the Assessee as per survey report and peak credit of trading goods to the tune of Rs.3,67,78,360/- during the year under consideration and consequently added the same in the income of the Assessee under section 69C of the Act. The AO also disallowed the amount of ITA No.1466/MUM/2024 M/s. Aarey Drugs Pharmaceuticals Ltd. 3 Rs.6,07,078/- as depreciation claimed on the non genuine purchase of plant and machinery to the tune of Rs.40,47,187/-. 4. The Assessee, being aggrieved, challenged the aforesaid additions before the then Ld. CIT(A), who affirmed the same. 5. The Assessee, being aggrieved, challenged the affirmation of the additions before the Honorable Tribunal, who vide order dated 05.05.2020 in ITA No.2820/M/2018 partly allowed the appeal of the Assessee and directed the AO to apply gross profit rate @ 12.5% on the total alleged bogus purchases meaning thereby the Honorable Tribunal confirmed the addition to the extent of Rs.45,97,295/-. 6. Thereafter the AO while passing the penalty order dated 25.03.2022 under section 271(1)(c) of the Act taken into consideration the total concealed income @ Rs.52,04,373/- (Rs.45,97,295/- being 12.5% of the alleged bogus purchases + Rs.6,07,078/- disallowance of depreciation) which was not challenged by the Assessee before the Tribunal and consequently levied the penalty to the tune of Rs.17,68,965/- being 100% of the amount of tax sought to be evaded on the concealed income of Rs.52,04,373/- for concealment of the particulars of income. 7. The Assessee, being aggrieved, challenged the levy of penalty before the Ld. Commissioner who vide impugned order affirmed the same. The Assessee, being aggrieved, is in appeal before us. 8. We observe from the grounds of appeal that the Assessee has raised the issue that subsequently the Tribunal vide order dated 27.09.2022 passed in ITA No.2820/M/2018 has also remanded the issue qua disallowance of depreciation of Rs.6,07,708/-, hence the penalty on the said addition is not sustainable as till date no fresh order has been passed. ITA No.1466/MUM/2024 M/s. Aarey Drugs Pharmaceuticals Ltd. 4 With regard to the levy of penalty on the addition of Rs.45,97,295/- @ 12.5% of the alleged bogus purchase of Rs.3,67,78,360/- as sustained by the then Ld. CIT(A) , the Assessee in the grounds of appeal only raised the issue that CIT(A) has neither given proper opportunity nor justified in confirming the penalty @ 100% on the addition restricted to 12.5% for purchases affected by suspicious hawala dealers. 9. Heard the parties and perused the material available on record and given thoughtful considerations to the peculiar facts and circumstances of the case , we observe that the Assessee has raised the ground that the Honorable Tribunal vide order dated 27.09.2022 in ITA No.2820/M/2018 has remanded back the issue, qua disallowance of Rs.6,07,078/- @ 50% of the depreciation claimed on machine, to the file of the AO for fresh determination and till date no order has been passed, therefore the penalty levied on this count on the amount of Rs.6,07,078/- is unsustainable. Consequently, we are inclined to delete the penalty to the extent imposed on the addition of Rs.6,07,078/- with liberty to the AO to initiate the penalty afresh in case again addition of this count would be made and sustained . 10. Coming to the penalty imposed on the income sought to be evaded of Rs.45,97,295/-, we observe that the Ld. Commissioner during the appellate proceedings duly given opportunity to the Assessee to substantiate its claim for not levying the penalty and in fact the Assessee has also submitted written reply which was considered by the Ld. Commissioner before coming to the conclusion for confirmation of the penalty, as the Ld. Commissioner has not only considered the reason for levying the penalty but also considered the reply filed by the Assessee and while following the parameters enumerated in the provisions of law under section 271(1)(c) of the Act and by valid reason affirmed the penalty, hence we are inclined not to interfere in the impugned order, as the same does not suffer from any perversity, impropriety and / or illegality. ITA No.1466/MUM/2024 M/s. Aarey Drugs Pharmaceuticals Ltd. 5 11. Consequently, the appeal filed by the Assessee is partly allowed. Order pronounced in the open court on 31.07.2024. Sd/- Sd/- (OMKARESHWAR CHIDARA) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.