HANUMAN SINGH RATHORE, MUMBAI V. ITO 25(2)(4), MUMBAI

ITA 1517/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5214 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 03-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Depreciation; Accommodation entries
• Section: 271(1)(c); 143(1); 147

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI B. R. BASKARAN , AM & SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 1517/MUM/2017 , ( / ASSESSMENT YEAR: 2009 - 10 ) HANUMAN SINGH RATHORE, C/O - BHAVANI ENTERPRISES NEAR LAXMI NARAYAN TEMPLE WESTERN EXPRESS HIGHWAY DR. RAJENDRA PRASAD NAGAR, SONABHIAI RAOJJI CHWAL, VILE PARTLE (EAST) , MUMBAI - 4000 57 / VS. ITO WARD 2 5 (2 )(4 ) ROOM NO. 608, 6 TH FLOOR, C - 12, PRATYAKSHKAR BHAVAN, BKC, MUMBAI - 400 051. ./ ./ PAN/GIR NO. A ACPR2484B ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENTBY : SH. ANOOP HIWASE, DR / DATE OF HEARING : 08/10 /201 8 / DATE OF PRONOUNCEMENT : 08/10/20 18 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 37 , MUMBAI 2 I.T.A. NO. 1517 /MUM/201 7 HANUMAN SINGH RATHORE, DATED 12.01.17 FOR AY 20 09 - 10 ON THE GROUNDS MENTIONED HEREIN BELOW: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, T HE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE PENALTY U/S 271(1)(C) OF I. T. ACT FOR RS. 1,35,129/ - . HE OUGHT TO HAVE DELETED THE PENALTY. 2. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, MODIF Y OR SUBSTITUTE ANY GROUND /GROUNDS AND TO ADD ANY NEW GROUND OR GROUND ON OR BEFORE THE APPEAL IS DISPOSED OFF. 2 . THE BRIEF FACTS O F THE CASE ARE THAT THE ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR WAS COMPLETED ON 27.02.15 DETERMINING TO TOTAL INCOME AT RS. 8,46,394/ - . THE PENALTY PROCEEDINGS WERE INITIATED BY THE AO AGAINST THE ASSESSEE, FOR CONCEALING /FURNISHING INACCURATE PARTICULARS OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. THE PENALTY ORDER DATED 28.08.15 WAS PASSED THEREBY LEVYING PENAL TY OF RS. 1,35,129/ - UPON THE ASSESSEE BY HOLDING THAT THE ASSESSEE DEEMED TO HAVE CONCEALED THE PARTICULARS OF ITS INCOME AND THUS HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND COMMITTED DEFAULT WITHIN THE MEANING 3 I.T.A. NO. 1517 /MUM/201 7 HANUMAN SINGH RATHORE, OF SECTION OF 271(1)(C) R.W. EXPLANA TION - 1 FOR SUPPRESSING ITS REAL INCOME BY RS. 4,82,761/ - . AGGRIEVED BY THE ORDER OF PENALTY PASSED BY AO , ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES DISMISSED THE A PPEAL OF THE ASSESSEE AND UPHELD THE ORDER OF PENALTY. NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BY RAISING THE ABOVE GROUNDS. 3. AT THE VERY OUTSET, IT IS NOTICED THAT NONE HAS APPEARED ON BEHALF OF ASSESSEE AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED TODAY. ON THE OTHER HAND LD. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PARTE WITH THE ASSISTANCE OF THE LD. DR AND THE MATERIAL ON RECORD. 4 . T HE SOLE GROUND GROUNDS RAISE D BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN UPHOLDING THE ORDER OF PENALTY LEVIED BY AO. 4 I.T.A. NO. 1517 /MUM/201 7 HANUMAN SINGH RATHORE, 5. WE HAVE HEARD LD. DR AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. FROM THE RECORDS, WE FIND THAT THE ASSESSEE HAD FILED THE ORIGINAL RETURN OF INCOME THEREBY DECLARING TOTAL INCOME AT RS. 3,63,630/ - . THE ASSESSMENT U/S 143(1) WAS COMPLETED AND SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U/S 147 OF THE I.T. ACT ON RECEIP T OF INFORMATION FROM DGIT(INV), MUMBAI TO THE EFFECT THAT ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES FOR PURCHASES FROM VARIOUS PARTIES WHO WERE FOUND TO BE SUSPICIOUS DEALERS BY THE SALES TAX DEPARTMENT, THUS IN THIS WAY, THE ADDITIONS WERE MADE ON AD HOC ESTIMATION FOR BOGUS PURCHASES AND PENALTY WAS THEREAFTER IMPOSED U/S 271(1)(C) OF THE I.T. ACT. AFTER CONSIDERING THE FACTS AS WELL AS LEGAL PROPOSITION, WE ARE OF THE VIEW THAT NO PENALTY CAN BE LEVIED U/S. 271(1)(C) ON ADDITIONS MADE ON AN ESTIMATED BASIS WITHOUT ANY CONCRETE EVIDENCE OF ACTUAL CONCEALMENT. THE PROVISIONS OF SECTION 271 (1) (C) OF THE ACT WOULD BE APPLICABLE ONLY WH ERE THE ASSESSEE 5 I.T.A. NO. 1517 /MUM/201 7 HANUMAN SINGH RATHORE, HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOM E. HOWEVER, THE ESTIMATION OF HIGHER RATE OF PROFITS BY THE AO CANNOT BE TERMED AS EITHER CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND SUPPORT FROM THE SERIES OF DECISIONS BY DIFFERENT HIGH COURT AS WELL COORDINATE BENCHES OF IT AT, I.E. IN THE CASE OF COMMISSIONER OF INCOME - TAX V. NORTON ELECTRONICS SYSTEMS (P) LTD. (2014) 41 TAXMANN.COM 280 (ALLAHABAD HC) . IT WAS HELD THAT W HEN ADDITION IS MADE ON ESTIMATE BASIS, NO PENALTY IS SUSTAINABLE. WE ALSO RELY UPON THE DECISION IN THE CASE OF ASST. COMMISSIONER OF INCOME - TAX V. VISION RESEARCH MANAGEMENT ('P) LTD. ITAT LUCKNOW (2015) 63 TAXMANN.COM 8 (LUCKNOW TRIB) , WHEREIN IT WAS HELD THAT I MPOSITION OF PENALTY UPON ASSESSEE U/S. 271(1)(C) ON BASIS OF ADHOC & ESTIMATED DISALLOWANCE/ADDITION, WITHOUT BRINGING ANY CLINCHING MATERIAL SUGGESTING CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, WAS NOT JUSTIFIED. 6 I.T.A. NO. 1517 /MUM/201 7 HANUMAN SINGH RATHORE, IN THE CASE OF PREM CHAND VS. ASST. COMMISSIONER OF INCOME - TAX (2014 ) 52 TAXMANN.COM 95 (CHANDIGARH TRIB ) , IT WAS HELD THAT W HEN ADDITION IN HANDS OF ASSESSEE WAS MADE BY ESTIMATING VALUE OF RICE HUSK WITHOUT ANY CONCRETE EVIDENCE, LEVY OF PENALTY ON SUCH ADDITION WAS NOT SUSTAINABLE . IN COMMISSIONER OF INCOME - TAX V. BRAHM APUTRA CONSORTIUM LTD. (DEL): PENALTY CONCEALMENT OF INCOME DISALLOWANCE OF CLAIM FOR DEDUCTION OF EXPENDITURE AND DEPRECIATION FINDING THAT CLAIMS WERE ERRONEOUS AND THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS -- PENALTY COULD NOT BE LEVIED INCOME - TAX ACT, 1961, S. 271(1)(C) . IN COMMISSIONER OF INCOME - TAX V. P. ROLES (MAD) , IT WAS HELD THAT THE LEVY OF PENALTY WAS BASED ON THE ESTIMATION OF INCOME. THERE CANNOT BE ANY IMPOSITION OF PENALTY BASED ON ESTIMATION OF INCOME . IN NARESH CHAND AGAR WAL V. COMMISSIONER OF INCOME - TAX (ALL): PENALTY UNDER SECTION 271(1)( C) COULD NOT BE IMPOSED ON THE BASIS OF ESTIMATING SALES AND MAKING ADDITION BY APPLYING NET PROFIT RATE - SAME WAS RIGHTLY SUSTAINED BY TRIBUNAL AND NO SUBSTANTIAL QUEST ION OF LAW ARISES . IN COMMISSIONER OF INCOME - TAX V. P. H. I. SEEDS INDIA LTD., 120081 301 ITR 7 I.T.A. NO. 1517 /MUM/201 7 HANUMAN SINGH RATHORE, 0013 (DEI): IT WAS HELD THAT SECTION 271 (1) (C) OF THE INCOME - TAX ACT, 1961, IS ATTRACTED ONLY IN THOSE INSTANCES WHERE THE ASSESSEE HAS CONCEALED THE PARTICULA RS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME WITH AN INTENT TO 'MISLEAD THE REVENUE. THE INCOME - TAX ACT DOES NOT ENVISAGE OR EXPLICITLY PROVIDE THAT IN EVERY CASE WHERE THE RETURN IS NOT ACCEPTED AS CORRECT AND THE ASSESSMENT IS FRAMED AT AN INCOME HIGHER THAN THAT PRESENTED AND OFFERED FOR TAXATION BY AN ASSESSEE IN THE FORM OF ITS RETURN, PENALTY PROCEEDINGS MUST BE INITIATED. THIS PROPOSITION MUST LOGICALLY 'FOLLOW FROM THE USE OF THE WORD 'MAY' IN SECTION 271 IN CONTRADISTINCT ION TO 'SHALL' IN SECTION 234. WHERE TWO OPTIONS WERE POSSIBLE, ADOPTING ONE OF THEM COULD SCARCELY BE VIEWED AS MALA FIDE, WITH AN INTENT TO EVADE PAYMENT OF INCOME - TAX. RECOMPENSE HAD BEEN PROVIDED FOR IN SECTION 234 OF THE ACT BY WAY OF LEVY OF INTEREST , WHICH, IN THE PRESENT CASE, HAD BEEN PAID WITHOUT DEMUR. IN DILIP N. SHROFF V. JOI NT COMMISSIONER OF INCOME - TAX, (2007) 291 ITR 519 (SC): IT WAS HELD THAT CLAUSE (C) OF SECTION 271(1) OF THE INCOME - FAX APT, 1961, CATEGORICALLY STATES THAT PENALTY WOULD B E LEVIABLE IF THE ASSESSEE CONCEALS PARTICULARS OF HIS INCOME OR FURNISHES 8 I.T.A. NO. 1517 /MUM/201 7 HANUMAN SINGH RATHORE, INACCURATE PARTICULARS THEREOF. BUT BY REASON OF SUCH CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASSESSEE DOES NOT IPSO FACTO BECOME LIABLE FOR PENALTY. IMPOSITI ON OF PENALTY IS NOT AUTOMATIC. PENALTY PROCEEDINGS ARE NOT TO BE INITIATED MERELY TO HARASS THE ASSESSEE. THE APPROACH OF THE ASSESSING OFFICER IN THIS BEHALF MUST BE FAIR AND OBJECTIVE. 'CONCEALMENT OF INCOME' AND 'FURNISHING INACCURATE PARTICULARS' ARE DIFFERENT. BOTH CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS REFER TO DEL/BERATE ACTS ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSION OR SUGGESTIO FALSI. 8. FURNISHING OF ACCURATE PARTICULARS: AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES AND WHILE CONSIDERING THE SERIES OF JUDGMENTS AS MENTIONED ABOVE, WE ARE OF THE VIEW THAT THERE IS NO ACTIVE CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE AND ADDITIONS MADE ON ESTIMATION BY THE AO DO NOT CALLED FOR INITIATION OF PENALTY. THUS, IN OUR VIEW, THE PENALTY LEVIED BY AO AND UPHELD BY CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAW AND IS THUS SET 9 I.T.A. NO. 1517 /MUM/201 7 HANUMAN SINGH RATHORE, ASIDE. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE ST ANDS ALLOWED. 7 . IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH OCT. 2018 SD/ - SD/ - (B .R. BASKARAN ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 08 . 10 .201 8 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI