SANDEEP C. SHAH, MUMBAI V. INCOME TAX OFFICER WARD 25(1)(1), MUMBAI

ITA 1522/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0201 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 09-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Keywords: Bogus purchase; Set aside
• Section: 271(1)(c); 201; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G , MUMBAI BEFORE S HRI RAJESH KUMAR (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 1522/MUM/2018 ASSESSMENT Y EAR: 2009 - 10 SANDEEP C. SHAH, 52, ROKADIYA NIKETAN, PARSI PANCHAYAT ROAD, OPP., SONA UDYOG, ANDHE RI (EAST), MUMBAI - 400069 PAN: AMTPS9859G VS. THE COMMISSIONER OF INCOME TAX - 37, BKC C - 13, 1 ST FLOOR, ROOM NO. 112, MUMBAI - 400051 (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI T.S. KHALSA (DR) DATE OF HEARING: 07/12 /2020 DATE OF PRONOUNCEMENT: 08 / 12 /2020 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 07.03.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APP EALS) - 37 (FOR SHORT THE CIT(A) , MUMBAI, FOR THE ASSESSMENT YEAR 2009 - 10 , WHEREBY THE LD. CIT(A) HAS DISMISSED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE PENALTY ORDER PASSED U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF F ACTS OF THE CASE ARE THAT THE ASSESSE E ENGAGED IN THE BUSINESS OF TRADING IN STEEL, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS. 1,69,432/ - . THE AO PASSED ASSESSMENT ORDER U/S 144 OF THE ACT DETERMINI NG THE TOTAL INCOME AT RS. 12,31,110/ - AFTER MAKING ADDITION OF 2.50% OF THE SALES VALUE ON ESTIMATION BASIS. ACCORDINGLY, AO INITIATED PROCEEDINGS U/S 271 (1 ) (C) OF THE ACT AND LEVIED PENALTY OF RS. 3,10,819/ - FOR CONCEALMENT OF PARTICULARS OF INCOME. TH E 2 ITA NO. 1522 / MUM/201 8 ASSESSMENT YEAR: 2009 - 1 0 ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT (A). THE LD. CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE PENALTY LEVIED BY THE AO . THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL AGAINST THE SAID ORDER . 3 . THE ASSESSEE HAS CHAL LENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) ON THE FOLLOWING EFFECTIVE GROUND : - LEARNED CIT (A) ERRED IN CONFIRMING THE PENALTY IMPOSED BY ASSESSING OFFICER OF RS. 3,10,820/ - U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961, WHERE THE ASSESSING OFFICE R HAS ASSESSED THE INCOME ON ESTIMATED BASIS. 4. THIS APPEAL WAS FIXED FOR HEARING ON 07.12 .2020. HOWEVER, WHEN THE CASES WERE CALLED OUT FOR HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. HENCE , WE DECIDED TO DISPOSE OF THIS APPEAL ON THE BASIS OF M ATERIAL ON RECORD AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE (DR). ACCORDINGLY, WE ASKED THE LD. DR TO PRESENT THE CASE OF THE DEPARTMENT. 5. THE LD. DR SUPPORTING THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT SINCE THE ASSESSEE HA D CONCEALED THE PARTICULARS OF ITS INCOME, THE AO MADE ADDITION OF 2.50% OF THE TOTAL AMOUNT OF SALE S DECLARED BY THE ASSESSEE . THE LD. DR FURTHER POINTED OUT THAT THE ASSESSEE DID NOT CHALLENGE THE ADDITION MADE BY THE AO AND ACCORDINGLY ADMITTED THAT IT HAD CONCEALE D ITS PARTICULARS OF INCOME. HENCE THE AUTHORITIES BELOW HAVE RIGHTLY LEVIED /CONFIRMED PENALTY U/S 271 (1) (C) OF THE ACT. THEREFORE , THERE IS NO INFIRMITY IN THE ORDER PA S SED BY THE LD. CIT(A). 6 . WE HAVE PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE SUBMISSIONS MADE BY THE LD. DR. WE NOTICE THAT THE AO HAS MADE ADDITION OF 2.50% OF THE TOTAL AMOUNT OF SALES ON ADHOC BASIS BY ESTIMATING THE PROFIT FROM THE SAID TRANSACTION. IN THE CASE OF SH. AJAY LOKNATH LOHIA VS. ITO , THE COORDINATE BENCH OF THE ITAT HAS DELETED THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT, ON THE BASIS OF ADDITION MADE ON ESTIMATION BASIS , HOLDING THAT MERE DISALLOWANCE OF PURCHASES ON ADHOC BASIS DOES NOT AMOUNT TO FURNISHING INACCURATE 3 ITA NO. 1522 / MUM/201 8 ASSESSMENT YEAR: 2009 - 1 0 PARTICULARS OF INCOME WITHIN THE MEANING O F SECTION 271 (1) (C) OF THE ACT. THE RELEVANT PARA OF THE ORDER READ S AS UNDER: 8. HAVING HEARD BOTH THE SIDES, WE FIND MERIT IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT ALTHOUGH THE AO HAS ESTIMATED 25% GROSS PROFIT ON ALLEGED BOGUS PURCHASE S, NEVER MADE BY OBSERVATIONS WITH REGARD TO THE INCORRECTNESS IN DETAILS FILED BY THE ASSESSEE TO PROVE SUCH PURCHASES. THE AO NEVER DISBELIEVED INFORMATION FILED BY THE ASSESSEE, BUT HE PROCEEDED ON THE BASIS OF INFORMATION RECEIVED FROM SALES - TAX DEPART MENT TO MAKE ADDITIONS. THE AO HAS MADE SUCH ADDITION ON ADHOC BASIS BY ESTIMATING GROSS PROFIT ON ALLEGED BOGUS PURCHASES. FROM THESE FACTS, IT IS VERY CLEAR THAT THE AO FAILED TO MAKE A CASE OF DELIBERATE ATTEMPT BY THE ASSESSEE TO FURNISH INACCURATE PAR TICULARS OF INCOME. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT MERE DISALLOWANCE OF PURCHASES ON ADHOC BASIS DOES NOT TANTAMOUNT TO WILLFUL FURNISHING INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271 (1) (C) OF THE INCOME TAX ACT, 1961 . HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS ERRED IN LEVYING PENALTY U/S 271 (1) (C) OF THE ACT. ACCORDINGLY WE DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271 (1 ) ( C) OF THE ACT. 7 . IN THE PRESENT CASE, THE AO HAS LEVIED PENALTY U/S 271 (1) (C) OF THE ACT ON THE BASIS OF ADHOC ADDITION MADE ON ESTIMATION BASIS. AS PER THE SETTLED LAW, IN ORDER TO H OL D THE ASSESSEE LIABLE U/S 271 (1) (C) OF THE ACT, THERE MUST BE A CLEAR FINDING BASED ON MATERIAL ON RECORD. MERE ADDITION DOES NOT IPSO FAC TO MAKE THE ASSESSEE LIABLE FOR PENALTY. THE COORDINATE BENCH HAS DECIDED THE SIMILAR ISSUE IN THE CASE OF SH. AJAY LOKNATH LOHIA VS. ITO (SUPRA) , IN FAVOUR OF THE ASSESSEE. HENCE, RESP ECTFULLY FOLLOWING PRINCIPLE LAID DOWN BY T HE COORDINATE BENCH IN THE AFORESAID CASE , WE ALLOW THE APPEAL OF THE ASSESSEE AND SET ASIDE THE FINDINGS OF THE LD. CIT (A) . ACCORDINGLY, WE DIRECT THE AO TO DELETE THE PENALTY LEVIED/S 271(1)(C) OF THE ACT. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 201 0 IS ALLOWED. 4 ITA NO. 1522 / MUM/201 8 ASSESSMENT YEAR: 2009 - 1 0 ORDER PRONOUNCED ON 8 TH DECEMBER , 2020 UNDER RULE 34 (4) OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963. SD/ - SD/ - ( RAJESH KUMAR ) ( RA M LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 08 / 1 2 /2020 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT (A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI