ITO - 32(2)(3), MUMBAI V. MADHU BANWARILAL AGARWAL, MUMBAI

ITA 1568/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4304 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 20-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c); 147

Judgement Text

1 ITAS 1568 & 1569/MUM/2020 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) I.T.A. NOS.1568 & 1569/MUM/2020 (ASSESSMENT YEARS : 2011-12 & 2009-10) INCOME-TAX OFFICER 32(2)(3), MUMBAI VS MADHU BANWARILAL AGARWAL 502, 5 TH FLOOR, SHEETAL CHSL OVARIPADA, DAHISAR EAST MUMBAI-400 068 PANADFPA7719N APPELLANT RESPONDENT APPELLANT BY SHRI BHARAT ANDHLE, DR RESPONDENT BY SHRI DHARMIL JHAVERI, AR DATE OF HEARING 22-09-2021 DATE OF PRONOUNCEMENT 04-10-2021 O R D E R PER SAKTIJIT DEY (JM) THESE ARE APPEALS BY THE REVENUE AGAINST TWO SEPAR ATE ORDERS, BOTH DATED 20-01-2020, OF LEARNED COMMISSIONER OF INCOME TAX ( APPEALS)-44, MUMBAI DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEARS 2011-12 AND 2009-10, RESPE CTIVELY. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVI DUAL ENGAGED IN THE BUSINESS OF TRADING IN NON FERROUS METALS. BASED ON INFORMATION RECEIVED FROM SALES-TAX DEPARTMENT, THE ASSESSING OFFICER REOPENED THE ASSE SSMENT FOR THE IMPUGNED 2 ITAS 1568 & 1569/MUM/2020 ASSESSMENT YEARS UNDER SECTION 147 OF THE ACT. THE REASON FOR WHICH THE ASSESSMENTS WERE REOPENED ARE, CERTAIN PURCHASES MA DE BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEARS WERE NON GENUINE, AS, THE CONCERNED SELLING DEALERS HAVE BEEN IDENTIFIED AS HAWALA OPERATORS PR OVIDING ACCOMMODATION BILLS. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES. THOUGH THE ASSESSEE FURNISHED CERTAIN DOCUMENTARY EVIDENCES TO PROVE TH E PURCHASES; HOWEVER, THE ASSESSING OFFICER WAS UNCONVINCED. ULTIMATELY, HE T REATED THE PURCHASES AS NON GENUINE. HOWEVER, CONSIDERING THE FACT THAT CORRESP ONDING SALES HAVE BEEN EFFECTED, THE ASSESSING OFFICER ESTIMATED THE GROSS PROFIT AT 10.16% IN ASSESSMENT YEAR 2009-10 AND MADE A NET DISALLOWANCE OF RS.19,7 1,745/-. WHEREAS, IN ASSESSMENT YEAR 2011-12 HE DISALLOWED RS.23,32,180/ -, BEING, 12.5% OF THE ALLEGED NON GENUINE PURCHASES. THE DISALLOWANCE MAD E BY THE ASSESSING OFFICER WAS SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) . BASED ON THE DISALLOWANCE SUSTAINED BY LEARNED COMMISSIONER (APPEALS), THE AS SESSING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME AND ULTIMATELY PASSED ORDERS IMPOSING PENALTY OF RS.6,33,990/- IN ASSESSMENT YEA R 2009-10 AND RS.9,56,730/- IN ASSESSMENT YEAR 2011-12. AGAINST THE PENALTY ORD ERS SO PASSED, THE ASSESSEE PREFERRED APPEALS BEFORE LEARNED (APPEALS). AFTER C ONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD, LEARNED COMMISSIONER (APPEALS) DELETED THE PENALTY IMPOSED IN BOTH THE ASSESSMENT YEARS. 3. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. IT IS EVIDENT, THOUGH THE ASSESSING OFFICER, BASED ON CERTAIN INFORMATION RECEIVED 3 ITAS 1568 & 1569/MUM/2020 FROM THE SALES-TAX DEPARTMENT HAS TREATED CERTAIN P URCHASES MADE IN THE RELEVANT ASSESSMENT YEARS AS NON GENUINE; HOWEVER, HE HAD NO DOUBT THAT GOODS REPRESENTING SUCH PURCHASES, INDEED, WERE AVAILABLE WITH THE ASSESSEE. FOR THIS REASON ALONE, INSTEAD OF DISALLOWING THE ENTIRE PUR CHASES, THE ASSESSING OFFICER HAS RESTRICTED THE DISALLOWANCE TO THE PROFIT ELEME NT EMBEDDED IN SUCH PURCHASES, THAT TOO, PURELY ON ESTIMATE BASIS. INAB ILITY OF THE ASSESSEE TO PROVE THE SOURCE OF PURCHASES COULD BE FOR VARIOUS REASON S. HOWEVER, THAT ITSELF CANNOT BE A FACTOR TO CONCLUDE THAT THE ASSESSEE HAS COMMI TTED ANY OFFENCE UNDER SECTION 271(1)(C) OF THE ACT. IN ANY CASE OF THE M ATTER, ADDITIONS BASED ON WHICH PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN IMPOSED, WERE MADE PURELY ON ESTIMATE BASIS. THAT BEING THE FACTUAL POSITION, WE FULLY AGREE WITH THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN DELETING THE P ENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. GROUNDS ARE DISMISSED. 4. IN THE RESULT, APPEALS ARE DISMISSED. ORDER PRONOUNCED ON 04/10/2021. SD/- SD/- (RAJESH KUMAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 04/10/2021 PAVANAN 4 ITAS 1568 & 1569/MUM/2020 COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI