FIVE VISION, MUMBAI V. ACIT -33(1) [ERSTWHILE ACIT 25(3)], MUMBAI

ITA 1604/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0402 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAI N , JUDICIAL MEMBER ITA NO. 1604/MUM./2015 (ASSESSMENT YEAR: 2009 - 10 ) M/S. FIVE VISION D - 201, VASANT SMRUTI THAKUR COMPLEX, KANDIVALI (E) MUMBAI 400 101 PAN NO.AABFF8876C . APPELLANT V/S ACIT 33 (1) (ERSTWHILE ACIT 25(3) 308, 3 RD FLOOR, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX, BANDRA MUMBAI 400 050 . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI. T.A. KHAN DATE OF HEARING 07.08.2017 DATE OF ORDER - 11 .0 8 .2017 O R D E R PER: SHAMIM YAHYA THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF CIT ( A ) DATED 12 .03.2014 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. 2. THE ISSUE RAISED IS THAT CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S.271(1)(C) AMOUNTING TO RS.25,90,286.00. 3. THE FACTS LEADING THE LEVY OF PENALTY ARE THAT ADDITION WAS MADE FOR RS.34,39,532/ - ON ACCOUNT OF BOGUS PURCHASE. FURTHERMORE, ADDITION WAS ALSO MADE FOR INTEREST ON DEBIT BALANCE OF PARTNERS CAPITAL ACCOUNT TREATED AS ITA NO.1604/MUM/2015 M/S. FIVE VISION 2 UNEXPLAINED INTEREST INCOME. WH ILE LEVYING THE PENALTY, THE ASSESSING OFFICER HELD AS UNDER: - DURING ASSESSMENT PROCEEDINGS, THE AO HAD CLEARLY BROUGHT OUT THE FACTS THAT THE ASSESSEE WAS ENTERING INTO TRANSACTIONS WITH SUCH ENTITIES AS M/S AMAR TRADING CORPORATION AND M/S SURAJ TIMBERS WHO WERE INDULGING IN HAWALA TRANSACTIONS AND WHOSE NAMES WERE DISPLAYED ON THE WEBSITE OF MAHARASHTRA SALES TAX DEPARTMENT. THE ASSESSEE COULD NOT REBUT OR CONTROVERT THIS SIMPLE FACT. THE ARGUMENTS THAT THE PAYMENTS WERE MADE BY CHEQUES WAS FOUND TO BE UNTENABLE AS PAYMENTS BY CHEQUES, PER SE, IS NO PROOF OF THE TRANSACTION BEING GENUINE AS THE CONSIDERATION PAID IS RECEIVED IN CASH AFTER PAYING A NOMINAL COMMISSION TO THE ISSUER OF SUCH BOGUS BILLS. (II) EVEN DURING THE PROCEEDINGS U/S 274 R.W.S. 271(L)(C), THE ASSESSEE WAS NOT ABLE TO OFFER ANY COMPELLING ARGUMENTS IN SUPPORT OF ITS CONTENTION THAT IT HAD NOT ENTERED INTO ANY QUESTIONABLE OR COLORABLE TRANSACTIONS WITH PROVEN HAWALA OPERATORS. THE ASSESSEE'S 'BELIEF, TENUOUS AT BEST, IS A P OOR SUBSTITUTE FOR SUSTAINABLE AND VERIFIABLE DOCUMENTARY PROOF. (III) DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED MISERABLY IN EXPLAINING WHY INTEREST INCOME ON THE DEBIT BALANCES OF THE PARTNERS CAPITAL ACCOUNT WAS NOT OFFERED TO TAX, THOUGH THE PARTNERSHIP DEED CLEARLY MANDATED THE CHARGING OF 'SUCH INTEREST, AS WAS SUCCINCTLY BROUGHT OUT BY THE ASSESSING OFFICER ON PAGE - 3, PARA - 4 OF THE ASSESSMENT ORDER. EVEN DURING THE PROCEEDINGS U/S 274 R.W.S. 271(L)(C), THE ASSESSEE CHOSE TO REMAIN POIN TEDLY SILENT ON THIS ISSUE, THEREBY TACITLY ACCEPTING ITS DEFAULT. 5. IN VIEW OF THE ABOVE, 1 AM SATISFIED THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME LEADING TO CONCEALMENT, MAKING IT LIABLE, FOR PENALTY UNDER SECTION 271(L)(C) OF THE ACT . I, THEREFORE, LEVY A PENALTY OF RS. 25,90,286/ - , WHICH IS 200% OF THE TAX SOUGHT TO BE EVADED ON INCOME WHOSE PARTICULARS HAVE BEEN INACCURATELY FURNISHED LEADING TO CONCEALMENT. 4. UPON ASSESSEES APPEAL, LEARNED CIT(A) CONFIRMED THE PENALTY AS UNDER: - THE APPELLANT DID NOT COME FORTH WITH ANY LOGICAL EXPLANATION TO JUSTIFY THE PURCHASES AS GENUINE. MEANWHILE THE APPELLANT DID NOT FILE ANY APPEAL AGAINST THE ASSESSMENT PROCEEDING AND DID SO ONLY AFTER RECEIPT OF THE PENALTY ORDER. THE CONDONATION OF DELA Y IN FILING OF APPEAL AGAINST THE ASSESSMENT HAS ALREADY BEEN DISMISSED VIDE THIS OFFICER ORDER CIT(A) - 35/ACIT 25(3)/ITA 126/12 - 13 DATED 24 - 12 - 2013. IN THE PRESENT PROCEEDINGS THE APPELLANT HAS NOT COME FORTH WITH ANY FURTHER EXPLANATION EXCEPT THE STATEMENT ALONG WITH FILING OF THE APPEAL. THE APPELLANT HAS SUBMITTED THAT 'IN REPLY TO YOUR ABOVE NOTICE WE SUBMIT AS UNDER: ITA NO.1604/MUM/2015 M/S. FIVE VISION 3 WE HAVE VOLUNTARILY DECLARED ALL THE FACTS DURING THE ASSESSMENT PROCEEDINGS AND HAVE COOPERATED WITH THE PROCEEDINGS. WE DO NOT BELIEVE THAT THE ADDITION MADE WERE BOGUS PURCHASES BUT IN ORDER TO AVOID LITIGATION AND BUY PEACE OF MIND, WE HAVE ACCEPTED THE ADDITIONS. WE HAVE ALWAYS COOPERATED WITH THE ASSESSMENT PROCEEDINGS. WE HAVE PAID RS. 12 LAKHS OUT OF THE TAX AS DEMANDED. WE REQUEST YOUR HONOUR TO APPRECIATE THE SITUATION AND KINDLY NOT TO LEVY PENALTY U/S.271(L)(0 AND U/S.271(L)(B).' 4. FROM THE SUBMISSIONS MADE ALONGWITH THE STATEMENT OF FACTS AND KEEPING IN VIEW THAT THE APPELLANT HAS NOT COME FORTH WITH ANY PROPER EXP LANATION AS TO WHY PENALTY SHOULD NOT BE LEVIED THE APPEAL OF THE APPELLANT IS DISMISSED. 5. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD LEARNED DR AND PERUSED THE RECORDS. O N BEHALF OF THE ASSESSEE AN ADJOURNMENT PETITION HAS BEEN MOVED THAT THE ADVOCATE WAS NOT AVAILABLE ON ACCOUNT OF CERTAIN UNAVOIDABLE PERSONAL CONTINGENCY. WE NOTE THAT SEVERAL ADJOURNMENTS HAVE ALREADY BEEN GRANTED IN THIS CASE AT THE REQUEST OF THE ASSESSEE. TODAY NO COGENT REASON HAS BEEN CITED FOR SEEKING THE ADJOURNMENT; HENCE, THIS ADJOURNMENT PETITION HAS BEEN DISMISSED. 7. UPON HEARING LEARNED D R AND PERUSING THE RECORD, WE FI ND THAT THE REASON FOR THE LEVY OF PENALTY HAS BEEN VERY COGENTLY BROUGHT OUT IN THE PENALTY ORDER. TH E MAJOR PART OF THE PENALTY IS ON ACCOUNT OF BOGUS PURCHASES. THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF THE AO. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE AUTHORITIES BELOW FOR THE LEVY OF PENALTY. FURTHERM ORE, ADDITION ON ACCOUNT OF NON - CHARGING OF INTEREST ON DEBIT BALANCE OF PARTNERS HAS ALSO LE D TO CONCEALMENT OF INCOME. IN THESE CIRCUMSTANCES, WE ARE PRINCIPALLY IN AGREEMENT WITH LEVY OF PENALTY. WE NOTE THAT ASSESSEE HAS ALSO NOT BEEN ITA NO.1604/MUM/2015 M/S. FIVE VISION 4 COOPERING IN THE PROCEEDINGS. THE APPEAL TO THE LEARNED CIT(A) ON THE MERITS OF ADDITION WAS DISMISSED ON ACCOUNT OF DELAY. IN THE PENALTY PROCEEDINGS NONE HAS APPEARED BEFORE THE LEARNED CIT(A). BEFORE US ALSO NONE HAS APPEARED. 8. HOWEVER, ALTHOUGH WE ARE PRINCIPALLY IN AGREEMENT WITH THE LEVY OF PENALTY, WE DO NOT FIND ANY JUSTIFICATION FOR THE LEVY OF PENALTY @200% OF THE TAXES SOUGHT TO BE EVADED. HENCE, WE MODIFY THE PENALTY AND HOLD THAT LEVY OF PENALTY @100% OF TAXES SOUGHT TO BE EVADED I.E., RS. 12,95,143/ - WOULD SERVE THE END OF JUSTICE. ACCORDINGLY THE ORDERS OF THE AUTHORITIES BELOW ARE MODIFIED AND PENALTY AMOUNTING TO RS.12,95,143/ - IS CONFIRMED. 9. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 1 .0 8 .2017 S D / - S D / - (SANDEEP GOSAIN) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 1 1 .0 8 .2017 ITA NO.1604/MUM/2015 M/S. FIVE VISION 5 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE. BY ORDER KARUNA /SR.PS. SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI