MADHUKANT VANDRAVANDAS SANGHVI, MUMBAI V. ITO, WARD-26(2)(2), MUMBAI

ITA 172/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8532 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 14-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHARM VEER SINGH
• Keywords: Bogus purchase; Reassessment proceedings; Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI N.K.PRADHAN, ACCOUNTANT MEMBER ITA NO.172/MUM/2019(A.Y.2010-11) MADHUKANT VANDRAVANDAS SANGHVI, C/23, KRISHNALAYA CHS, N.S.MANIKAR MARG, SION, MUMBAI 400 022. PAN: AAPPS1903F ..... . APPELLANT VS. ITO WARD 26(2)(2), C-11, ROOM NO.704, 7 TH FLOOR, PRATYKSHKAR BHAVAN, BKC, BANDRA (E), MUMBAI 400 051 ..... RESPONDEN T APPELLANT BY : NONE RESPONDENT BY : SHRI DHARM VEER S INGH DATE OF HEARING : 14/01/2020 DATE OF PRONOUNCEMENT : 14/01/2020 ORDER PER VIKAS AWASTHY, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-38, MUMBAI [IN SHORT THE CIT( A)] DATED 24/08/2018 FOR THE ASSESSMENT YEAR 2010-11 CONFIRMING LEVY OF PENAL TY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE NOTICE OF THE APPEAL WAS SENT TO THE ASSESSE E THROUGH RPAD ON 05/12/2019. AS IS EVIDENT FROM THE ACKNOWLEDGMENT CARD AVAILABLE ON RECORD, THE NOTICE WAS DULY SERVED ON THE ASSESSEE. DESPITE SE RVICE OF NOTICE NEITHER THE ASSESSEE NOR AUTHORIZED REPRESENTATIVE OF THE ASSES SEE WAS PRESENT IN THE COURT TO 2 ITA NO.172/MUM/2019(A.Y.2010-11) DEFEND THE APPEAL. IT SEEMS THAT ASSESSEE IS NOT I NTERESTED IN PURSUING THE MATTER BEFORE THE TRIBUNAL. THE APPEAL IS TAKEN UP FOR AD JUDICATION WITH THE ASSISTANCE OF LD. DEPARTMENTAL REPRESENTATIVE AND THE MATERIAL AVAILA BLE ON RECORD. 3. BRIEF FACTS OF THE CASE AS EMANATING FROM THE RE CORDS ARE: THE ASSESSEE IS A TRADER IN IRON AND STEEL PRODUCTS. THE ASSESSMENT FOR ASSESSMENT YEAR 2010-11 WAS REOPENED BY THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM DGIT(INV) REGARDING ASSESSEES INVOLVEMENT IN DEALI NG WITH HAWALA OPERATORS. IN REASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSE RVED THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS FROM VARIOUS PARTIES AGGREGATING TO RS.35,81,438/-. THE ASSESSING OFFICER MADE ADDITION OF RS.4,47,680/ - I.E. 12.5% OF NON-GENUINE PURCHASES. THE ASSESSING OFFICER FURTHER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER VIDE O RDER DATED 26/08/2016 LEVIED PENALTY OF RS.1,18,258/- FOR CONCEALMENT OF INCOME. AGGRIEVED AGAINST THE ORDER LEVYING PENALTY, THE ASSESSEE FILED APPEAL BEFORE T HE CIT(A). THE CIT(A) VIDE IMPUGNED ORDER DISMISSED THE APPEAL OF ASSESSEE A ND CONFIRMED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. HENCE, THE PRE SENT APPEAL BY THE ASSESSEE. 4 SHRI DHARM VEER SINGH REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED TH E IMPUGNED ORDER AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY LD. DEPAR TMENTAL REPRESENTATIVE AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. AT T HE OUTSET, WE OBSERVE THAT WHILE RECORDING SATISFACTION FOR LEVYING OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER HAS OBSERVED AS UNDER:- PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE SE PARATELY INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND FOR CONCEALING THE INCOME. 3 ITA NO.172/MUM/2019(A.Y.2010-11) WHEREAS WHILE LEVYING PENALTY UNDER SECTION 271(1)( C) OF THE ACT VIDE ORDER DATED 26/08/2016, THE PENALTY HAS BEEN LEVIED FOR CONCEAL MENT OF INCOME . THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PE RINCHERY REPORTED AS 88 TAXMAN 413(BOM) HAS HELD THAT THE ORDER IMPOSING PENALTY H AS TO BE MADE ONLY ON THE GROUND FOR WHICH THE PENALTY PROCEEDINGS HAVE BEEN INITIATED AND IT CANNOT BE ON FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. 6. IN THE PRESENT CASE, WE OBSERVE THAT THE ASSESS ING OFFICER WAS NOT CLEAR IN HIS MIND AS TO WHICH LIMB OF SECTION 271(1)(C) OF THE A CT WOULD GET ATTRACTED FOR LEVY OF PENALTY. THEREFORE, HE MENTIONED BOTH THE CHARGES OF SECTION 271(1)(C) OF THE ACT. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF T. ASHOK PAI VS. CIT, 292 ITR 11 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INA CCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MANU ENGG., 122 ITR 306 HAS HELD THAT LEVY OF PENAL TY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED. WHERE THE POSITION IS UNCL EAR, PENALTY IS NOT SUSTAINABLE. FROM THE ABOVE REFERRED JUDGMENTS IT IS EXPLICITLY CLEAR THAT PENALTY CANNOT BE SUSTAINED WHERE THE CHARGE IS VAGUE. IN THE INSTANT CASE THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS FOR FURNISHING INACCURATE PARTI CULARS OF INCOME AND FOR CONCEALING THE INCOME. THE MANNER IN WHICH AS SESSING OFFICER HAS RECORDED SATISFACTION FOR INITIATING PENALTY PROCEEDS BY INV OKING BOTH THE CHARGES UNDER SECTION 271(1)(C) OF THE ACT AND THEREAFTER, LEVIED PENALTY ON THE CHARGE OF CONCEALMENT OF INCOME ALONE INDICATES THAT THERE WA S AMBIGUITY IN THE MIND OF ASSESSING OFFICER WITH REGARD TO THE CHARGE ON WHI CH PENALTY IS TO BE LEVIED. THE PENALTY PROVISIONS CANNOT BE INVOKED IN AN AMBIGUOU S MANNER. OUR VIEW IS SUPPORTED BY THE DECISION RENDERED BY HONBLE KARNA TAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY, REPORT ED AS 359 ITR 565(KAR). THE 4 ITA NO.172/MUM/2019(A.Y.2010-11) PENALTY UNDER SECTION 271(1)(C) OF THE ACT, IS LIAB LE TO BE DELETED ON THIS LEGAL GROUND. WE HOLD AND DIRECT ACCORDINGLY. 7. WE FURTHER OBSERVE THAT EVEN ON MERITS THE PENA LTY IS NOT SUSTAINABLE. THE ADDITION HAS BEEN MADE BY ASSESSING OFFICER ON MERE ESTIMATION OF GP ON THE ALLEGED BOGUS PURCHASES. IT IS A WELL SETTLED LAW THAT PEN ALTY PROCEEDINGS ARE UNUSTAINABLE ON ESTIMATED ADDITIONS. WE FIND MERIT IN THE APPEA L OF THE ASSESSEE. HENCE, THE IMPUGNED ORDER IS SET ASIDE AND APPEAL OF THE ASSES SEE IS ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY , THE 14 TH DAY OF JANUARY, 2020. SD/- SD/- (N.K.PRADHAN) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 14/01/2020 VM , SR. PS(O/S) 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