Shri Nilesh Rameshchandra Shah, Ahmedabad V. The DCIT, Circle-6(1), Ahmedabad

ITA 180/AHD/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4175 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Rejection of books of accounts
• Section: 271(1)(c); 48; 27; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD (CONDUCTING THROUGH VIRTUAL COURT) BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO.180/AHD/2019 (ASSESSMENT YEAR: 2009-10) SHRI NILESH RAMESHCHANDRA SHAH PROP: SHAGUN ART, 8, RAM SHYAM APARTMENT, NR. L. G. HOSPITAL, MANINAGAR, AHMEDABAD-380008 VS. DCIT CIRCLE-6(1), AHMEDABAD [PAN NO. AFQPS3070R] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI KARAN SHAH, AR RESPONDENT BY: SHRI PURUSHOTTAM KUMAR, SR. DR DATE OF HEARING: 04/10/2021 DATE OF PRONOUNCEMENT: 05/10/2021 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER DATED 12.12.2018 PASSED BY THE LD. CIT(A)-6, AHMEDABAD AR ISING OUT OF THE ORDER DATED 24.03.2017 PASSED BY THE DCIT, CIRCLE-12, AHMEDABAD UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS T O THE ACT) FOR A.Y. 2009-10. 2. WE HAVE HEARD THE PARTIES, AND PERUSED THE RELEV ANT MATERIALS AVAILABLE ON RECORD. 3. THE SHORT POINT INVOLVED IN THIS PARTICULAR CASE AS TO WHETHER THE PENALTY IS LEVIABLE WHEN THE ADDITION HAS BEEN MADE ON ESTIMAT ION OF GROSS PROFIT (G.P.). THE QUANTUM PROCEEDING WAS A RE-OPENING OF ASSESSMENT U NDER SECTION 148 OF THE ACT BY ISSUING NOTICE DATED 28.03.2013 WHICH WAS FINALIZED ON 28.03.2014 UPON MAKING THE - 2 - ITA NO.180/AHD/2019 SHRI NILESH RAMESHCHANDRA SHAH VS.DCIT A.Y. 2009-10 FOLLOWING ADDITION AFTER DETERMINING THE TOTAL INCO ME OF THE ASSESSEE AT RS. 1,47,07,690/-: I) REJECTION OF BOOKS OF ACCOUNTS AND ADDITION ON A CCOUNT OF DISALLOWANCE OF BOGUS PURCHASES RS. 1,28,53,148/-. II) CHARGING OF INTEREST UNDER SECTION 234A, 23B & 234C OF THE ACT. III) PENALTY UNDER SECTION 271(1)(C) WAS ALSO INITI ATED BY THE LD. AO. 4. THE SAID ADDITION WAS ALSO CONFIRMED BY THE LD. CIT(A). HOWEVER, THE HONBLE ITAT UPON CONSIDERING THE CASE OF THE ASSES SEE RESTRICTED THE DISALLOWANCE AT 5% ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO RS. 6, 42,657/-. ON THE OTHER HAND, THE LD. AO BY AND UNDER THE ORD ER DATED 24.03.2017 IMPOSED PENALTY OF RS. 43,68,785/- UNDER SECTION 27 1(1)(C) OF THE ACT. HOWEVER, KEEPING IN VIEW THE ORDER PASSED BY THE HONBLE ITA T IN QUANTUM APPEAL, THE LD. CIT(A) IN PENALTY APPEAL RESTRICTED THE PENALTY ON ADDITION OF RS. 6,42,657/- AS AGAINST THE PENALTY LEVIED BY THE LD. AO ON 1,28,53 ,148/-. THE ASSESSEE HAS CHALLENGED THE PENALTY ORDER BEFO RE US, ON THE COUNT, THAT PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED ON ADDITION ON ESTIMATION OF G.P. IN THIS REGARD, WE HAVE CAREFULLY CONSIDERED FOLLOWING JUDGMENTS AS RELIED UPON BY THE LD. AR PASSED BY THE JURISDICTIONAL HIGH COURT IN T HE CASE OF ITO VS. BOMBAYWALA READYMADE STORES REPORTED IN, (2015) TAXMAN 313 (GU J.)(HC) AND CIT VS. WHITELENE CHEMICALS REPORTED IN, (2013) 32 TAXMANN.COM 192/21 4 TAXMAN 93(MAG.)(GUJ.). WE HAVE FURTHER CONSIDERED THE JUDGMENTS PASSED BY THE COORDINATE BENCH IN THE CASE OF WHITELINE CHEMICALS VS. ITO REPORTED IN, (2014) 48 TAXMANN.COM 123 / (2013) 28 ITR (TRIB.) 523 (AHD.), A. K. PATEL & CO. (CONSTRUC TION) (P.) LTD. VS. DCIT REPORTED IN, (2011) 15 TAXMANN.COM 380/(2012) 50 SOT 91 (URO ) (AHD.), ACIT, CIRCLE-5, SURAT VS. SHIVAM PROJECTS REPORTED IN, (2018) 97 TA XMANN.COM 88 AND DCIT VS. - 3 - ITA NO.180/AHD/2019 SHRI NILESH RAMESHCHANDRA SHAH VS.DCIT A.Y. 2009-10 KALINDI RAIL NIRMAN ENGG. LTD. REPORTED IN, (2012) 21 TAXMANN.COM 24 / 52 SOT 91 (URO) (DELHI). CONSIDERING THE ABOVE JUDGMENTS AND RELYING ON THE RATIO LAID DOWN THEREIN WE HOLD THAT WHEN THE INCOME WAS ASSESSED ON ESTIMATED BASIS AND ADDITION WAS MADE ON ESTIMATION OF G.P. NO PENALTY UNDER SECTION 271(1)( C) COULD BE LEVIED AGAINST THE ASSESSEE FOR CONCEALMENT ON INCOME. THE ORDER IMPU GNED IS, THEREFORE, NOT SUSTAINABLE. HENCE, THE PENALTY ORDER IS HEREBY QU ASHED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 05/10/2021 SD/- SD/- (AMARJIT SINGH) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 05/10/2021 TANMAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE PCIT- AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 04.10.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04.10.2021 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 04.10.2021 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 05.10.2021 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER