EVERGREEN TECHNOLOGIES P.LTD, MUMBAI V. DCIT CIR 1(1)(2), MUMBAI

ITA 1833/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9824 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: P R RAIYANI
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

I T A N O . 1 8 3 3 / M U M / 2 0 1 6 A . Y . 2 0 0 9 - 1 0 P A G E | 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 1833 /MUM/2016 ( / ASSESSMENT YEAR: 2009 - 10 ) EVERGREEN TECHNOLOGIES PVT. LTD. 3D, MAKER BHAVAN NO. 2, 18 NEW MARINE LINES, MUMBAI 400 020. / VS. DCIT, CIRCLE - 1(1)(2), AAYAKAR BHAVAN, M.K. MARG, MUMBAI - 400 020. ./ ./ PAN/GIR NO. AAACE5284F ( / APPELLANT ) : ( / RESPONDENT) / APPELLANT BY : SHRI P.R. RAIY ANI , A.R. / RESPONDENT BY : SHRI V. JUSTIN, D.R. / DATE OF HEARING : 06 /07/2017 / DATE OF PRONOUNCEMENT : 26 /07/2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER T HE PRESENT APPEAL IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) - 2 , MUMBAI, DATED 01.01.2016 , WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT), DATED 17/03/2015 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING G ROUNDS OF APPEAL BEFORE US: - I T A N O . 1 8 3 3 / M U M / 2 0 1 6 A . Y . 2 0 0 9 - 1 0 P A G E | 2 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) - 2, MUMBAI [CIT(A)] ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE IN CONFIRMING PENALTY OF RS. 15,918/ - LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 [ACT] BY DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1( 1)(2), MUMBAI [AO] VIDE ORDER DATED 17/03/2015; 1.1 CIT(A) ERRED IN NOT APPRECIATING THAT: (I) APPELLANT'S CA DID ATTEND BEFORE HIM ON 28TH SEPTEMBER, 2015 IN RESPONSE TO NOTICE OF HEARING D ATED 04.09.2015 AND HE INFORMED CIT(A) ABOUT PENDING APPEAL BEFORE CIT(A) - 1 FOR QUANTUM ADDITION MADE IN RESPECT OF WHICH SAID PENALTY OF RS. 15,918 / - WAS IMPOSED AND CA HAD REQUESTED CIT(A) TO ADJOURN THE HEARING AND HE ALSO FILED LETTER DATED 28.09.2015 IN THE OFFICE OF CIT(A) WHICH WAS AVAILABLE ON THE RECORD WHILE PASSING ORDER; (II) APPELLANT'S CA HAD ALSO ATTENDED BEFORE CIT(A) ON 20.11.2015 AT THE ADJOURNED HEARING AND HE INFORMED CIT(A) AGAIN ABOUT SAID PENDING APPEAL AGAINST QUANTUM ADDITION AND THE CIT(A) HAD FURTHER ADJOURNED THE HEARING FOR THE PURPOSE OF CLUBBING AND HEARING BOTH THE APPEALS SIMULTANEOUSLY; (III) APPELLANT'S CA HAD, AFTER MAKING INQUIRIES WITH OFFICE OF CIT(A) - 1 INFORMED THE OFFICE OF CIT(A) - 2 ON 23.11.2015 ABOUT TRANSFER OF SAID APPEAL MADE TO CIT(A) - 2 IN MARCH, 2015. (IV) PASSING OF ORDER ON 01.01.2016 WITHOUT CLUBBING AND FIXING HEARING OF BOTH PENDING APPEALS AND WITHOUT GIVING OPPORTUNITY TO THE APPELLANT WAS BAD IN LAW. 2. APPELLANT PRAYS THAT : 2.1 PENALTY OF RS. 15,918 / - IMPOSED U/S 271(1)(C) OF THE ACT BE DIRECTED TO BE DELETED; AND 2.2 STATEMENT OF FACTS ATTACHED TO THE MEMO OF APPEAL IN FORM 36 BE TAKEN INTO CONSIDERATION WHILE DISPOSING OFF THE APPEAL. 3. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTER, VARY OR W ITHDRAW ALL OR ANY OF THE ABOVE GROUNDS . 2. BRIEFLY STATED, THE FACT S OF THE CASE ARE THAT THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 22.09.2009, DECLARING TOTAL INCOME OF RS.99,66,390/ - . THE ASSESSMENT I T A N O . 1 8 3 3 / M U M / 2 0 1 6 A . Y . 2 0 0 9 - 1 0 P A G E | 3 IN THE CASE OF THE ASSESSEE WAS INITIALLY FRAMED U/S. 143(3) OF THE ACT ON 29.12.2011, THEREIN DETERMINING THE LATTERS TOTAL TAXABLE INCOME AT RS.99,66,390/ - . SUBSEQUENTLY , ON THE BASIS OF INFORMATION RECEIVED FROM THE SALE S TAX DEPARTMENT THAT THE ASSESSEE COMPANY HAD BOOK ED BOGUS PURCHASES DURING THE YEAR UNDER CONSIDERATION, THE CASE OF THE ASSESSEE WAS REOPENED AND A NOTICE U/S. 148, DATED 14.03.2014 WAS ISSUED AND SERVED ON THE ASSESSEE. THE ASSESSEE IN COMPLIANCE TO THE AFORESAID NOTICE THERE IN REQUESTED THAT ITS ORIGI NAL RETURN OF INCOME WHICH WAS E - FILED ON 29.09.2009 MAY BE TREATED AS THE RETURN FILED IN RESPONSE TO NOTICE U/S. 148, WHICH WAS ACCEPTED AND ACTED UPON AS SUCH BY THE A.O. 3. THAT DURING THE COURSE OF THE ASSESSM ENT PROCEEDINGS THE A.O OBSERVING THAT THE ASSESSEE HAD MADE A PURCHASE OF RS.46,831/ - FROM M/S. ASIAN STEEL DURING THE YEAR UNDER CONSIDERATION, THEREIN CALLED UPON IT TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE SAID PURCHASE TRANSACTION. THE A.O AFTER DELIBERATING ON THE SUBMISS IONS OF THE ASSESSEE THOUGH DID NOT DISTURB THE SALES CORRESPONDING TO THE AFORESAID PURCHASE S UNDER CONSIDERATION, BUT HE HOWEVER NOT FIND ING FAVOUR WITH THE EXPLANATION OF THE ASSESSEE AS REGARDS THE GENUINENESS OF THE PURCHASE TRANSACTION , WHICH WAS CLA IMED TO HAVE BEEN MADE FROM THE AFORESAID PARTY , VIZ . M/S. ASIAN STEEL, THEREIN CONCLUDED THAT THE ASSESSEE HAD CARRIED OUT THE SAID PURCHASES OUTSIDE ITS BOOKS OF ACCOUNTS AND MADE AN ADDITION OF THE AFORESAID AMOUNT TO THE RETURN ED INCOME OF THE ASSESSEE AND ASSESSED THE LATTERS INCOME AT RS. 1,00,13,221/ - . 4. THAT PURSUANT TO THE FRAMING OF THE AFORESAID ASSESSMENT THE A.O PROCEEDED WITH THE PENALTY PROCEEDINGS IN THE HANDS OF THE ASSESSEE AND HOLDING A CONVICTION THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE AFORESAID PURCHASE I T A N O . 1 8 3 3 / M U M / 2 0 1 6 A . Y . 2 0 0 9 - 1 0 P A G E | 4 OF RS. 46,831/ - (SUPRA) , THEREIN IMPOSED A PENALTY OF RS.15,9 18/ - U/S. 271(1)(C) IN THE HANDS OF THE ASSESSEE. 5. THE ASSESSEE BEING AGGRIEVED WITH THE PENALTY IMPOSED U/S. 271(1)(C), THEREIN ASSAILED THE SAME BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE SUBMISSIO NS OF THE ASSESSEE, THEREIN DID NOT FIND FAVOUR WITH THE SAME AND DISMISSED THE APPEAL OF THE ASSESSEE. 6. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) SUSTAINING THE PENALTY IMPOSED BY THE A.O U/S. 271(1)(C) HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THAT AT THE VERY O UTSET OF THE HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R.) FOR THE ASSESSEE THAT THE QUANTUM ADDITION OF RS.46,831 / - MADE BY THE A.O WHILE FRAMING THE ASSESSMENT U/S. 143(3) R.W.S. 147 HAD THEREAFTER ON APPE AL BEEN DELETED BY THE CIT(A) VIDE HIS ORDER 24.02.2017 , AND THEREIN TOOK US THROUGH THE COPY OF THE ORDER PASSED BY THE CIT(A) . IT WAS SUBMITTED BY THE LD. A.R THAT THE CIT(A) AFTER DULY APPRECIATING THAT AS THE SALES CORRESPONDING TO THE AFORESAID PURCHASE TRANSACTION HAD NOT BEEN DISPUTED BY THE A.O, THEREFORE , THE ADDITION OF THE ENTIRE AMOUNT OF PURCHASE OF RS.46,831/ - (SUPRA) COULD NOT BE SUSTAINED. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT THE CIT(A) BEING OF THE VIEW THAT AS THE ASSESSEE MUST HAD CARRIED OUT THE PURCHASES FROM H AWALA SUPPLIERS , HE THEREFORE RESTRICTED THE ADDITION ONLY TO THE EXTENT OF THE PROFIT ELEMENT EMBEDDED IN THE PURCHASE TRANSACTION OF RS.46,831/ - (SUPRA) . IT WAS FURTH ER SUBMITTED BY THE LD. A.R THAT THE CIT(A) IN ORDER TO GIVE E FFECT TO HIS AFORESAID OBSERVATIONS HAD THEREIN MERELY ESTIMATED THE PROFIT ELEMENT AT 2% OF THE VALUE OF THE PURCHASE TRANSACTIONS AMOUNTING TO RS.46,831/ - (SUPRA), AS A RESULT WHEREOF THE ADD ITION IN THE HANDS OF THE ASSESSEE BOILED DOWN TO AN AMOUNT OF RS.936/ - . IT WAS AVERRED BY THE LD. A.R. THAT NOW WHEN THE AFORESAID ADDITION OF I T A N O . 1 8 3 3 / M U M / 2 0 1 6 A . Y . 2 0 0 9 - 1 0 P A G E | 5 RS.936/ - HAD BEEN MADE BY THE CIT(A) NOT ON THE BASIS OF ANY CONCRETE MATERIAL, BUT MERELY ON THE BASIS OF AN ESTIMATE, THEREFORE , NO PENALTY U/S. 271(1)(C) COULD BE SUSTAINED IN RESPECT OF THE SAME. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R.) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVE S FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE ADDITION OF RS.46,831/ - (SUPRA) HAD BEEN STRUCK DOWN BY THE CIT(A) WHILE DISPOSING OF THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE A.O U/S. 143(3) R.W.S. 147 , AND THE SAME HAD BEEN SUBSTITUTED BY AN ADDITION OF RS.936/ - WHICH IN ITSELF HAD BEEN WORKED OUT ON AN ESTIMATE BASIS BY APPLYING A PROFIT RATE OF 2% ON THE VALUE OF THE AFORESAID PURCHASE TRANSACTION OF RS. 46,831/ - , AND IS NOT FOUND TO BE BACKED BY ANY CONCRETE BASIS, THEREFORE , WE FIND OURSELVES TO BE IN AGREEMENT WITH THE LD. A.R. THAT NO PENALTY IN RESPECT OF THE A DDITION AT RS.936/ - (SUPRA) WHICH HAD BEEN SUSTAINED IN THE HANDS OF THE ASSESSEE ON AN ESTIMATE BASIS CAN BE SUSTAINED IN THE EYES OF LAW. WE THUS IN LIGHT OF OUR AFORESAID OBSERVATIONS SET ASIDE THE ORDER OF THE CIT(A) AND QUASH THE PENALTY IMPOSED BY THE A.O U/S. 271(1)(C) OF THE ACT IN THE HANDS OF THE ASSESSEE. 8. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 /07/2017 . SD/ - SD/ ( G.S. PANNU ) (RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 26 .0 7 .2017 I T A N O . 1 8 3 3 / M U M / 2 0 1 6 A . Y . 2 0 0 9 - 1 0 P A G E | 6 / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI