R.M.MEHTA & CO., MUMBAI V. ACIT 2, MUMBAI

ITA 200/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6962 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHOK MEHTA LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 271(1)(c); 143(3); 48

Judgement Text

ITA NO.200/MUM/2019 R.M. MEHTA & CO. ASSESSMENT YEAR :2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO 200/MUM/2019 ( / ASSESSMENT YEAR : 2009-10 ) M/S. R.M. MEHTA & CO. NEW TROMBAY ROAD OPP. GODREJ FOODS LTD. OPP. CASTROL DEPOT, WADALA(W), MUMBAI 400037. / VS. A CIT - 2 PIRAMAL CHAMBERS LALBAUGH MUMBAI 400013. %& ./ ./PAN/GIR NO. AAAFR-1399-D ( &( /APPELLANT ) : ( )*&( / RESPONDENT ) ASSESSEE BY : SHRI ASHOK MEHTA- LD. AR REVENUE BY : MS. JOTHILAKSHMI NAYAK-LD.DR / DATE OF HEARING : 28/01/2020 / DATE OF PRONOUNCEMENT : 05/02/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2009-10 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-48, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-48/IT-380/ACIT-21(3)/2018-19 DATE D 13/11/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED ASSESSING OFFICER ERRED IN LEVYING P ENALTY OF RS. 4,77,244/- UNDER SECTION 271(1)(C) & CIT APPEAL 48 ERRED IN CONFIR MING THE SAME. ITA NO.200/MUM/2019 R.M. MEHTA & CO. ASSESSMENT YEAR :2009-10 2 2. THE LEARNED ASSESSING OFFICER AND CIT APPEAL 4 8 ERRED IN CONFIRMING PENALTY WITHOUT APPRECIATING THAT THE ADDITION IS M ADE ON ACCOUNT OF ESTIMATION AND PROBABILITY WITHOUT ANY EVIDENCE AGAINST THE ASSESS EE. 3. THE LEARNED ASSESSING OFFICER ERRED IN LEVYING P ENALTY WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAD PROVIDED ALL THE EVI DENCES INCLUDING TRUCK NOS IN WHICH THE DELIVERY WAS MADE TO THE ASSESSEE AND FUR THER SOLD THE GOODS & THE CIT APPEAL 48 ERRED IN CONFIRMING THE SAME. 4. THE ASSESSEE CRAVES LEAVE TO ADD/ALTER/AMEND/DEL ETE ANY OF THE ABOVE GROUNDS OF APPEAL. AS EVIDENT FROM GROUND OF APPEAL, THE ASSESSEE IS A GGRIEVED BY CONFIRMATION OF PENALTY U/S 271(1)(C) FOR RS.4.77 L ACS. 2. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE ( AR) SUBMITTED THAT PENALTY HAS BEEN LEVIED ON ESTIMATED ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE LD. AR SUBMITTED THAT ADDITIONS MADE MERELY ON ESTIMATED BASIS WOULD NOT JUSTIFY PENALTY U/S 271(1)(C). AU CONTRAIRE, LD. DR POINTED OUT THAT THE ASSESSEE MISERABLY FAIL ED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS AND THEREFOR E, THE LEVY OF PENALTY WAS JUSTIFIED. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S 143(3) R.W.S. 147 ON 3 0/03/2014. THE REASSESSMENT PROCEEDINGS WERE TRIGGERED PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT THAT THE ASSE SSEE OBTAINED FICTITIOUS PURCHASES BILLS FOR RS.123.55 LACS FROM AN ENTITY NAMELY M/S RAJ TRADERS. ALTHOUGH THE ASSESSEE PRODUCED COPIES OF CHALLANS A ND BILLS OF SUPPLIER ALONG WITH EVIDENCE OF PAYMENT TH ROUGH BANKING CHANNELS BUT FAILED TO PRODUCE THE SUPPLIER FOR VER IFICATION OF PURCHASES. CONSEQUENTLY, LD. AO MADE ESTIMATED ADDITIONS OF 25 % AGAINST SUCH PURCHASES AND INITIATED PENALTY PROCEEDINGS FOR FUR NISHING OF INACCURATE ITA NO.200/MUM/2019 R.M. MEHTA & CO. ASSESSMENT YEAR :2009-10 3 PARTICULARS OF INCOME. UPON FURTHER APPEAL, LD. CIT (A) REDUCED THE ESTIMATION TO 12.5% VIDE APPELLATE ORDER DATED 18/0 3/2016. 3.2 DURING PENALTY PROCEEDINGS BEFORE LD. AO, THE A SSESSEE SUBMITTED THAT ADDITIONS WERE MADE WITHOUT ANY DOCUMENTARY EV IDENCES. NO FAULT WAS FOUND IN VARIOUS DETAILS FURNISHED BY THE ASSES SEE IN SUPPORT OF PURCHASE TRANSACTIONS. THESE DETAILS INCLUDED PURCH ASE BILLS, TRUCK NOS., CORRESPONDING SALES MADE OUT OF PURCHASES, LEDGER E XTRACTS, RECONCILIATION OF PURCHASE AND SALES AND EVIDENCES OF PAYMENT THROUGH BANKING CHANNELS. HENCE, THERE WAS NO JUSTIFICATION OF LEVY OF PENALTY. HOWEVER, NOT CONVINCED, LD. AO LEVIED A PENALTY OF RS.4.77 LACS U/S 271(1)(C). THE LD. CIT(A) CONFIRMED THE SAME BY APP LYING EXPLANATION-1 TO SEC. 271(1)(C). AGGRIEVED, THE ASSESSEE IS UNDER FURTHER APPEAL BEFORE US. 4. UPON CAREFUL CONSIDERATION OF FACTUAL MATRIX AS ENUMERATED BY US IN PRECEDING PARAGRAPHS, IT IS OBSERVED THAT THE QUANT UM ADDITIONS HAVE BEEN MADE PRIMARILY BECAUSE THE ASSESSEE COULD NOT PRODUCE THE SUPPLIER TO PROVE THE GENUINENESS OF THE TRANSACTIO NS. NEVERTHELESS, THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCU MENTS. THE ASSESSEE FURNISHED PURCHASE BILLS, TRUCK NOS., CORR ESPONDING SALES MADE OUT OF PURCHASES, LEDGER EXTRACTS, RECONCILIATION O F PURCHASE AND SALES AND EVIDENCES OF PAYMENT THROUGH BANKING CHANNELS T O ESTABLISH THE GENUINENESS OF THE PURCHASES. THERE COULD BE MULTIP LE REASON FOR NON- PRODUCTION OF A THIRD PARTY. IT IS ALSO SETTLED LEG AL POSITION THAT LEVY OF PENALTY IS NOT AUTOMATIC AND MERELY BECAUSE THE QUA NTUM ADDITIONS WERE ACCEPTED, THE SAME COULD NOT AUTOMATICALLY LEA D TO IMPOSITION OF PENALTY UNLESS THE ASSESSEE HAD NO BONA-FIDE EXPLAN ATION. THE GIVEN ITA NO.200/MUM/2019 R.M. MEHTA & CO. ASSESSMENT YEAR :2009-10 4 FACTUAL MATRIX DOES NOT CONVINCE US TO CONFIRM THE PENALTY SINCE THE ASSESSEE HAD FURNISHED SUFFICIENT DOCUMENTARY EVIDE NCES IN SUPPORT OF PURCHASE TRANSACTIONS, AS CALLED FOR BY LD.AO. THER EFORE, BY DELETING THE IMPUGNED PENALTY, WE ALLOW THE APPEAL. 5. RESULTANTLY, THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2020. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUM AR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 05/02/2020 SR.PS. JAISY VARGHESE !'#' / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )*&( / THE RESPONDENT 3. 1 ( ) / THE CIT(A) 4. 1 / CIT CONCERNED 5. 23),4 , 4 , / DR, ITAT, MUMBAI 6. 3567 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.