Income tax Officer, V. Deepak Shankar Panaskar, Nashik

ITA 203/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5518 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 27-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Bogus purchase
• Section: 271(1)(c); 133(6); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , ! ' , # $ BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS. 203 & 204/PUN/2017 #& ' (' / ASSESSMENT YEAR: 2010-11 THE INCOME TAX OFFICER, WARD 2(2), NASHIK. ....... / APPELLANT & / V/S. SHRI DEEPAK SHANKAR PANASKAR, PROP. M/S. NEW JYOTI POWER CONTROLS, PLOT NO. 368/2, JAGANNATH BHADURE MALA, OLD AMBAD ROAD, SATPUR, NASHIK-422 007. PAN : AMFPP6337E / RESPONDENT ASSESSEE BY : SHRI SANKET JOSHI REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 20.03.2019 / DATE OF PRONOUNCEMENT : 03.06.2019 ) / ORDER PER VIKAS AWASTHY, JM THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK, DELETING ADDITION MADE IN RESPECT OF BOGUS PURCHASES AND DELETING PENALTY LEVIED U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS THE ACT) ON THE ADDITION MADE IN RESPECT OF BOGUS PURCHASES. 2 ITA NOS.203 & 204/PUN/2017 A.Y.2010-11 ITA NO.203/PUN/2017 BY REVENUE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-2, NASHIK DATED 02.11.20 16 IN QUANTUM APPEAL AND ITA NO.204/PUN/2017 BY REVENUE IS D IRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-2, NASHIK DATED 04.11.2016 DELETING PENALTY LEVIED U/S.271(1)(C) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS ENGAGED IN MANUFACTURING OF ELECTRICAL EQUIPMENT S AND IS A GOVERNMENT CONTRACTOR. INFORMATION WAS RECEIVED FROM SALE S TAX DEPARTMENT THAT THE ASSESSEE IS ENGAGED IN BOGUS PURC HASES. SURVEY ACTION U/S.133A OF THE ACT WAS CARRIED OUT IN THE CASE OF ASSES SEE ON 22.08.2013. DURING THE COURSE OF SURVEY, STATEMENT OF SHRI SAGAR SHA NKAR PANASKAR, BROTHER OF ASSESSEE WAS RECORDED ON OATH U/S.131 OF TH E ACT, WHEREIN HE ADMITTED THAT IN ABSENCE OF SUPPORTING BILLS, OCTROI RECEIPTS AND TRANSPORT RECEIPTS ETC., GENUINENESS OF THE PURCHASES MADE FROM EIG HT PARTIES AGGREGATING TO RS.85,98,876/- COULD NOT BE PROVED. THE A SSESSING OFFICER MADE ADDITION OF ENTIRE RS.85,98,876/- ON ACCOUNT OF BOGUS PURCHASES. FURTHER, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 30.01.2 015 PASSED U/S.143(3) OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE C OMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX(APPEALS ) UPHELD THE PURCHASE OF GOODS FROM BOGUS PARTIES. HOWEVER, THE COMMIS SIONER OF INCOME TAX (APPEALS) RESTRICTED THE ADDITION TO 10% OF THE ALLEGED BOGUS PURCHASES I.E.8,59,887/- AND DELETED THE REMAINING ADDITION. A GAINST THE 3 ITA NOS.203 & 204/PUN/2017 A.Y.2010-11 FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE REVE NUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A)-2, NASHIK WAS JUSTIFIED IN DELETING THE ADDI TION OF RS.77,38,989/- MADE BY THE ASSESSING OFFICER ON THE ISSUE OF ALLEGED BOGUS PURCHASES? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A)-2, NASHIK WAS JUSTIFIED IN IGNORING THE FACT S THAT THE AO HAD BROUGHT ON RECORD CREDIBLE EVIDENCE TO PROVE THAT T HE PURCHASES ARE NOT GENUINE? 3. THE APPELLANT PRAYS LEAVE TO ADD, ALTER, CLARIF Y/AMEND AND OR WITHDRAW ANY GROUNDS OF APPEAL AS AND WHEN THE OCCA SION DEMANDS. 4. SHRI PANKAJ GARG REPRESENTING THE DEPARTMENT SUBMIT TED THAT THE ASSESSEE HAD FAILED TO FURNISH SUPPORTING DOCUMENTS TO SH OW TRAIL OF GOODS. THE ASSESSEE NEITHER FURNISHED INVOICES, OCTROI RECEIPTS AN D TRANSPORT RECEIPTS NOR THE ASSESSEE WAS MAINTAINING STOCK REGISTE R. FURTHER, THE ASSESSEE COULD NOT PROVE GENUINENESS OF THE SUPPLIERS. NO CONFIRMATIONS WERE FILED BY THE ASSESSEE FROM SUPPLIERS OF GOODS. IN THE STATEMENT RECORDED U/S.131 OF THE ACT, SHRI SAGAR SHANKAR PANASK AR, BROTHER OF ASSESSEE ADMITTED THAT THE GENUINENESS OF THE PURCHASE S COULD NOT BE PROVED. THUS, THE ASSESSING OFFICER RIGHTLY MADE ADDITION OF ENTIRE BOGUS PURCHASES. THE LD. DR IN SUPPORT OF HIS CONTENTIONS PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF MUKES HKUMAR PUKHRAJ MEHTA VS. THE INCOME TAX OFFICER IN ITA NO.2026/ PUN/2014 FOR ASSESSMENT YEAR 2010-11 DECIDED ON 03.11.2015. 5. ON THE OTHER HAND, SHRI SANKET JOSHI APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD . AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD MADE PAYMEN TS FOR THE PURCHASES OF GOODS HELD TO BE BOGUS PURCHASES THROUGH CHEQUE. TH E ASSESSING OFFICER 4 ITA NOS.203 & 204/PUN/2017 A.Y.2010-11 HAS NOT BEEN ABLE TO SHOW THAT THE AMOUNT PAID BY CHE QUE WAS IMMEDIATELY WITHDRAWN BY SUPPLIERS AND WERE PAID BACK TO THE ASSES SEE. NO EFFORTS WERE MADE BY THE ASSESSING OFFICER TO FIND OUT GENUINENESS OF T HE SUPPLIERS AND VERIFY THE AUTHENTICITY OF THE TRANSACTIONS. THE ASSESSEE HAD FURNISHED COPIES OF VAT CHALLENS. FURTHER, THE SALES MADE BY ASSESSE E WERE NOT DISPUTED BY THE ASSESSING OFFICER AND BOOKS OF ACCOUNT WE RE NOT REJECTED. THUS, WITHOUT PURCHASES THERE CANNOT BE SALES. THE LD. A R SUBMITTED THAT THE ENTIRE PURCHASES CANNOT BE ADDED AS BOGUS PURCHA SES WHERE SALES ARE NOT QUESTIONED. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. T HE REVENUE IN APPEAL HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TA X (APPEALS) IN RESTRICTING ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES TO 10% OF THE BOGUS PURCHASES. IT IS AN UNDISPUTED FACT THAT REVENUE HAS ACCEPTED THE TOTAL TURNOVER OF THE ASSESSEE. THE TOTAL TURNOVER OF TH E ASSESSEE DURING IMPUGNED PERIOD IS RS.1,15,71,310/-, WHEREAS, THE ALLEGED BOGU S PURCHASES DISALLOWED BY THE ASSESSING OFFICER ARE RS.85,98,876/-. WITHOUT PURCHASES, THERE CANNOT BE SALES. THE BOOKS OF ACCOUNT OF THE ASS ESSEE HAVE ALSO NOT BEEN REJECTED BY THE ASSESSING OFFICER BEFORE MAKING ADDIT ION OF THE ENTIRE ALLEGED BOGUS PURCHASES. UNDOUBTEDLY, THE PRIMARY ONUS T O PROVE GENUINENESS OF PURCHASE TRANSACTIONS IS ON THE ASSESSEE AND HE SHOULD HAVE IN FIRST PLACE FURNISHED COGENT EVIDENCES TO PROVE THE GENUINENESS OF THE PURCHASES AND SUPPLIERS. NO CONFIRMATIONS WERE FILED BY THE ASSESSEE FROM SUPPLIERS. WE ALSO OBSERVE THAT AT THE TIME OF ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER HAS ALSO NOT EXERCISED HIS POWER TO SUMMON THE VENDORS U/S. 133(6) OF THE ACT. IF THE ASSESSEE HAD FAILE D TO PRODUCE VENDORS, THE ASSESSING OFFICER COULD HAVE SUMMONED THEM. T HUS, THERE 5 ITA NOS.203 & 204/PUN/2017 A.Y.2010-11 WAS LACK OF EFFORT FROM BOTH THE SIDES TO BRING THE TRUE C OLOUR OF PURCHASE TRANSACTION TO FORE. THE COMMISSIONER OF INCOME TAX (APPEA LS) AFTER CONSIDERING ENTIRE FACTS CAME TO THE CONCLUSION THAT IT IS A CASE OF PURC HASES FROM GRAY MARKET AND THEREAFTER, BILLS HAVE BEEN PROCURED FROM HAWALA OPERATORS. IN THE GIVEN FACTS, THE ENTIRE PURCHASES CANN OT BE CONSIDERED AS BOGUS. AT THE SAME TIME, THE ASSESSEE CANNOT BE ALLOWED TO GO SCOT FREE FOR NOT PROVING THE GENUINENESS OF THE PURCHASES. THE CO-OR DINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. VS. D CIT IN ITA NO. 795/PUN/2014 FOR THE ASSESSMENT YEAR 2010-11 HAS HELD THAT IN THE CASES OF PURCHASES FROM SUSPICIOUS DEALERS, ADDITION OF 10% OF THE BOGUS PURCHASES OVER AND ABOVE THE GP DECLARED BY THE ASS ESSEE FOR THE YEAR SHOULD BE MADE. IN THE INSTANT CASE, THE COMMISSIONER OF I NCOME TAX (APPEALS) HAS RESTRICTED THE ADDITION TO 10% OF THE ALLEGED BOGUS PURCHASES. HENCE, THE IMPUGNED ORDER IS MODIFIED; THE ADDITION IS RESTR ICTED TO 10% OF ALLEGED BOGUS PURCHASES OVER AND ABOVE THE GP DECLARED BY THE AS SESSEE. 7. WE HAVE CONSIDERED THE DECISION IN THE CASE OF MUKESHK UMAR PUKHRAJ MEHTA VS. THE INCOME TAX OFFICER (SUPRA.) ON WHICH THE LD. DR HAS PLACED RELIANCE. IN THE SAID CASE, THE ASSESSEE HAD ADMITTED TO THE ADDITION OF PURCHASES MADE FROM THE HAWALA DEALERS. NO SUPPORTING DO CUMENTS SUBSTANTIATING GENUINENESS OF PURCHASES WERE FURNISHED BY ASSESSEE. IN VIEW OF ASSESSEES ADMISSION NO FURTHER VERIFICATION WAS CAR RIED OUT BY THE ASSESSING OFFICER. WHEREAS, IN THE INSTANT CASE, THE ASSESSE E HAD NOT GIVEN ANY SUCH CONCESSION. WE FIND THAT THE DECISION CITED IS DIST INGUISHABLE ON FACTS AND HENCE, DOES NOT SUPPORT THE CASE OF REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.203/PUN /2017 IS PARTLY ALLOWED IN THE TERMS AFORESAID. 6 ITA NOS.203 & 204/PUN/2017 A.Y.2010-11 ITA NO.204/PUN/2017 ASSESSMENT YEAR 2010-11 9. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING PENALTY OF RS .26,57,053/- LEVIED U/S.271(1)(C) OF THE ACT. 10. THE LD. AR OF THE ASSESSEE DEFENDING THE ORDER OF COMM ISSIONER OF INCOME TAX (APPEALS) SUBMITTED THAT THE PENALTY HAS BEEN DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE GROUND OF AMB IGUITY IN MENTIONING THE CHARGE WHILE LEVYING PENALTY U/S.271(1)(C) OF THE ACT. THE LD. AR SUBMITTED THAT WHILE INITIATING PENALTY U/S.271(1)(C) OF THE A CT, THE ASSESSING OFFICER MENTIONED THAT THE PENALTY PROCEEDINGS U /S. U/S.271(1)(C) OF THE ACT ARE SEPARATELY INITIATED FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME, WHEREAS, AT THE TIME OF LEVY OF PENALTY, THE ASSESS ING OFFICER LEVIED PENALTY FOR CONCEALMENT OF INCOME. FURNISHING OF INACCUR ATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME ARE TWO DIFFERENT EXPR ESSIONS HAVING DIFFERENT CONNOTATION. PENALTY INITIATED UNDER ONE LIMB OF SECT ION 271(1)(C) OF THE ACT AND LEVIED ON ANOTHER LIMB WOULD MAKE THE PENALT Y ORDER BAD IN LAW. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY REPORTED AS 392 ITR 4 (BOM.) 11. ON THE OTHER HAND, THE LD. DR VEHEMENTLY DEFENDED TH E ORDER OF ASSESSING OFFICER DATED 22.07.2015 IN LEVYING PENALTY U/S. 27 1(1)(C) OF THE ACT AND PRAYED FOR REVERSING THE IMPUGNED ORDER. 7 ITA NOS.203 & 204/PUN/2017 A.Y.2010-11 12. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW P ERUSED. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT PENALTY PROCEEDINGS U/ S.271(1)(C) OF THE ACT WERE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCO ME. THE RELEVANT EXTRACT OF THE ASSESSMENT ORDER WHEREBY PENA LTY PROCEEDINGS WERE INITIATED READS AS UNDER: FURTHER, FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, PENALTY PROCEEDING U/S.271(1)(C) OF THE IT ACT IS SEPARATEL Y INITIATED. A PERUSAL OF THE ORDER LEVYING PENALTY DATED 22.07.2015 R EVEALS THAT THOUGH PENALTY WAS INITIATED FOR FURNISHING INACCURATE PART ICULARS OF INCOME, THE ASSESSING OFFICER INVOKED THE OTHER LIMB OF SECT ION 271(1)(C) OF THE ACT WHILE LEVYING PENALTY I.E. CONCEALMENT OF INCOME. TH E RELEVANT EXTRACT OF THE PENALTY ORDER READS AS UNDER: 5. CONSIDERING THE TAX BRACKET AND THE AMOUNT OF CO NCEALMENT, IT IS CLEAR THAT THE ASSESSEE HAS INTENTIONALLY CONCEALED THE TAXABLE INCOME WHICH WAS DETECTED BY THE DEPARTMENT. IF THE ASSESS EES CASE HAD NOT BEEN SELECTED FOR THE SCRUTINY, THE CORRECT INCOME WOULD NOT HAVE BEEN TAXED. I AM THEREFORE SATISFIED THAT THE ASSESSEE H AS FURNISHED INACCURATE PARTICULARS OF HIS INCOME FOR THE A.Y.20 10-11 AND THUS CONCEALED HIS INCOME AS PER THE PROVISION (C) OF SUB SECTION (1) OF SECTION 271 OF THE INCOME TAX ACT, 1961. 13. THE MANNER IN WHICH PENALTY HAS BEEN LEVIED BY THE A SSESSING OFFICER U/S.271(1)(C) OF THE ACT CLEARLY SHOWS THAT THERE WAS AMBIG UITY IN THE MIND OF ASSESSING OFFICER WITH REGARD TO CHARGE U/S.271(1)(C) OF THE ACT THAT IS TO BE INVOKED FOR LEVY OF PENALTY. IT IS A WELL SETTLE LAW THAT PENALTY CANNOT BE LEVIED ON THE CHARGE OTHER THAN THE CHARGE FOR WHICH IT WAS INITIATED. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF IN THE CASE CIT VS. SAMSON PERINCHERY(SUPRA.) HAS HELD: '6. THE ABOVE SUBMISSION ON THE PART OF THE REVENUE IS IN THE FACE OF THE DECISION OF THE SUPREME COURT IN ASHOK PAI V/S. CIT 292 ITR 11 [RELIED UPON IN MANJUNATH COTTON & GINNING FACTORY (SUPRA)] - WHEREIN 8 ITA NOS.203 & 204/PUN/2017 A.Y.2010-11 IT IS OBSERVED THAT CONCEALMENT OF INCOME AND FURNI SHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C) OF THE A CT, CARRY DIFFERENT MEANINGS/ CONNOTATIONS. THEREFORE, THE SATISFACTION OF THE ASSESSING OFFICER WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SECTION 271(1)(C) OF THE ACT, FOR INITIATION OF PEN ALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENALTY BEING IMPOSED FOR THE OTHER BREACH. THIS IS MORE SO, AS AN ASSESSEE WOULD RESPOND TO THE GROUND ON WHICH THE PENALTY HAS BEEN INITIATED/NOTICE ISSUED. IT MUST, THEREFORE, FOLLOW THAT THE ORDER IMPOSING PENALTY HAS TO BE MADE ONLY ON T HE GROUND OF WHICH THE PENALTY PROCEEDINGS HAS BEEN INITIATED, AND IT CANNOT BE ON A FRESH GROUND OF WHICH THE ASSESSEE HAS NO NOTICE. ' [EMPHASIZED BY US ] 14. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING PENALTY LEVIED U/S.271(1)(C) OF THE ACT. HENCE, THE IMPUGNED ORDER IS UPHELD AND APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 15. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.204/PUN /2017 IS DISMISSED. 16. TO SUM UP, APPEAL OF THE REVENUE IN ITA NO.203/PUN/2 017 IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IN ITA NO.204/PUN/2017 IS DISMISSED . ORDER PRONOUNCED ON MONDAY, THE 03 RD DAY OF JUNE, 2019. SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! ' /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 03 RD JUNE, 2019 SB 9 ITA NOS.203 & 204/PUN/2017 A.Y.2010-11 ) * +#,-! .!(, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, NASHIK. 4. THE PR. CIT-2, NASHIK. 5. %&' () , * () , +,- , / DR, ITAT, B BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, 3 (- / PRIVATE SECRETARY * () , / ITAT, PUNE. 10 ITA NOS.203 & 204/PUN/2017 A.Y.2010-11 DATE 1 DRAFT DICTATED ON 20.03.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 28.05 .2019 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER