OXFORD PRINTERS, Mumbai V. ACIT 21(2), Mumbai

ITA 2148/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1611 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 08-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Difference of opinion; Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 2148 /MUM/2019 ASSESSMENT Y EAR: 2010 - 11 OXFORD PRINTERS, UNIT NO. 219, PRAGATI INDUSTRIAL ESTATE, N.M. JOSHI MARG, LOWER PARE L, MUMBAI - 400011 PAN: AAAFO6125E VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 21(2), PIRAMAL CHAMBERS, 1 ST FLOOR, LALBAUG, MUMBAI - 400012 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MEHUL SHAH (A R) REVENUE BY : SHRI UODAL RAJ SING H (D R) DATE OF HEARING: 21 /10 /2020 DATE OF PRONOUNCEMENT: 26 / 1 1 /2020 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 11.02.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 33 (FOR SHORT THE CIT(A) , MUMBAI, FOR THE ASSESSMENT YEAR 2010 - 11 , WHEREBY THE LD. CIT(A) HAS PARTLY ALLOWED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE PENALTY ORDER PASSED U/S 271 (1) (C) OF THE INCOME TAX ACT, 1 961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARIN G THE TOTAL INCOME OF RS. 21,44, 780/ - . THE AO COMPLETED THE ASSESSMENT U/S 143 (3) OF THE ACT DETE RMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 90,25,824/ - AFTER MAKING ADDITION OF RS. 68,81,046/ - ON ACCOUNT OF BOGUS PURCHASES SHOWN BY THE ASSESSEE. IN THE FIRST APPEAL, THE LD. CIT (A) RESTRICTED THE ADDITION TO 12% OF THE SAID AMOUNT. ON THE BASIS O F THE AFORE SAID ADDITION, THE AO INITIATED 2 ITA NO. 2148 / MUM/2019 ASSESSMENT YEAR: 2010 - 1 1 PROCEEDINGS U/S 271 (1) (C) OF THE ACT AND LEVIED PENALTY OF RS. 2,55,500/ - . THE LD. CIT (A) CONFIRMED THE SAID PENALTY . A GAINST THE SAID FINDINGS OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 3 . THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) ON THE FOLLOWING EFFECTIVE GROUNDS : - 1. ON THE FACTS, AND IN CIRCUMSTANCES OF THE CASE, AND IN LAW, LEARNED COMMISSIONER OF INCOME - TAX (APPEAL) ERRED IN UPHOLDING ACTION OF T HE ASSESSING OFFICER IN LEVYING PENALTY UNDER SECTION 271 (1) (C) OF THE INCOME - TAX ACT 1961 AMOUNTING TO RS. 255,500 WITHOUT APPRECIATING THAT THE ADDITION OF ALLEGED NON - GENUINE PURCHASES WAS MADE ON AN ESTIMATED BASIS AND DIFFERENCE OF OPINION, AND THER E WAS NEITHER CONCEALMENT OF INCOME NOR FILING OF INACCURATE OF INCOME, AS THE APPELLANT HAD FURNISHED ALL MATERIAL PARTICULARS IN SUPPORT OF ITS CLAIM OF PURCHASES FURTHER SUPPORTED BY THE ORDER OF MAVT DEPARTMENT ACCEPTING THE SAME PURCHASES WHICH THE AS SESSING OFFICER TREATED AS NON GENUINE. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY CONFIRMED THE PENALTY LEVIED BY THE AO WITHOUT CONSIDERING THE FACT THAT ADDITION OF 12% HAS BEEN SUSTAINED BY THE FIRST APPELLATE AUTHORITY ON ESTIMATION BASIS. THE LD. COUNSEL RELYING ON THE DECISIONS OF THE ITAT MUMBAI IN THE CASE OF SH. AJAY LOKNATH LOHIA VS. ITO, ITA NO. 2998/MUM/2017, AY 2009 - 10 AND SAMEER D. PUNJABI, ITA NO. 1564/M/2017 SUBMITTED THAT SINCE THE ADDIT ION MADE ON ESTIMATION BASIS DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF THE INCOME WITHIN THE MEANING OF SECTION 271 (1) (C) OF THE ACT, THE LD. CIT(A) HAS WRONGLY CONFIRMED THE PENALTY LEVIED BY THE AO. THE LD. COUN SEL ACCORDINGLY SUBMITTED THAT SINCE ISSUE INVOLVED IN THE PRESENT APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION S OF THE TRIBUNAL, THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE ( DR ) SUBMITTED THAT SINCE THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE PURCHASES IN QUESTION BY ADDUCING COGENT AND CONVINCING EVIDENCE DURING THE ASSESSMENT 3 ITA NO. 2148 / MUM/2019 ASSESSMENT YEAR: 2010 - 1 1 PROCEEDINGS OR DURING THE APPELLATE PROCEEDINGS , THE LD. CIT (A) SUSTAINED THE ADDI TION OF 12% OF THE TOTAL AMOUNT OF BOGUS PURCHASES DETERMINED BY THE AO . HENCE, THE LD. CIT (A) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED BY THE AO U/S 271 (1) (C) OF THE ACT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL O N RECORD IN THE LIGHT OF THE RIVAL CONTENTIONS. AS POINTED OUT BY THE LD. COUNSEL, THE AO HAD MADE ADDITION OF TOTAL AMOUNT OF BOGUS PURCHASES SHOWN BY THE ASSESSEE. IN THE FIRST APPEAL, THE LD.CIT (A) RESTRICTED THE ADDITION TO 12% OF THE TOTAL AMOUNT OF BOGUS PURCHASES. AS POINTED OUT BY THE LD. COUNSEL, IN THE CASE OF SH. AJAY LOKNATH LOHIA VS. ITO (SUPRA), THE COORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT, HOLDING THAT ADDITION MADE ON AD - HOC BASIS DOES NOT AMO UNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. THE OPERATIVE PART OF THE ORDER READS AS UNDER: 8. HAVING HEARD BOTH THE SIDES, WE FIND MERIT IN THE ARGUMENTS OF THE AS SESSEE FOR THE REASON THAT ALTHOUGH THE AO HAS ESTIMATED 25% GROSS PROFIT ON ALLEGED BOGUS PURCHASES, NEVER MADE BY OBSERVATIONS WITH REGARD TO THE INCORRECTNESS IN DETAILS FILED BY THE ASSESSEE TO PROVE SUCH PURCHASES. THE AO NEVER DISBELIEVED INFORMATION FILED BY THE ASSESSEE, BUT HE PROCEEDED ON THE BASIS OF INFORMATION RECEIVED FROM SALES - TAX DEPARTMENT TO MAKE ADDITIONS. THE AO HAS MADE SUCH ADDITION ON ADHOC BASIS BY ESTIMATING GROSS PROFIT ON ALLEGED BOGUS PURCHASES. FROM THESE FACTS, IT IS VERY CLEA R THAT THE AO FAILED TO MAKE A CASE OF DELIBERATE ATTEMPT BY THE ASSESSEE TO FURNISH INACCURATE PARTICULARS OF INCOME. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT MERE DISALLOWANCE OF PURCHASES ON ADHOC BASIS DOES NOT TANTAMOUNT TO WILLFUL FURNISHING INA CCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271 (1) (C) OF THE INCOME TAX ACT, 1961. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS ERRED IN LEVYING PENALTY U/S 271 (1) (C) OF THE ACT. ACCORDINGLY WE DIRECT THE AO TO DELETE THE PENALT Y LEVIED U/S 271 (1) (C) OF THE ACT. 4 ITA NO. 2148 / MUM/2019 ASSESSMENT YEAR: 2010 - 1 1 7. IN THE PRESENT CASE, THE LD. CIT (A) HAS CONFIRMED THE PENALTY IN QUESTION ON THE BASIS OF ADDITION OF 12% OF THE TOTAL AMOUNT OF BOGUS PURCHASES SUSTAINED ON ESTIMATION BASIS. IN THE CASE OF SH. AJAY LOKNATH L OHIA VS. ITO (SUPRA) THE COORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE PENALTY LEVIED U/S 271 (1) (C) OF THE ACT HOLDING THAT WHERE THE ADDITION IS MADE ON ESTIMATE BASIS, PENALTY U/S 271 (1) (C) CANNOT BE IMPOSED. I N OUR CONSIDERED VIEW, THE FINDINGS O F THE LD. CIT (A) ARE NOT IN ACCORDANCE WITH THE DECISION OF THE COORDINATE BENCH DISCUSSED ABOVE, WE FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE ORDER PASSED BY THE LD. CIT (A) IS NOT SUSTAINABLE. WE ACCORDINGLY SET ASIDE THE DECISION OF THE LD . CIT (A) AND ALLOW THE APPEAL FILED BY THE ASSESSEE. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE PENALTY LEVIED UNDER SECTION 271 (1) (C) OF THE ACT. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 2011 IS ALLOWED. O RDER PRONOUNCED ON 26 TH NOV., 2020 UNDER RULE 34 (4) OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963. SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNT ANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 26 / 1 1 /2020 ALINDRA, PS / 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 . 5 ITA NO. 2148 / MUM/2019 ASSESSMENT YEAR: 2010 - 1 1 / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI