SHAILESH S. MODY, MUMBAI V. ASST CIT 25(1), MUMBAI

ITA 2250/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1755 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 30-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 2251/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) SHAILESH S.MODY A/903 PRATHAMESH RESIDENCY NEAR BHAVANS COLLEGE ANDHERI (WEST) MUMBAI 400 069 / VS. ASSISTANT COMMISSIONER OF INCOME TAX-25(1) MUMBAI ./ ./PAN/GIR NO. AAGPM-4487-M ( /APPELLANT ) : ( !' / RESPONDENT ) & ./I.T.A. NO. 2250/MUM/2017 ( / ASSESSMENT YEAR: 2010-11) SHAILESH S.MODY A/903 PRATHAMESH RESIDENCY NEAR BHAVANS COLLEGE ANDHERI (WEST) MUMBAI 400 069 / VS. ASSISTANT COMMISSIONER OF INCOME TAX-25(1) MUMBAI ./ ./PAN/GIR NO. AAGPM-4487-M ( /APPELLANT ) : ( !' / RESPONDENT ) & ./I.T.A. NO. 2254/MUM/2017 ( / ASSESSMENT YEAR: 2012-13) SHAILESH S.MODY A/903 PRATHAMESH RESIDENCY NEAR BHAVANS COLLEGE ANDHERI (WEST) MUMBAI 400 069 / VS. ASSISTANT COMMISSIONER OF INCOME TAX-25(1) MUMBAI ./ ./PAN/GIR NO. AAGPM-4487-M ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE B Y : DEEPAK TIKEKER, LD. AR REVENUE BY : V.K.CHATURVEDI, LD. SR. DR 2 / DATE OF HEARING : 16/08/2018 / DATE OF PRONOUNCEMENT : 07/09/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR S [AY] 2009-10, 2010-11 & 2012-13 CONTEST SEPARATE ORDERS OF LD. FI RST APPELLATE AUTHORITY QUA CONFIRMATION OF PENALTY U/S 271(1)(C). SINCE, ISSUE S ARE COMMON, WE DISPOSE-OFF THE SAME BY WAY OF THIS COMM ON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. ITA NO. 2251/MUM/2017, AY 2009-10 2. THE ASSESSEE, BEING RESIDENT INDIVIDUAL ENGAGED IN INTERIOR WORKS WAS REASSESSED U/S 143(3) READ WITH SECTION 147 ON 29/01/2015 WHEREIN IT WAS NOTED THAT THE ASSESSEE OWNED FIVE IMMOVEABL E PROPERTIES AND THEREFORE, AFTER CONSIDERING THE ONE PROPERTY AS SE LF-OCCUPIED PROPERTY, THE OTHER PROPERTIES WERE DEEMED TO BE LET OUT AND TAXABLE IN TERMS OF THE PROVISIONS OF SECTION 23(1)(A). THE LD. AO ESTI MATED NOTIONAL INCOME OF THE SAID PROPERTIES AS RS.10.13 LACS AND ADDED T HE SAME TO THE INCOME OF THE ASSESSEE. THE ASSESSEE SUFFERED ANOTH ER ADDITION OF ALLEGED BOGUS PURCHASES OF RS.6.81 LACS PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA THAT THE ASSESSEE STOOD BENEFITTED BY BOGUS PURCHASES STATED TO BE MADE FROM 4 SUSPICIOUS PARTIES. NOTICES ISSUED U/S 133(6) AS WE LL AS INSPECTORS REPORT REVEALED THAT NONE OF THE PARTIES WERE EXIST ING AT THE GIVEN ADDRESSES. RESULTANTLY, THESE PURCHASES WERE DISALL OWED AND ADDED TO THE INCOME OF THE ASSESSEE. IT HAS BEEN SUBMITTED B EFORE US THAT THE 3 ASSESSMENT HAS ATTAINED FINALITY SINCE THE ASSESSEE HAS NOT PREFERRED ANY APPEAL AGAINST THE SAME. 3. AS AGAINST QUANTUM ADDITIONS OF RS.16.95 LACS AS ABOVE, THE ASSESSEE HAS BEEN SADDLED WITH IMPUGNED PENALTY OF RS.5.76 LACS VIDE ORDER DATED 21/07/2015, WHICH, UPON CONFIRMATION BY FIRST APPELLATE AUTHORITY, IS BEING AGITATED BEFORE US. 4. THE LD. AUHTORIZED REPRESENTATIVE FOR ASSESSEE [ AR], DRAWING OUR ATTENTION TO THE FACT THAT PENALTY HAS BEEN LEVIED AGAINST NOTIONAL INCOME WHICH WAS NOT FAIR & JUSTIFIED. RELIANCE HAS BEEN P LACED ON SEVERAL JUDICIAL PRONOUNCEMENTS. REGARDING ADDITION OF ALLEGED BOGUS PURCHASES, IT HAS BEEN SUBMITTED THAT THE ASSESSEE WAS IN POSS ESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS WERE TH ROUGH BANKING CHANNELS AND THE CLAIM WAS BONA FIDE. THEREFORE, MERELY BECAUSE THE SUPPLIER DID NOT RESPOND TO THE NOTICES U/S 133(6), THE IMPOSITION OF PENALTY WAS NOT JUSTIFIED. OUR ATTENTION IS DRAWN T O THE FACT THAT THE ASSESSEE WAS SADDLED WITH SIMILAR ADDITIONS IN AY 2 011-12 BUT FINDING STRENGTH IN THE ARGUMENT OF THE ASSESSEE, PENALTY H AS BEEN DROPPED BY LD. AO HIMSELF. PER CONTRA, LD. DR, SHRI V.K.CHATURVEDI, SUBMITTED THAT NONE OF THE SUPPLIER WAS EXISTING AT THE GIVEN ADDR ESS AND THEREFORE, THE CLAIM WAS NOT GENUINE AND THEREFORE, THE PENALTY WA S JUSTIFIED. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. THE UNDISPUTED FACT IS THAT THE INCOME FROM HOUSE PROPERTY AS ASSESSED BY LD. AO WAS A NOTIONAL INCOME FROM CERTAIN PROPERTIES DEEMED TO BE LET OUT. THE ADDITIONS HAVE BEEN MADE IN TERMS OF DEEMING FICTION CREATED BY LAW. HOWEVER, NOTHING ON RECORD SUGGEST THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED ITS INCOME OR ANY OF THE PROPERTY WAS UND ISCLOSED PROPERTY. 4 THIS BEING THE CASE, THE IMPOSITION OF PENALTY WAS NOT JUSTIFIED. OUR VIEW IS FORTIFIED BY THE JUDGMENT OF HONBLE MADRAS HIGH COURT RENDERED IN CIT VS. SMT. B.SAROJA DEVI [236 ITR 203] WHEREIN HONBLE COURT, ON IDENTICAL FACTUAL MATRIX, HAS HELD AS UNDER:- WE HAVE HEARD BOTH THE LEARNED STANDING COUNSEL FOR THE DEPARTMENT AS WELL AS LEARNED COUNSEL FOR THE RESPONDENT ASSESSEE. THE FIRST ITEM RELATES TO A SUM OF RS. 2,153 ESTIMA TED AS INCOME FROM SELF-OCCUPATION OF THE PROPERTY AS SADASIVANAGAR, BANGALORE. IT WAS LET OU T, ONLY DURING THE SUBSEQUENT YEAR IT HAD BEEN VACATED BY THE PREVIOUS TENANT BY THE END OF J ANUARY, 1971, AND IT WAS THE ASSESSEE'S CASE THAT IT WAS VACANT THEREAFTER. HOWEVER, THE AS SESSEE'S HUSBAND MENTIONED THAT HE WAS IN OCCUPATION OF THE BUILDING FROM JANUARY 1, 1973. THE PROPERTY ITSELF WAS UNDER THE SCRUTINY OF THE INCOME-TAX OFFICER. THERE IS NO FIR M BASIS TO CONTROVERT THAT THE PROPERTY WAS OCCUPIED ONLY IN APRIL 1971, NOTWITHSTANDING HER HU SBAND'S LETTER, WHICH WAS WRITTEN TWO YEARS LATER. IT WAS A MATTER OF FACT THAT THE CONST RUCTION WENT ON TILL THE END OF FEBRUARY 1973, AND THE ASSESSEE HAD ANOTHER HOUSE DURING THE PERIOD. THE INCOME FROM THE PROPERTY WAS ASSESSED ON THE BASIS OF NOTIONAL INCOME. IT WA S NOT ESTABLISHED BY THE DEPARTMENT THAT THERE WAS ANY EVASION OF INCOME FROM THIS PROP ERTY. UNDER SUCH CIRCUMSTANCES, THE TRIBUNAL CAME TO THE CONCLUSION THAT LEVY OF PENALT Y OF RS. 2,153, UNDER SECTION 271(1)( C ) OF THE ACT IS NOT WARRANTED. THE FACTS ON RECORD WOULD GO TO SHOW THAT THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INCORRECT PA RTICULARS IN THE MATTER OF NOTIONAL INCOME DERIVED FROM THE PROPERTY AT SADASIVANAGAR, BANGALO RE. THEREFORE, WE CONSIDER THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE TRIBUNAL IN DELETING THE PENALTY OF RS. 2,153. SIMILAR ANALOGY HAS BEEN DRAWN BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE DECISION OF HARIGOPAL SINGH VS CIT [258 ITR 85]. NO CONTRARY JUDGMENT HAS BEEN PLACED ON RECORD. THEREF ORE, THE PENALTY AGAINST NOTIONAL INCOME ADDITION COULD NOT BE SUSTAINED AND HENCE DELETED. 6. SO FAR AS THE PENALTY ON ACCOUNT OF ADDITION AGA INST ALLEGED BOGUS PURCHASES IS CONCERNED, WE FIND THAT THE UNDISPUTED FACTS ARE THAT ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCU MENTS INCLUDING DELIVERY CHALLANS AND THE PAYMENTS TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS. THE ADDITIONS WERE MADE SINCE THO SE SUPPLIERS DID NOT RESPOND TO NOTICES U/S 133(6). NEVERTHELESS, TH E CIRCUMSTANCES UNDER WHICH ADDITIONS HAVE BEEN MADE, DO NOT JUSTIF Y IMPOSITION OF 5 PENALTY. THEREFORE, BY DELETING THE SAME, WE ALLOW THE ASSESSEES APPEAL. ITA NOS. 2250 & 2254 /MUM/2017, AY 2010-11 & 2012-1 3 7. THE ASSESSEE, UNDER SIMILAR FACTUAL MATRIX HAS B EEN SADDLED WITH PENALTY OF RS.5.21 LACS IN AY 2010-11 & RS.4.68 LAC S IN AY 2012-13 AGAINST NOTIONAL RENTAL INCOME FROM HOUSE PROPERTY. THE FACTS AND CIRCUMSTANCE BEING THE SAME, TAKING THE SAME VIEW, WE DELETE THE IMPUGNED PENALTIES AND ALLOW THE APPEALS. CONCLUSION 8. ALL THE THREE APPEALS STAND ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH SEPTEMBER, 2018 SD/- SD/- (JOGINDER SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 07.09.2018 SR.PS:-THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. ) ( ) / THE CIT(A) 4. ) / CIT CONCERNED 5. * !$+ , + , / DR, ITAT, MUMBAI 6. ,-. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI