Shri Dhansukhbhai Dahyabhai Kapadia, Surat V. The Income Tax Officer, Ward-2(2), Surat

ITA 2294/AHD/2015

• Counselvise Citation: 229420514 RSA 2015
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL SR DR
• Keywords: Bogus purchase; Principle of natural justice

Judgement Text

` , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD .. , ( .) , BEFORE SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2294/AHD/2015 ( / ASSESSMENT YEAR : 2008-09) SHRI DHANSUKHBHAI DAHYABHAI KAPADIA 3/2205, PIPARD SHERI SALABATPURA SURAT -395 003 / VS. THE INCOME TAX OFFICER WARD-2(2) SURAT % & ./ ./ PAN/GIR NO. : ADTPK 8432 A ( %( / APPELLANT ) .. ( )*%( / RESPONDENT ) %( + / APPELLANT BY : WRITTEN SUBMISSION )*%( , + / RESPONDENT BY : SHRI S.L. CHANDEL, SR.DR -. , /& / DATE OF HEARING 20/10/2015 0123 , /& / DATE OF PRONOUNCEMENT 30/11/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-II, SURAT [CIT(A) IN SHORT] DATED 28/04/2015 PERTAINING TO ASSESSMENT YEAR (AY) 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEA L:- ITA NO. 2294/AH D/2015 SHRI DHANSUKHBHAI DAHYABHAI KAPADIA VS. ITO ASST.YEAR 2008-09 - 2 - 1. THAT THE PENALTY ORDER MADE BY THE ASSESSING OFFIC ER AND CONFIRMED BY THE CIT(A) IS ILLEGAL, BAD IN LAW & ON FACTS AND WITHOUT JURISDICTION. THEREFORE, PENALTY NEEDS TO BE DELETED. 2. THAT ON THE FACTS OF THE CASE AND CIRCUMSTANCE AND AS PER LAW, THE LD.A.O. ERRED IN LEVYING PENALTY OF RS.21,300/- U/S .271(1) OF THE ACT AND LD.CIT(A) ALSO ERRED BY UPHOLDING PENALTY. 2.1. THAT THE PENALTY LEVIED BY THE A.O. AND CONFI RMED BY THE CIT(A) WAS ONLY ON THE BASIS OF PROBABILITIES AND ADVERSE PRESUMPTIONS AS AGAINST THE MATERIALS ON RECORDS TO PROVE THE ACT O F CONCEALMENT. THEREFORE, THE PENALTY NEEDS TO BE DELETED. 3. WITHOUT PREJUDICE TO THE ABOVE, THE PENALTY BE REDU CED. 4. THAT, THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTE R, MODIFY OR DELETE ANY OF THE GROUNDS OF APPEAL HEREUNTO TAKEN BEFORE. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE-INDIV IDUAL FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 24/09 /2008 BY SHOWING TOTAL INCOME OF RS.1,38,853/- AND THE CASE WAS PICK ED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) OF THE INC OME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED V IDE ORDER DATED 24/12/2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE DISALLOWANCE OUT OF PURCHASES OF RS.2,82,173, ADDIT ION U/S.68 OF THE ACT OF RS.20,720/-, DISALLOWANCE U/S.40(A)(IA) OF THE A CT OF RS.44,780/-, DISALLOWANCE OF DEDUCTION U/S.80C OF RS.1,00,000/-, DISALLOWANCE OF DEDUCTION U/S.80D OF RS.5,685/- AND MADE TOTAL TAXA BLE INCOME AT RS.5,92,210/-. WHILE FRAMING THE ASSESSMENT, THE A O ALSO INITIATED PENALTY PROCEEDINGS AND SUBSEQUENTLY LEVIED PENALTY OF RS.21,300/- ON THE ADDITION SUSTAINED BY THE LD.CIT(A). THE ASSES SEE PREFERRED APPEAL BEFORE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISS IONS DISMISSED THE ITA NO. 2294/AH D/2015 SHRI DHANSUKHBHAI DAHYABHAI KAPADIA VS. ITO ASST.YEAR 2008-09 - 3 - APPEAL. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW THE ASSESSEE IS FURTHER IN APPEAL BEFORE US. 3. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS AGAI NST CONFIRMATION OF PENALTY OF R.21,300/- MADE U/S.271(1)(C) OF THE ACT . NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSIO N HAS BEEN FILED. IN THE WRITTEN SUBMISSION THE ASSESSEE STATED THAT THE GOODS PURCHASED FROM THE PARTIES WERE SHOWN AS SALES AND THAT TOO WITH G ROSS PROFIT. SO, THE ADDITIONS IN THE PURCHASE RESULTED IN DOUBLE ADDITI ON AND AGAIN THE LEVY OF PENALTY ON THE SAME PURCHASES WILL LEAD TO MULTI PLE ADDITIONS ON THE SAME AMOUNT WHICH IS NOT PERMISSIBLE AND AGAINST TH E NATURAL JUSTICE. 3.1. THE LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE PENALTY CANNOT BE SUSTAINED IN VIEW OF THE FACT THAT THE ASSESSEE HAD FURNISHED THE DETAILS IN THE NATURE OF ADDRESSE S, ETC. OF THE PARTIES WHEREFROM PURCHASES WERE MADE. IN THE WRITTEN SUBM ISSION, IT IS STATED THAT MERE NON-SERVICE OF NOTICE CANNOT PROVE GENUIN E PURCHASES AS BOGUS PURCHASES AND THIS SHOULD NOT BE THE REASON FOR LEV YING THE PENALTY. WE FIND FORCE INTO THIS CONTENTION SINCE IT IS SETTLED LAW THAT THE QUANTUM PROCEEDINGS AND THE PENALTY PROCEEDINGS ARE TWO SEP ARATE PROCEEDINGS. ITA NO. 2294/AH D/2015 SHRI DHANSUKHBHAI DAHYABHAI KAPADIA VS. ITO ASST.YEAR 2008-09 - 4 - EVEN IF ADDITION IS SUSTAINED, IT IS NOT NECESSARY THAT PENALTY WOULD AUTOMATICALLY BE SUSTAINED. IF THE ASSESSEE IS ABL E TO DEMONSTRATE THAT UNDER THE GIVEN FACTS, PENALTY SHOULD NOT BE SUSTAI NED IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS AND THE STATUTORY PROVISION S. IN THAT EVENT, LEVY OF PENALTY WOULD NOT BE JUSTIFIABLE. IN THE PRESE NT CASE, CLAIM OF PURCHASES WAS REJECTED ON THE GROUND THAT NOTICES U PON THE PARTIES WHEREFROM PURCHASES WERE MADE COULD NOT BE SERVED. HOWEVER, IT IS NOT IN DISPUTE THAT THE PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL. THEREFORE, IN OUR CONSIDERED VIEW, THE BASIS ADOPTE D BY THE AO IS NOT SUFFICIENT FOR LEVY OF PENALTY IN THE LIGHT OF THE DECISION OF THE COORDINATE BENCH (ITAT MUMBAI) RENDERED IN THE CASE OF ACIT VS . RAMILA PRAVIN SHAH IN ITA NO.5246/MUM/2013, WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- BOGUS PURCHASES: FACT THAT SUPPLIERS NAMES APPEAR IN THE LIST OF HAWALA DEALERS OF THE SALES-TAX DEPT AND TH AT ASSESSEE IS UNABLE TO PRODUCE THEM DOES NOT MEAN THAT THE PURCH ASES ARE BOGUS IF THE PAYMENT IS THROUGH BANKING CHANNELS & GP RATIO BECOMES ABNORMALLY HIGH. FURTHER, IT HAS TO BE APPR ECIATED THAT (I)PAYMENTS WERE THROUGH BANKING CHANNEL AND B Y CHEQUE,(II) NOTICES COMING BACK, DOES NOT MEAN, THO SE PARTIES ARE BOGUS, THEY ARE JUST DENYING THEIR BUSINESS TO AVOID SALES TAX/VAT ETC, (III) STATEMENT BY THIRD PARTIES CANNO T BE CONCLUDED ADVERSELY IN ISOLATION AND WITHOUT CORROB ORATING EVIDENCES AGAINST APPELLANT,(IV) NO CROSS EXAMINATI ON HAS BEEN OFFERED BY AO TO THE APPELLANT TO CROSS EXAMIN E THE RELEVANT PARTIES (WHO ARE DEEMED TO BE WITNESS OR A PPROVER ITA NO. 2294/AH D/2015 SHRI DHANSUKHBHAI DAHYABHAI KAPADIA VS. ITO ASST.YEAR 2008-09 - 5 - BEING USED BY AO AGAINST THE APPELLANT) WHOSE NAME APPEAR IN THE WEBSITE WWW.MAHAVAT.GOV.IN AND (V) FAILURE TO PRODUCE PARTIES CANNOT BE TREATED ADVERSELY AGAINST APPELLA NT. 4.1. IN THE LIGHT OF ABOVE DECISION, WE HEREBY SE T ASIDE THE ORDERS OF LD.CIT(A) AND THE AO IS HEREBY DIRECTED TO DELETE T HE PENALTY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON MONDAY, THE 30 TH DAY OF NOVEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( . ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED / 11 /2015 6/..-, .-../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. 789 : / CONCERNED CIT 4. : ( ) / THE CIT(A)-II, SURAT 5. ;< )-89 , / 893 , 7 / DR, ITAT, AHMEDABAD 6. <= >. / GUARD FILE. ! / BY ORDER, *; ) //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD