KGK INVESTMENTS CO. P.LTD, MUMBAI V. DCIT CIR 5(2), MUMBAI

ITA 2449/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48563 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 29-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI R,S. SYAL, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 2449/MUM/2010 ASSESSMENT YEAR: 2006-07 M/S KGK INVESTMENTS CO. PVT. LTD., APPELLANT C/O KARNAVAL & CO. 2A KITAB MAHAL, 1 ST FLOOR 192 DR. D.N. ROAD, MUMBAI 400 001. (PAN AAACK 14608) VS. THE DY. COMMISSIONER OF INCOME-TAX, RESPONDENT RANGE 5(2), MUMBAI. APPELLANT BY : MR. VIJAY MEHTA RESPONDENT BY : MR. MANVENDRA GOYAL . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- 9, MUMBAI, PASSED ON 29/01/2010 FOR THE ASS ESSMENT YEAR 2006-07. 2. THE SUBSTANTIAL GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS IN RESPECT OF PENALTY OF RS. 96,11,475/- U/S 271(1) (C) OF THE ACT. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER HELD THAT THE ASSESSEE CLAIMED TO HAVE BEEN BOGUS PURCHA SES FROM M/S PUJAN IMPEX AND M/S MARVEL IMPEX TO THE TUNE OF RS. 2,85,54,849/- IN ITS RETURN OF INCOME WHICH WAS DETECTED BY THE S URVEY PARTY AND BROUGHT TO TAX IN ASSESSMENT PROCEEDINGS. THEREFORE , THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD DELIB ERATELY AND ITA NO. 2449/M/2010 M/S KGK INVESTMENTS CO. PVT. . LTD. 2 CONSCIOUSLY ATTEMPTED TO CONCEAL THE TRUE PARTICULA RS OF ITS INCOME AND CONSEQUENTLY ATTEMPTED TO EVADE THE PAYMENT OF TAX THEREON. THEREFORE, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. IN THE PENALTY PROCEEDINGS, T HE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT PURCHAS ES MADE BY THE ASSESSEE FROM M/S PUJAN IMPEX AND M/S MARVEL IMPEX WERE GENUINE AND THE PAYMENTS FOR THE SAME WERE MADE THROUGH ACC OUNT PAYEE CHEQUE. THE ASSESSEE FURTHER SUBMITTED THAT IT OFFE RED TO TAX ADDITIONAL INCOME OF RS. 2,85,54,849/-, VOLUNTARILY , IN ORDER TO AVOID PROTRACTED LITIGATION AND IN ORDER TO BUY PEACE OF MIND WITH THE PRAYER THAT NO PENAL ACTION WILL BE TAKEN AGAINST ASSESSEE . THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT FOUND FAVOUR WITH THE ASSESSING OFFICER AND LEVIED PENALTY OF RS. 96,11,475/- ON THE GROUND THAT THE ASSESSEE HAD CONSCIOUSLY AND DELIBERATELY FILED INA CCURATE PARTICULARS OF ITS INCOME. ON APPEAL, THE CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 4. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE H AS CANVASSED THAT THE ISSUE IN DISPUTE IS COVERED BY THE DECISIO N OF ITAT IN ASSESSEES SISTER CONCERN M/S KGK CREATIONS (INDIA) P. LTD. FOR AY 2005-06 IN ITA NO. 2320/MUM/2009 VIDE ITS ORDER DAT ED 11 TH MARCH, 2010. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBM ITTED THAT THE ASSESSEE HAS MADE THE PURCHASES FROM THE SAME COMP ANY M/S PUJAN IMPEX AND M/S MARVEL IMPEX FROM WHOM THE SISTER CO NCERN, M/S KGK CREATIONS (INDIA) P. LTD. MADE. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE HAS RELIED UPON THE ORDERS OF THE REVENUE AUTHORITI ES, BUT, NOT CONTROVERTED THE SUBMISSIONS MADE BY THE LEARNED CO UNSEL FOR THE ASSESSEE. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT SIMILAR ISSUE CAME UP BEFORE THE ITA NO. 2449/M/2010 M/S KGK INVESTMENTS CO. PVT. . LTD. 3 ITAT IN ASSESSEES SISTER CONCERN, I.E. M/S KGK CRE ATIONS (INDIA) P. LTD. FOR AY 2005-06 (SUPRA) WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, PENALTY LEVIED U/S 271(1 )(C) BY THE ASSESSING OFFICER WAS DELETED. THE RELEVANT FINDING S OF THE ITAT ARE EXTRACTED BELOW:- 13. THE NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MALU ELECTRODES (P) LTD. (NAG.) 27 TTJ 599 WAS CON SIDERING THE SITUATION WHERE, IF THE ASSESSEE WOULD HAVE CONTEST ED THE ADDITION IN STEAD OF AGREEING FOR THE SAME, THE ADD ITION COULD NOT HAVE BEEN MADE AND IN SUCH A SITUATION IT OBSERVED THAT IT IS POSSIBLE THAT THE ASSESSEE WOULD HAVE MADE THE SURR ENDER DUE TO A NUMBER OF POSSIBLE REASONS AND IN SUCH A SITUATIO N, NO PENALTY CAN BE LEVIED. IT HELD THAT MERE FACT OF AN AGREED ADDITION, DOES NOT RESULT INTO A CONCLUSION THAT THE AMOUNT AGREED TO BE ADDED AS INCOME WOULD RESULT IN CONCEALED INCOME. THE BEN CH RELIED ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF KANBAY SOFTWARE INDIA (P) LTD. VS. DCIT (2009) 22 DTR (PUN E) 481. 7. SINCE THE FACTS OF THE CASE UNDER CONSIDERATION IS MATERIALLY IDENTICAL TO THAT OF THE CASE DECIDED BY THE ITAT I N ASSESSEES SISTER CONCERN (SUPRA) FOR AY 2005-06, WE RESPECTFULLY FOL LOW THE DECISION OF THE SAME AND IN THE LIGHT OF THAT WE HEREBY DELETE THE PENALTY OF RS. 96,11,475/- U/S 271(1)(C) OF THE ACT LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 29 TH APRIL, 2011. SD/- SD/- (R.S.SYAL) (V. DURGA R AO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 29 TH APRIL, 2011 ITA NO. 2449/M/2010 M/S KGK INVESTMENTS CO. PVT. . LTD. 4 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV