Western Metal Industries Pvt.Ltd., Pune V. Assistant Commissioner of Income tax,

ITA 2693/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2057 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 29-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Additional evidence
• Section: 148; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO S . 26 93 & 26 94 /P U N/201 6 / ASSESSMENT YEAR S : 20 1 0 - 11 & 201 1 - 1 2 WESTERN METAL INDUSTRIES PVT. LTD., 251/1/1A & B, HADAPSAR INDUSTRIAL ESTATE, HADAPSAR, PUNE - 411013 . / APPELLANT PAN: A AACW7017C VS. THE ASS T . COMMISSIONER OF INCOME TAX, CIRCLE 1( 2 ), PUNE . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : S HRI SUDHENDUDAS / DATE OF HEARING : 06 . 1 1 .201 8 / DATE OF PRONOUNCEMENT: 16 . 11 .201 8 / ORDER PER SUSHMA CHOWLA, J M : BOTH T HE APPEAL S FILED BY ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) , PUNE - 5 , PUNE DATED 12.08.2016 RELATING TO ASSESSMENT YEAR S 20 1 0 - 11 AND 201 1 - 1 2 AGAINST LEVY OF PEN ALTY UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT). ITA NO S . 2693 & 2694 /P U N/20 1 6 WESTERN METAL INDUSTRI AL PVT. LTD. 2 2. BOTH THE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. T HE ISSUE RAISED IN BOTH THE APPEALS IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, IN ORDER TO ADJUDICATE THE ISSUE, REFERENCE IS BEING MADE TO THE FACTS AND ISSUE IN ITA NO.2693/PUN/2016, RELATING TO ASSESSMENT YEAR 2010 - 11. 4 . THE ASSESSEE IN ITA NO.26 93 /PUN/2016, RELATING TO ASSESSMENT YEAR 20 1 0 - 11 HAS RAISED THE FOLLOWING GROUND OF APPEAL: - ON FACTS AND IN LAW, 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS.2,43,210/ - U/S 271(1)(C). 2] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT A . THE APPELLANT HAD MADE PURCHASES OF BEARINGS FROM M/S. RUP INTERNATIONAL, MUMBAI AND THE PAYMENT WAS MADE THROUGH BANKING CHANNEL AND JUST BECAUSE THAT PARTY HAD AVOIDED PAYMENT OF VAT, IT DID NOT MEAN THAT THE PURCHASES WERE BOGUS. B . THE DEPT. HAD NOT PROVED THAT THE PURCHASES WERE BOGUS NOR DID IT PRODUCE THE SUPPLIER FOR EXAMINATION AND THEREFORE, THE LEVY OF PENALTY U/S 271(1)(C) IS NOT JUSTIFIED. 3] THE APPELLANT REQUESTS FOR ADMISSION OF ADDITIONAL EVIDENCES, IF ANY NECESSARY, I N SUPPORT OF ITS GROUNDS OF APPEAL. 5 . BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF 4,40,14,030/ - . THE CASE OF ASSESSEE WAS TAKEN UP FOR SCRUTINY. THE ASSESSING OFFICER HAD RECEIVED INFORMATION FROM THE MAHARASHTRA SALES TAX DEPARTMENT ABOUT PURCHASES MADE BY THE ASSESSEE FROM HAWALA PARTIES. THE CASE OF ASSESSEE WAS REOPENED UNDER S ECTION 148 OF THE ACT AND IN RESPONSE THERETO, THE ASSESSEE OFFERED ADDITIONAL INCOME ON ACCOUNT OF BOGUS PURCHASES OF 7,15,520/ - . THE ASSESSING OFFICER WHILE ITA NO S . 2693 & 2694 /P U N/20 1 6 WESTERN METAL INDUSTRI AL PVT. LTD. 3 COMPLETING ASSESSMENT HELD THAT IT WAS CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURA TE PARTICULARS OF SUCH INCOME AND INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. FURTHER, THE ASSESSING OFFICER WHILE PASSING ORDER UNDER SECTION 271(1)(C) OF THE ACT VIDE PARA 6 HAS HELD THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTIC ULARS OF INCOME WITH A VIEW TO PAY LESSER TAX AND HENCE, MADE ITSELF LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER VIDE PARA 8 LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT READ WITH EXPLANATION 1 AT 2,43,210/ - . 6. THE CIT(A) UPHELD LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNM ENT. ON EARLIER DATE OF HEARING I.E. 29.08.2018, APPEAL WAS ADJOURNED AT THE REQUEST OF ASSESSEE BUT NONE APPEARED ON THE NEXT DATE OF HEARING I.E. 06.11.2018 AND WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE. 9. ON PERUSAL OF RECORD, WE FIND THAT THE ONLY ISSUE RAISED IN PRESENT APPEAL IS AGAINST LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. THE SAID PENALTY FOR CONCEALMENT CAN BE LEVIED WHERE THE ASSESSEE HAS CONCEALE D ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER WHILE INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT HAS TO RECORD SATISFACTION AS TO WHICH LIMB OF SAID SECTION HAS NOT BEEN FULFILLED BY ASSESSEE. CONS EQUENTLY, WHILE PASSING ASSESSMENT ORDER, THE ITA NO S . 2693 & 2694 /P U N/20 1 6 WESTERN METAL INDUSTRI AL PVT. LTD. 4 ASSESSING OFFICER HAS TO COME TO A FINDING AS TO WHICH LIMB OF SAID SECTION HAS NOT BEEN FULFILLED AND SHOW CAUSE THE ASSESSEE TO EXPLAIN ITS CASE VIS - - VIS SAID LIMB OF SAID SECTION. HOWEVER, IN THE PRESENT C ASE, NO SUCH SATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER. FURTHER, WE FIND THAT THE ASSESSING OFFICER WHILE PASSING PENALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT IN PARA 6 HAS OBSERVED THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS O F INCOME MAKING IT LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FURTHER, IN PARA 8, IT HAS LEVIED PENALTY UNDER SECTION 271(1)(C) READ WITH EXPLANATION 1 OF THE ACT, WHICH ARISES IN THE CASE OF CONCEALMENT OF INCOME. HENCE, AGAIN THE AS SESSING OFFICER HAS FAILED TO COME TO A FINDING AS TO WHICH LIMB OF SAID SECTION HAS NOT BEEN FULFILLED MAKING THE ASSESSEE LIABLE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 10. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY IN INCOME TAX APPEAL NO.1154 OF 2014 WITH OTHER INCOME TAX APPEALS NOS.953 OF 2014, 1097 OF 2014 AND 1226 OF 2014, JUDGMENT DATED 05.01.2017 , (2017) 392 ITR 4 (BOM) HAVE HELD THAT WHERE THERE IS NO PROPER SATISFACTION FOR LEVY OF PENALTY AND IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 11. APPLYING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH CO URT, WE HOLD THAT IN THE ABSENCE OF PROPER SATISFACTION BEING RECORDED BY THE ASSESSING OFFICER WHILE INITIATING PENALTY PROCEEDINGS AND ALSO WHILE PASSING ORDER LEVYING PENALTY, ORDER PASSED BY ASSESSING OFFICER LEVYING PENALTY IS INVALID AND BAD IN LAW. CONSEQUENTLY, WE DELETE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, ALLOWED. ITA NO S . 2693 & 2694 /P U N/20 1 6 WESTERN METAL INDUSTRI AL PVT. LTD. 5 12. THE FACTS AND ISSUE IN ITA NO.2694/PUN/2016 ARE IDENTICAL TO THE FACTS AND ISSUE IN ITA NO.2693/PUN/2016 AND OUR DECISION IN ITA NO.2693/PUN/2016 S HALL APPLY MUTATIS MUTANDIS TO ITA NO.2694/PUN/2016. 1 3 . IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 16 TH DAY OF NOVEMB ER , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 16 TH NOVEM BER , 201 8 . GCVSR / COPY OF THE ORDER IS FORWAR DED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) , PUNE - 5 , PUNE ; 4. THE PR. CIT , PUNE - 4, PUNE ; 5. 6. , , / DR B , ITAT, PUNE ; / GUARD FIL E . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE