ITO WD 1(4), THANE V. SMT MAYA A. ROHRA, THANE

ITA 2773/MUM/2019

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 4449 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 03-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Assessee Lawyers: PRAVESH ADVANI
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 2773/MUM/2019 (ASSESSMENT YEAR 2010-11 ) ITO, WARD-1(4) ROOM NO. 11 6 TH FLOOR B-WING, WAGLE INDUSTRIAL ESTATE THANE WEST PINCODE-400 604. VS . SMT. MAYA ANANDPRAKASH ROHRA A-4, 1 ST FLOOR, SHALIMAR CHS, NEAR BANK OF BARODA KOPRI COLONY, THANE EAST PINCODE-400 603. PAN : AAQPR0172A (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI PRAVESH ADVANI DEPARTMENT BY MS. SMITA VERMA DATE OF HEARING 09.11.2020 DATE OF PRONOUNCEMENT 19.11.2020 O R D E R THIS IS IN APPEAL BY THE REVENUE IN THE REVENUE I S AGGRIEVED THAT THE LEARNED CIT APPEALS HAS ERRED IN DELETING THE PENAL TY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS. 4,19,448/- BY ORDER DATED 21.2.2019 PERTAINING TO ASSESSMENT YEAR 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IN THI S CASE IS ENGAGED IN BUSINESS OF MANUFACTURER OF PLASTIC AND RUBBER GOOD S. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE D ISALLOWANCE OF 100% OF THE PURCHASES OF RS. 54,29,738/-. THE SAME WAS REST RICTED TO 25% BY LEARNED CIT(A). PENALTY UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RUPEES 4,19,448/-WAS ALSO LEVIED. 3. UPON ASSESSEE'S APPEAL LEARNED CIT(A) DELETED TH E PENALTY BY OBSERVING AS UNDER :- 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, FINDINGS OF THE AO, SUBMISSION OF THE APPELLANT AND MATERIAL PLACED ON RE CORD. IN THE APPEAL ORDER OF THE QUANTUM APPEAL, THE THEN CIT(A) HAD ADJUDI CATED THAT 25% OF BOGUS PURCHASES OF RS. 54,29,738/-, NEEDED TO BE ADD ED TO THE INCOME OF THE SMT. MAYA ANANDPRAKASH ROHRA 2 APPELLANT AND THE SAME WAS UPHELD BY THE HON'BLE ITA T, MUMBAI. HENCE THE ADDITION TO INCOME HAS BEEN SUSTAINED ON ESTIMATION BAS IS. 6. THE SUPREME COURT HAS RECENTLY REITERATED THE LAW I N CASE OF DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519 BY HOLDING IN PARA 62 THAT FINDING IN ASSESSMENT PROCEEDINGS CANNOT AUTOMATICALLY ADOPTED IN PENALTY PROCEEDINGS AND THE AUTHORITIES HAVE TO CONSIDER THE MA TTER AFRESH FROM DIFFERENT ANGLE. MOREOVER, IN THE CASE OF AJAY LOKNAT H LOHIA, ORDER DATED 5.10.2018, MUMBAI ITAT HAS ADDRESSED THAT WHEN AO H AD ESTIMATED COST GP ON ALLEGED PURCHASES, SUCH DISALLOWANCE DOES NOT TANTA MOUNT TO WILLFUL FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 7. IN THE CASE OF ETCO PROFILES PVT. LTD. VS. ACIT, IN ITA NO. 5351/MUM/2012, HON'BLE MUMBAI ITAT HAD HELD THAT: 'THE AO HAS DISALLOWED 20% OF PURCHASES ONLY ON PRE SUMPTIONS WITHOUT ESTABLISHING FULLY THAT THE ASSESSEE HAS MADE PURCH ASES FROM GREY MARKET. EVEN, IF IT IS ASSUMED FOR A MOMENT THAT TH E ASSESSEE MIGHT HAVE PURCHASED GOODS FROM GREY MARKET, IT WAS NOT E STABLISHED THAT THE AMOUNT OF PURCHASES WAS LESS THAN THAT RECORDED IN THE BOOKS OF ACCOUNT. UNDER THESE SET OF FACTS, IT HAS TO BE HEL D THAT THE IMPUGNED ADDITION HAS BEEN MADE ONLY ON ESTIMATED BASIS THAT TOO ON PRESUMPTIONS ONLY. HENCE, BY FOLLOWING THE DECISION RENDERED BY THE TRIBUNAL IN THE ASSESSEE'S SISTER CONCERN'S CASE (S UPRA), WE HOLD THAT THE IMPUGNED PENALTY IS LIABLE TO DELETED.' 8. IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 322 ITR 158 (SC) IT WAS HELD AS UNDER: - 'WE DO NOT AGREE, AS THE ASSESSES HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COU LD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WA S NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINI ON, ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTIO N OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDME NT OF THE LEGISLATURE'. 9. THE LEVY OF PENALTY IS MERELY ON DISALLOWANCE O F PURCHASES AND NOT FINDING OF CONCEALMENT TO REDUCE TAXABLE INCOME. ADDITI ON MADE ON ACCOUNT OF DISALLOWANCE OF PURCHASES AS BOGUS AUTOMATICALLY CANNOT JUSTIFY THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORDINGLY , THE PENALTY OF RS. 4,19,448/-, IMPOSED U/S 271(1)(C) OF THE IT. ACT, BY THE AO, IS HEREBY DELETED AND THE GROUNDS OF APPEAL, RAISED AS ABOVE, ARE ALL OWED. 4. AGAINST THIS ORDER REVENUE IS IN APPEAL BEFORE T HE ITAT. SMT. MAYA ANANDPRAKASH ROHRA 3 5. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTA TIVE AND PERUSED THE RECORDS. I FIND THE ADDITION ON ACCOUNT OF BOGUS PU RCHASES HAS BEEN DONE ON ESTIMATED BASIS. THE LEARNED CIT(A) IS CORRECT IN H OLDING THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THIS CASE IS NOT S USTAINABLE . I FURTHER NOTE THAT THE CONDUCT OF THE ASSESSEE IN THIS CASE CANNOT BE CONSIDERED BE CONTUMACIOUS WARRANT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THIS PROPOSITION IS SUPPORTED BY THE DECISION OF HONOURABLE SUPREME COU RT DECISION THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA VS. (83 ITR 26) . MOREOVER THE ID COUNSEL OF THE ASSESSEE HAS POINTED OUT THAT TAX EFFECT IN THI S CASE IS BELOW THE LIMIT FIXED BY CBDT VIDE CIRCULAR NO 17/2019 DATED 8.8.2019. 6. THE LD DR TRIED TO MENTION THAT SINCE THE ADDITI ON IS BASED UPON INFORMATION FROM SALES TAX AUTHORITY AN OUTSIDE AGE NCY THE PENALTY CAN ALSO CONSIDERED TO BE SO BASED AND HENCE WOULD FALL UNDE R THE EXEMPTION CARVED OUT IN THE SAID CBDT CIRCULAR. I AM NOT CONVINCED B Y THIS ARGUMENT. ONCE THE REVENUE CONCEDES THAT PENALTY HAS BEEN LEVIED BASED UPON OUTSIDE AGENCY INFORMATION THE PENALTY WOULD HAVE NO LEGS TO STAND . 7. BE AS IT MAY I UPHOLD THE ORDER OF LD CIT(A) DEL ETING THE PENALTY. 8. IN THE RESULT APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULE S BY PLACING THE RESULT ON NOTICE BOARD ON 19.11.2020. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 19/11/2020 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. SMT. MAYA ANANDPRAKASH ROHRA 4 BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI