GRAFICA FLEXTRONICA, MUMBAI V. ACIT 25(2), MUMBAI

ITA 295/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1777 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 11-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHI RAMA KARTHIKEYAN S
• Keywords: Bogus purchase; Corroborative evidences; Accommodation entries
• Section: 271(1)(c); 143(3); 147; 54; 154

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 295/MUM/2018 (ASSESSMENT YEAR 2010-11 ) M/S GRAFICA FLEXTRONICA 3, SAURABH- A CHS LTD., GROUND FLOOR, NEXT TO BHUTA HIGH SCHOOL, SHAHAJI RAJE MARG, VILE PARLE (EAST), MUMBAI-400057 . PAN: AAAFG4064A VS. ACIT-25(2), ROOM NO. 508, C-10, 5 TH FLOOR, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051. APPELLANT RESPONDE NT APPELLANT BY : SHRI BHUPENDRA SHAH (C.A) RESPONDENT BY : SHRI ABHI RAMA KARTHIKEYAN S. (SR. DR) DATE OF HEARING : 06.06.2019 DATE OF PRONOUNCEMEN T : 06.06.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-37 [THE LD. CIT(A)], MUMBAI DA TED 13.10.2017 IN CONFIRMING THE PENALTY LEVIED BY ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT (THE ACT) DATED 29.07.2016 FOR A SSESSMENT YEAR 2010- 11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. (A) UNDER THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING PENALTY U/S 271(1)(C) OF IN COME TAX ACT, 1961 (LITHE ACT') ON ESTIMATED GP ADDITION MADE OF RS.6,59,220/ - ON PURCHASE MADE FROM PARTIES ALLEGED TO BE SUSPICIOUS/HAWALA DEALERS. (B) UNDER THE FACTS AND CIRCUMSTANCE OF THE CASE AN D IN LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING PENALTY IN A CASE WHERE EST IMATED ADDITION AT SPECIFIC PERCENTAGE OF PURCHASE WAS MADE PURELY ON CONJECTUR E AND NO ADVERSE ITA NO. 295 MUM 2018-M/S GRAFICA FLEXTRONICA 2 CONCLUSIVE FINDING MADE BY AO OR CIT (A) DISPROVING GENUINENESS OF PURCHASES. 2. UNDER THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING PENALTY, BRUSHING ASIDE APP ELLANT'S SUBMISSION AND ALL HARD CORE SUPPORTING EVIDENCES FOR PURCHASE AND SUP PLY THEREOF, MADE BEFORE ASSESSING OFFICER AND CIT (A) IN SUPPORT OF GENUINE NESS OF ITS PURCHASES. 3. UNDER THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN PASSING ORDER WITHOUT TAKING COGNIZANC E OF VARIOUS JUDICIAL PRECEDENTS INCLUDING COVERED CASE OF HON'BLE ITAT, MUMBAI AND OTHERS, QUOTED BEFORE HIM IN THE MATTER. 4. UNDER THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT (A) HAS PASSED THE ORDER SUBSTITUTING LD. AO'S SATISFAC TION AS HIS OWN, WITHOUT ASSIGNING ANY SPECIFIC REASONS THEREOF FOR CONFIRMI NG PENALTY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 19.03.2013. THE ASSESSING OFFI CER WHILE PASSING THE ASSESSMENT ORDER MADE DISALLOWANCE ON ACCOUNT OF BO GUS PURCHASES OF RS. 6,37,894/- ( BEING 25% OF TOTAL PURCHASES OF RS. 28 ,78,959/-) AND INITIATED THE PENALTY UNDER SECTION 271(1)(C). THEREAFTER, THE AS SESSMENT REOPENED UNDER SECTION 147 ON 28.01.2016. THE REOPENING ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S. 147 ON 28.01.2016. IN THE ASS ESSMENT ORDER DATED 28.01.2016 THE ASSESSING OFFICER FURTHER MADE DISAL LOWANCE OF PURCHASES OF RS. 4,08,327/- ( 25% OF PURCHASES OF RS. 13,61,091/ -) WAS MADE. THE ASSESSMENT WAS RECTIFIED VIDE ORDER UNDER SECTION 1 54 DATED 21.06.2016 RESTRICTING THE PURCHASES TO RS. 3,40,273/-. ON APP EAL BEFORE THE LD. CIT(A), THE ADDITION OF RS. 637894/- ( BEING 25% OF TOTAL P URCHASES OF RS. 28,78,959/-) MADE IN ASSESSMENT ORDER SATED 19.03. 2013 WAS PARTLY CONFIRMED TO THE EXTENT OF RS. 3,18,948/- ( 12.5% O F RS. 28,78,959/-) AND ITA NO. 295 MUM 2018-M/S GRAFICA FLEXTRONICA 3 REMAINING ADDITION OF RS. 3,40,273/- THAT IS TOTAL OF RS. 6,59,220/- WAS SUSTAINED. THEREAFTER, A FRESH SHOW NOTICE ISSUED B Y ASSESSING OFFICER FOR LEVYING THE PENALTY VIDE NOTICE DATED 08.07.2016. T HE ASSESSEE FILED ITS REPLY DATED 19.07.2016. IN THE REPLY, THE ASSESSEE STATED THAT ASSESSEE HAD NO INTENTION TO CONCEAL THE INCOME AND HAS NOT FURNISH ED ANY INCORRECT PARTICULARS. THE CONTENTION OF ASSESSEE WAS NOT ACC EPTED BY ASSESSING OFFICER. THE ASSESSING OFFICER LEVIED 100% OF PENAL TY ON THE TAX SOUGHT TO BE EVADED VIDE HIS ORDER DATED 29.07.2016 LEVYING T HE PENALTY OF RS. 2,03,700/-. ON FURTHER APPEAL BEFORE THE LD. CIT(A) , THE ACTION OF ASSESSING OFFICER IN LEVYING THE PENALTY WAS CONFIRMED. THUS, FURTHER AGGRIEVED, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. A R OF THE ASSESSEE SUBMITS THAT NO PENALTY WAS LEVIABLE AGAINST THE ASSESSEE A S THE ADDITION IN THE QUANTUM ASSESSMENT WAS ESTIMATED/ADHOC BASIS. THE L D. AR OF THE ASSESSEE SUBMITS THAT ASSESSEE FURNISHED COMPLETE DETAILS OF HIS PURCHASES TO SUBSTANTIATE HIS EXPENSES INCURRED ON ACCOUNT OF PU RCHASES DURING THE RELEVANT PERIOD. THE ASSESSING OFFICER MADE ADDITIO N ON ADHOC BASIS @ 25% WHICH WAS FURTHER RESTRICTED TO 12.5% OF THE PURCHA SES IN RESPECT OF THREE PARTIES. IN RESPECT OF ONE MORE PARTY THE ADDITION ON ACCOUNT OF BOGUS PURCHASE WAS ALSO MADE @ 25% OF SUCH PURCHASES. IT WAS ARGUED THAT NO ITA NO. 295 MUM 2018-M/S GRAFICA FLEXTRONICA 4 PENALTY LEVIED ON THE BASIS OF ESTIMATED/ADHOC ADDI TIONS. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF TRIBUNAL IN SUSHIL CHHATRABHUJ RAHEJA DARSHAN BHEDA & ASSOCIATE S VS. ACIT IN ITA NO. 1375, 1376 & 1377/MUM/2017 DATED 29.09.2017 (AU THORED BY SAME COMBINATION). THE LD. AR OF THE ASSESSEE, THUS, SUB MITS THAT THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE PRINCIPALLY COVERED I N FAVOUR OF ASSESSEE. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER/LD. CIT(A) . THE LD. DR FOR THE REVENUE FURTHER SUBMITS THAT THE ASSESSEE HAS AVAIL ED ACCOMMODATION ENTRIES FROM THE HAWALA DEALERS AND THAT THE LOWER AUTHORIT Y HAS RIGHTLY LEVIED/CONFIRMED THE PENALTY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO DELIBERATED ON VARIOUS CASE LAWS FILED BY LD. AR OF THE ASSESSEE. THE LD. AR OF THE ASSESSEE MAINLY RELIED UPON THE DECISION OF CO-ORDINATE BENCH IN SU SHIL CHHATRABHUJ RAHEJA DARSHAN BHEDA & ASSOCIATES (SUPRA). WE HAVE NOTED T HAT THE FACTS OF THE CASE ARE ALMOST SIMILAR. WE HAVE FURTHER NOTED THAT IT I S SETTLED LAW THAT NO PENALTY IS LEVIABLE UNDER SECTION 271(1)(C) FOR THE YEAR ON ADHO C/ESTIMATED ADDITIONS. SIMILAR VIEW HAS BEEN TAKEN BY VARIOUS HIGH COURTS AND CO-ORDINATE BENCH OF TRIBUNAL IN THE FOLLOWING CASES. (I) CIT VS. RAVAIL SINGH & COMPANY (254 ITR 191 (P&H). (II) HARIGOPAL VS. CIT 9258 ITR 85 (P&H HC). ITA NO. 295 MUM 2018-M/S GRAFICA FLEXTRONICA 5 (III) ITO VS. BOMBAYWALA READYMADE STORE [2015] 230 TAXMA N 313 (GUJ.). (IV) NARESH CHAND AGGARWAL VS. CIT (357 ITR 515 (ALL HC) , (V) DCIT VS. MANOHAR MANAK (ITA 5586/M/2015). (VI) YASHRAJ FILMS PVT. LTD. VS. ACIT (ITA 7519/M/2013). (VII) SARVESH MERCANTILE PVT. LTD. (ITA 93/MUM/2011). (VIII) DCIT VS. RISABH IMPEX (ITA 93/MUM/2011. 6. THEREFORE, CONSIDERING THE FACT OF THE PRESENT CASE AND IN VIEW OF THE ABOVE AFORESAID DECISION, WE ARE OF THE VIEW THAT THIS IS NOT A FIT CASE FOR LEVYING OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HENCE, THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/06/2019. SD/- SD/- G.S. PANNU, PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 06.06.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI