JAY SCIENTIFIC CO., MUMBAI V. ACIT 25(2), MUMBAI

ITA 3211/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5282 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Bogus purchase; Principle of natural justice
• Section: 271(1)(c); 143(3); 5(2)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL J BENCH MUMB AI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 3211/MUM/2017 (ASSESSMENT YEAR 2009-10 ) M/S JAY SCIENTIFIC CO. BEENA SMRUTI, 4 TH FLOOR, VILE PARLE (WEST) MUMBAI-400056. PAN: AACFJ7526Q VS. ACIT - 5(2) BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI. APPELLANT RESPONDE NT APPELLANT BY : SHRI GOVIND JHAVERI WITH SHRI ANUJ KISNADWALA (AR) RESPONDENT BY : SHRI RAJEEV GUBGOTRA (DR) DATE OF HEARING : 09.10.2018 DATE OF PRONOUNCEMEN T : 15.10.2018 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME -TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-37, MUMBAI DATED 03 .03.2017 FOR ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: THE FOLLOWING GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO EACH OTHER: 1. THE LEARNED ASSESSING OFFICER (AO) HAS ERRED IN PASSING AND THE HON'BLE CIT (A)-37 HAS ERRED IN LAW AND IN FACTS IN CONFIRM ING THE ORDER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ('THE ACT') WHICH IS BAD I N LAW, ILLEGAL AND VOID. 2. THE LEARNED ASSESSING OFFICER HAS ERRED IN PASSI NG AND THE HON'BLE CIT (A)- 37 HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE PENALTY ORDER U/S 271 (1)(C) IN GROSS VIOLATIONS OF PRINCIPLES OF NATURAL JUSTICE. 3. THE HON'BLE CIT(A)-37 HAS ERRED IN CONFIRMING PE NALTY U/S 271 (1)(C) LEVIED BY ASSESSING OFFICER WITHOUT SPECIFYING WHETHER IT IS FOR CONCEALMENT OF INCOME OR FURNISHING IN ACCURATE PARTICULARS OF INCOME. HE NCE, IT IS TOTALLY INCORRECT. ITA NO. 3211 MUM 2017-M/S JAY SCIENTIFIC CO. 2 4. THE HON'BLE CIT(A)-37 HAS ERRED IN CONFIRMING PE NALTY U/S 271 (1)(C) OF RS. 1,24,000/- LEVIED BY LEARNED ASSESSING OFFICER ON A DDITION MADE ON AGREED AND ESTIMATED BASIS OF PURCHASES FROM SUSPICIOUS DEALER S. 5. THE HON'BLE CIT(A)-37 HAS ERRED IN CONFIRMING PE NALTY U/S 271 (1)(C) LEVIED BY LEARNED ASSESSING OFFICER ONLY ON THE BASIS OF I NFORMATION FROM SALES TAX DEPARTMENT WEBSITE WITHOUT ANY CONCRETE EVIDENCE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10 WAS COMPLETED ON 24.03.2015 UNDER SECTION 1 43(3) R.W.S 147 OF THE ACT. THE ASSESSING OFFICER WHILE PASSING THE RE-ASS ESSMENT ORDER MADE ADDITION ON ACCOUNT OF BOGUS PURCHASES ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARA SHTRA. THE ASSESSING OFFICER MADE THE ADDITION OF 25% OF THE AGGREGATE P URCHASES SHOWN FROM THE ALLEGED HAWALA TRADERS. THE ASSESSING OFFICER L EVIED THE PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED ON SUCH ADDITIO N MADE ON ADHOC BASIS. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSE SSING OFFICER WAS CONFIRMED. THUS, FURTHER, AGGRIEVED BY THE ORDER OF LD. CIT(A), 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 IS LEVIABLE ON THE ADDITION MADE BY ASSESSING OFFICER ON ADHOC BASIS. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF TRIBUNAL IN SUSHIL CHHATRABHUJ RAHEJA VS. ACIT IN ITA NO. 1375 TO 1377/MUM/2017 DATED 29.09.2017 (AUT HORED BY SAME ITA NO. 3211 MUM 2017-M/S JAY SCIENTIFIC CO. 3 COMBINATION). ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. 4. 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 LAW RELIED BY LOWER AUTHORITIES. IT IS AN ADMI TTED FACT THAT THE ASSESSING OFFICER MADE ADDITION IN RE-ASSESSMENT PROCEEDING @ 25% OF THE PURCHASES FROM THE PARTIES WHO WERE DECLARED AS TAINTED /HAWA LA DEALERS BY SALES TAX DEPARTMENT GOVERNMENT OF MAHARASHTRA. THE ADDITION WAS ADMITTEDLY MADE ON ADHOC BASIS. THE CO-ORDINATE BENCH OF MUMBAI TRIBUNAL IN SUSHIL CHHATRABHUJ RAHEJA (SUPRA) WHILE CONSIDERING THE SI MILAR FACTS PASSED THE FOLLOWING ORDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE P ARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE PERUSA L OF ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER, WHILE PASSING T HE ASSESSMENT ORDER UNDER SECTION 143(3) RWS 147, MADE THE ADDITION ON THE BASIS OF ESTIMATION. THE ASSESSING OFFICER MADE ADDITION @ 2 5% OF THE ALLEGED BOGUS PURCHASES. THE REVENUE HAS NOT DISPUTED THAT ADDITIONS WERE MADE MERELY ON THE BASIS OF ESTIMATION. IT IS SETTLED LA W THAT NO PENALTIES IS LEVIABLE UNDER SECTION 271(1)(C) FOR AD HOC /ESTIMATED ADDITIONS. SIMILAR VIEW HAS BEEN TAKEN IN THE VARIOUS DECISIONS CITED BY LEARNED AR FOR THE ASSESSEE . ACCORDINGLY , WE ARE OF THE OPINION THAT THIS IS NOT A FIT CASE F OR LEVY OF PENALTY . IN THE RESULT THE GROUNDS OF APPEAL RAISED BY THE A SSESSEE IS ALLOWED . ITA NO. 3211 MUM 2017-M/S JAY SCIENTIFIC CO. 4 5. CONSIDERING THE DECISION OF TRIBUNAL IN SUSHIL CHHA TRABHUJ RAHEJA (SUPRA), THE PENALTY LEVIED BY ASSESSING OFFICER UNDER SECTI ON 271(1)(C) OF THE ACT IS DELETED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/10/2018. SD/- SD/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 15.10.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR J BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI