PYARAMID INDUSTRIES, MUMBAI V. ACIT 25(3), MUMBAI

ITA 3269/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9902 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 04-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: ANANT M PAI
• Keywords: Bogus purchase; Opportunity of being heard; Principle of natural justice; Difference of opinion
• Section: 144

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 3269/MUM/2017 (ASSESSMENT YEAR 2009-10 ) PYRAMID INDUSTRIES 245, 2 ND , KUMBARWADA, 1 ST FLOOR, ROOM NO.2, NEAR GOL DEVAL, MUMBAI-400004. PAN: AAJFP1895P VS. ACIT- 25(3) MUMBAI. APPELLANT RESPONDE NT APPELLANT BY : SHRI ANANT M. PAI (AR) RESPONDENT BY : SHRI LOVE KUMAR (AR) DATE OF HEARING : 18.09.2018 DATE OF PRONOUNCEMEN T : 26.09.2018 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 20 .02.2017, WHICH IN TURN ARISES FROM THE PENALTY LEVIED UNDER SECTION 2 71(1)(C) OF THE ACT BY ASSESSING OFFICER VIDE ITS ORDER DATED 24.09.2015 F OR ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS OF APPEAL: 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED COMMISSIONER (APPEALS) FAILED TO NOTE THAT PENALTY ORDER PASSED BY THE LEARNED ASSESSING OFFICER U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961 WAS WITHOUT JURISDICTION - AS THE PENALTY PROCEEDINGS HAD BEEN INITIATED ON BASIS OF A DEFECTIVE NOTICE WHICH DID NOT SPECIFY THE OFFENCE FOR WHICH THE APPELLANT WAS BEING CHARGED. THE PENALTY ORDER U/S 271 (1) (C) IS CLEARLY ILLEGA L AND DESERVE TO BE QUASHED IN APPEAL. ITA NO. 3269 MUM 2017-PYRAMID INDUSTRIES 2 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LEARNED COMMISSIONER (APPEALS) ERRED IN SUSTAINING THE ORDE R OF THE LEARNED ASSESSING OFFICER LEVYING PENALTY U/S 271 (1) (C) OF THE INCO ME TAX ACT, 1961 AT RS. 4,95,846 WHEN THE APPELLANT HAD NEITHER CONCEALED P ARTICULARS OF ITS INCOME NOR FURNISHED INACCURATE PARTICULARS OF ITS INCOME SO AS TO DESERVE THIS PENALTY. THE PENALTY LEVIED U/S 271 (1) (C) AT RS. 4,95,846 MAY THEREFORE, PLEASE BE DELETED IN APPEAL. 3. BOTH THE LEARNED COMMISSIONER (APPEALS) AND THE LEARNED ASSESSING OFFICER ERRED IN PASSING THEIR RESPECTIVE ORDERS WITHOUT GR ANTING THE APPELLANT AN ADEQUATE OPPORTUNITY OF BEING HEARD. THE ORDERS PASSED BY THEM ARE IN CONTRAVENTION OF T HE PRINCIPLES OF NATURAL JUSTICE AND HENCE, BAD IN LAW. 4: THE APPELLANT RESERVES RIGHT TO ADD, ALTER, AMEN D OR DELETE ANY GROUNDS OF APPEALS WITH PERMISSION OF THE HON'BLE TRIBUNAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PAVER BLOCKS. THE ASSESSMENT FOR ASSESSMENT YEAR 2009-10 WAS COMPLETED ON 23.03.2015 UNDER SECTION 1 44 R.W.S 147 OF THE ACT. THE ASSESSING OFFICER WHILE PASSING THE ASSESS MENT ORDER DETERMINED THE TOTAL INCOME OF ASSESSEE AT RS. 64,88,633/- AGA INST THE RETURN OF INCOME OF RS. 48,83,945/-. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 16,04,679/- ON ACCOUNT OF BOGUS PURCHASES BEING 23% OF TOTAL PURCHASES OF RS. 69,76,866/-. THE ASSESSING OFFICER MADE THE ADDITION ON THE BASIS OF INFORMATION RECEIVED FROM SALE TAX DEPARTMENT TH AT ASSESSEE IS ONE OF THE BENEFICIARIES WHO HAVE OBTAINED BOGUS BILLS. TH E ASSESSING OFFICER INITIATED THE PENALTY PROCEEDING UNDER SECTION 271( 1)(C). A NOTICE UNDER SECTION 274 R.W.S 271(1)(C) DATED 23.03.2015 WAS SE RVED UPON THE ASSESSEE. INITIALLY THE ASSESSEE HAS NOT FILED REPL Y. HENCE, THE ASSESSING OFFICER ISSUED ANOTHER NOTICE DATED 10.07.2015 TO T HE ASSESSEE. IN RESPONSE ITA NO. 3269 MUM 2017-PYRAMID INDUSTRIES 3 TO THE NOTICE DATED 10.07.2015, THE ASSESSEE FILED ITS REPLY DATED 08.08.2015. IN REPLY, THE ASSESSEE CONTENDED THAT T HE ADDITION MADE BY ASSESSING OFFICER ARE ERRONEOUS, UNJUST AND UNLAWFU L, THEREFORE, THE PENALTY CANNOT BE LEVIED. THE ASSESSEE FURTHER CONT ENDED THAT THE ASSESSEE NEITHER FURNISHED ANY INACCURATE PARTICULAR NOR CON CEALED ANY INCOME. THE ADDITION WAS MADE BY ASSESSING OFFICER ONLY ON THE BASIS OF DIFFERENCE OF OPINION. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTE D BY ASSESSING OFFICER. THE ASSESSING OFFICER LEVIED THE PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED. THE ASSESSING OFFICER WORKED O UT THE PENALTY OF RS. 4,95,846/- VIDE ITS ORDER DATED 24.09.2015 PASSED U NDER SECTION 271(1)(C). ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSE SSING OFFICER WAS CONFIRMED. THUS, FURTHER AGGRIEVED, THE ASSESSEE HA S FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORISED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASS ESSEE SUBMITS THAT THE ASSESSING OFFICER MADE THE ADDITION ON ACCOUNT OF B OGUS PURCHASES ON ESTIMATE BASIS. THE LD. AR OF THE ASSESSEE SUBMITS THAT NO PENALTY IS LEVIABLE ON ESTIMATED ADDITION. IN SUPPORT OF HIS S UBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF MUMBAI TRI BUNAL IN SUSHIL CHHATRABUJ RAHEJA VS. ACIT IN ITAS NO. 1375, 1376 & 1377/MUM/2017 ITA NO. 3269 MUM 2017-PYRAMID INDUSTRIES 4 DATED 29.09.2017 AND SAMEER D. PUNJABI VS. ITO IN I TA NO. 1564/MUM/2017 DATED 10.11.2017. 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDERS OF AUTHORITIES BELOW. 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 THE VARIOUS CASE LAW CITED BY LOWER AUTHORITY IN THEIR ORDERS. A PERUSAL OF ASSESSMENT ORDER REVEALS THAT ASSESSEE HAS SHOWN PU RCHASES OF RS. 69,76,866/- FROM SEVEN PARTIES, WHICH WERE FOUND TO BE DOUBTFUL IN VIEW OF THE INFORMATION RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT. THE ASSESSING OFFICER NOT ADDED THE ENTIRE AMOUNT OF PU RCHASES TO THE RETURN OF INCOME, ADDED ONLY 23% OF POSSIBLE/ESTIMATED PRO FIT AND RESULTING IN ADDITION OF RS. 16,04,679/-. THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECTION 271(1)(C) ON SUCH ESTIMATED ADDITION. THE ASSESSEE BEFORE THE LOWER AUTHORITIES HAS URGED THAT ADDITION WAS M ADE ON THE BASIS OF DIFFERENCE OF OPINION AND NO PENALTY IS LEVIABLE ON SUCH ESTIMATED ADDITION. IT IS SETTLED LAW THAT ADDITION MADE BY A SSESSING OFFICER BY RESORTING THE ESTIMATION OF PROFIT ELEMENT ON ALLEG ED BOGUS PURCHASE, NO PENALTY IS SUSTAINABLE. SIMILAR VIEW WAS TAKEN BY T RIBUNAL IN CASE OF SUSHIL CHHATRABUJ RAHEJA (SUPRA) (AUTHORED BY SAME COMBINATION). AGAIN IN CASE OF SAMEER D. PUNJABI (SUPRA) (AUTHORED BY L D. AM). SIMILAR VIEW WAS TAKEN. ITA NO. 3269 MUM 2017-PYRAMID INDUSTRIES 5 6. CONSIDERING THE ABOVE FACTUAL DISCUSSION AND RESPEC TFULLY FOLLOWING THE SAME, WE HOLD THAT NO PENALTY IS LEVIABLE UNDER SEC TION 271(1)(C) ON ADHOC/ESTIMATED ADDITION. THEREFORE, WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. HENCE, GROUNDS OF APP EAL RAISED BY ASSESSEE ARE ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/09/2018. SD/- SD/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 26.09.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI