ACIT 26 (1), MUMBAI V. SHRI. GHANSHYAM T GURSAHANI, MUMBAI

ITA 338/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9316 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 13-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Keywords: Bogus purchase; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , G BENCH MUMBAI BEFORE : SHRI SHAMIM YAHYA , A CCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 338 / MUM/ 2020 ( ASSESSMENT YEAR : 2010 - 11 ) ACIT - 26(1) ROOM NO.623, 6 TH FLOOR KAUT ILYA BHAVAN BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051 VS. SHRI GHANSHYAM T. GURSAHANI C - 602, SAGAR SWAPNA NAGAR MULUND (W) MUMBAI 400 080 PAN/GIR NO. AABPG6912E (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI T.S. KHALSA ASSESSEE BY NONE DAT E OF HEARING 29 /07 /2021 DATE OF PRONOUNCEMENT 02 / 08 /202 1 / O R D E R PER SHRI SHAMIM YAHYA AM THIS APPEAL BY THE REVENUE IS AGAINST ORDER OF LEARNED CIT(A) - 40, MUMBAI DATED 23/10/2019 WHEREIN FOLLOWING PENALTY LEVIED UNDER 271 (1)(C) HAS BEEN DELETED : - 2. T HE BRIEF FACTS OF THE CASE LEADING TO THE LEVY OF PENALTY ARE THAT THE A SSESSING O FFICER IN TH IS CASE MADE DISALLOWANCE OF 20% ON ACCOUNT OF BOGUS PURCHASES. ASSESS EE HAS SUPPLIED THE PURCHASE VOUCHERS AND ASSESSMENT YEAR AMOUNT OF PENALTY 2010 - 11 RS.1,30,600/ - ITA NO . 338/MUM/2020 SHRI GHANSHYAM T. GURSAHANI 2 THE PAYMENT WHERE SHOWN TO HAVE BEEN MADE BY BANKING CHANNEL. HOWEVER , DRAWING ADVERSE INFERENCE FOR THE NONPRODUCTION OF THE SUPPLIERS , T HE A SSESSING O FFICER DISALLOWED 20% OF THE BOGUS PURCHASES. HOWEVER , THE A SS ESSING O FFICER DID NOT DOUBT THE SALES. PENALTY UNDER SECTION 271 ( 1 )(C) WAS ALSO LEVIED. LD CIT ( A ) DELETED THE PENALTY HOLDING AS UNDER : - 4. DECISION. HAVING GONE THROUGH THE 271(1) (C) ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT THERE IS MERIT IN T HE ARGUMENTS OF THE APPELLANT FOR THE REASON THAT ALTHOUGH THE A.O. HAS ESTIMATED 20% GROSS PROFIT ON ALLEGED BOGUS PURCHASES, NEVER MADE ANY OBSERVATIONS WITH REGARD TO THE INCORRECTNESS IN DETAILS FILED BY THE ASSESSEE TO PROVE SUCH PURCHASES AND THE PEN ALTY ORDER IS SILENT ON THE ISSUE AS TO HOW THIS SATISFACTION OF CONCEALMENT /FURNISHING OF INACCURATE PARTICULARS WAS ARRIVED AT. THEREFORE, THE QUALIFICATION OF THE ALLEGED CONCEALMENT/INACCURATE PARTICULARS IS ONLY AN ESTIMATE AND IT IS SETTLED LAW THAT PENALTY IS NOT ATTRACTED ON ESTIMATED ADDITIONS WITHOUT ANY ESTABLISHING CLEAR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HON'BLE DELHI HIGH COURT IN C1T VS. AERO TRADERS PVT. LTD., REPORTED IN 322 ITR 316 (DEL), HAS HEL D THAT NO PENALTY U/S 271(L)(C) CAN BE IMPOSED WHOA INCOME IS DETERMINED ON ESTIMATE BASIS. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARIGOP U SINGH VS. C1T REPORTED IN 258 ITR 85 (P&H) AND THE HON'BLE GUJARAT H IGH COURT IN THE CASE OF CIT VS. SUBHASH TRADING COMPANY REPORTED IN 221 ITR 110 (GUJ). IN VIEW OF THE FOREGOING PRECEDENTS INCLUDING THE ONE FROM THE HON'BLE JURISDICTIONAL HIGH COURT, IT IS APPARENT THAT WHEN THE BEDROCK OF INSTANT PENALTY IS THE ESTIMAT E OF NET PROFIT, THE SAME CANNOT BE SUSTAINED. ACCORDINGLY, THE A.O. IS DIRECTED TO DELETE THE PENALTY LEVIED. THE APPELLANTS SUCCEEDS ON HIS GROUNDS OF APPEAL FILED. 3. AGAINST THIS ORDER , REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD LD DR AND PERU SED THE RECORDS. AS CLEAR FROM THE FACTS RECORDED ABOVE , THE DISALLOWANCE HAS BEEN MADE ON AN ESTIMATED BASIS ON ACCOUNT OF THE NONPRODUCTION OF SUPPLIERS BEFORE THE A SSESSING O FFICER. THE PURCHASE VOUCHERS WERE DULY PRODUCED AND THE PAYMENTS WERE THROUGH BANKING CHANNEL. IN THESE BACKGROUNDS , IN OUR CONSIDERED OPINION , ASSESSEE CANNOT BE VISITED WITH THE RIGOURS OF PENALTY UNDER SECTION 271 ( 1 )(C) . AS A MATTER OF FACT ON MANY OCCASIONS ON SIMILAR CIRCUMSTANCES IN QUANTUM PROCEEDINGS THE DISALLOWANCE ITSELF HAS BEEN DELETED. IN OUR CONSIDERED OPINION , ON THE FACTS AND CIRCUMSTANCES OF THE ITA NO . 338/MUM/2020 SHRI GHANSHYAM T. GURSAHANI 3 CASE , ASSESSEE CANNOT BE SAID TO HAVE BEEN GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD , WE DRAW SUPPORT FROM THE DEC ISION OF A LA RGER BENCH OF THE HON BLE SUPREME COURT IN THE CASE OF THE HINDUSTAN STEEL LTD., VS. S TATE OF ORISSA REPORTED IN 82 ITR 26 WHERE IN IT WAS HELD THAT THE AUTHORITY MAY NO T LEVY THE PENALTY IF THE CONDUCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMACIOUS. 5. WE FURTHER NOTE THAT TAX EFFECT IN THIS CASE IS BELOW THE LIMIT FIXED BY CBDT FOR FILING APPEALS BEFORE ITAT. THE REVENUE HAS TRIED TO MAKE OUT A CASE THAT SINCE THE ADDITION WAS MADE PURSUANT TO INFORMATION FROM SALES TAX DEP ARTMENT , THIS PENALTY APPEAL F ALLS IN THE EXCEPTION CARVED OUT IN THE CBDT CIRCULAR REGARDING APPEALS ARISING OUT OF ADDITIONS MADE PURSUANT TO INFORMATION FROM OUTSIDE AGENCIES. WE ARE OF THE OPINION THAT THIS PLEA IS NOT TENABLE INASMUCH AS ONCE REVENUE ACCEPTS THAT PENALTY IS LEVIED ON OUTSIDE AGENCY INFORMATION /THE PENALTY LEVIED WILL HAVE NO LEGS TO STAND. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT , WE UPHOLD THE ORDER'S OF LD CIT ( A ) AND DELETE THE LEVY OF PENALTY. 6. IN THE RESULT R EVENUE'S APPEAL IS DISMISSED . ORD ER PRONOUNCED ON 02 / 08 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( PAVAN KUMAR GADALE ) SD/ - ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 02 / 08 / 2021 K ARUNA , SR.PS ITA NO . 338/MUM/2020 SHRI GHANSHYAM T. GURSAHANI 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//