ITO, W-3(2), THANE V. PRAYOSHA BUILDMAT PVT LTD, THANE

ITA 345/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8113 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 25-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO. 345/MUM/2019 ( ASSESSMENT YEAR: 2010-11) I.T.O., WARD 3(2), THANE, ROOM NO. 14, 6 TH FLOOR, B-WING, WAGLE INDUSTRIAL ESTATE, THANE (W), 400604. VS. M/S PRAYOSHA BUILDMAT PVT. LTD., 8, VIVEK CO-OPERATIVE HOUSING SOCIETY, RAVI COMPOUND, MADAN LAL DHINGRA ROAD, MR. TALWALKAR GYM PANCHPAKADI, THANE (W)- 400602. PAN/GIR NO.AABCP 0114 A (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI AKHTAR H ANSARI (DR) ASSESSEE BY NONE DATE OF HEARING 22/01/2020 DATE OF PRONOUNCEMENT 22/01/2020 / O R D E R PER: R.C. SHARMA, A.M. THIS IS THE APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE LD. CIT(A)-2, THANE DATED 14/11/2018 FOR THE A.Y. 2 010-11 IN THE MATTER OF DELETION OF PENALTY IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) AMOUNTING TO RS.1 ,49,051/-. 2. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND FOUND THAT THE A.O. HAS LEVIED PENALTY IN RESPECT O F ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES BY ESTIMATING PROFIT THE REON. BY THE ITA NO. 345/MUM/2019 ITO VS M/S PRAYOSHA BUILDMAT P LTD. 2 IMPUGNED ORDER, THE LD. CIT(A) HAS DELETED THE PENA LTY AFTER OBSERVING AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, FINDINGS OF THE AO, SUBMISSION OF THE AR AND MATERIAL PLACED ON RECORD. IT IS OBSERVED THAT THERE IS A NORMAL TENDENCY TO SUBJ ECT AN ASSESSEE TO PENALTY U/S 271(1)(C) IN ALL CASES WHER E THE ASSESSEE REFRAINS TO FILE AN APPEAL PURSUANT TO AN ASSESSMENT ORDER, WITH A HOPE TO END THE NIGHTMARE WHICH BEGAN WITH SELECTION OF CASE FOR SCRUTINY BY ACCEPTING THE GEN ERAL ADDITIONS IN ASSESSMENT ORDER. PENALTY IS STRAIGHTAWAY LEVIED ME RELY BECAUSE NO APPEAL HAS BEEN FILED AGAINST THE QUANTUM ORDER. THE HON'BLE SUPREME COURT IN THE CASE OF SIR SHADILAL SUGAR MILLS (168 ITR 7051) HELD THAT THERE MAY BE A HUNDRED AND ONE REASONS FO R NOT PROTESTING AND AGREEING TO AN ADDITION BUT THAT DOE S NOT FOLLOW TO THE CONCLUSION THAT THE AMOUNT AGREED TO BE ADDED W AS CONCEALED INCOME. THE HON'BLE KARNATAKA HIGH COURT IN CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY (2013 35 TAXMANN.COM 250) CATEGORICALLY HELD THAT:- '....THE VERY FACT THAT THE ASSESSEE AGREED TO PAY TAX AND DID NOT CHALLENGE THE ASSESSMENT ORDER, CANNOT BE CONST RUED AS MALA FIDE.' 6. FOLLOWING JUDICIAL PRONOUNCEMENTS CAN ALSO BE RE LIED ON IN SUPPORT OF THE PROPOSITION THAT VOLUNTARY SURRENDER OF INCO ME DOES NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT:- * CIT VS JAYARAJ TALKIES (1999) 239 ITR 914 (MAD HC ):- MERE AGREEMENT TO ADDITION OF INCOME OR SURRENDER O F INCOME DID NOT COMPLY CONCEALMENT OF INCOME. * CIT V/S M GEORGE & BROTHERS (1987) 59 CTR (KERALA HC) 298:- WHERE THE ASSESSEE FOR ONE REASON OR OTHER AGREES OR SURRENDERS CERTAIN AMOUNTS FOR ASSESSMENT , ITA NO. 345/MUM/2019 ITO VS M/S PRAYOSHA BUILDMAT P LTD. 3 THE IMPOSITION OF PENALTY SOLELY ON THE BASIS OF AS SESSEE'S SURRENDER WILL NOT BE WELL FOUNDED. * CIT V/S SURAJBHAN (2007) 294 ITR 481 (P&H HC):- P ENALTY CANNOT BE IMPOSED MERELY ON ACCOUNT OF HIGHER INCOM E HAVING BEEN SUBSEQUENTLY DECLARED. 7. THE SUPREME COURT HAS RECENTLY REITERATED THE LA W IN CASE OF DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519 BY HOLDING IN PARA 62 THAT FINDING IN ASSESSMENT PROCEEDINGS CANNOT AUTOM ATICALLY ADOPTED IN PENALTY PROCEEDINGS AND THE AUTHORITIES HAVE TO CONSIDER THE MATTER AFRESH FROM DIFFERENT ANGLE. 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 ASSESSEE 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 COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CL AIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAI MED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NO T ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT , IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)(C ). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE O F EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSE SSING 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 OF PURCHASES AND NOT FINDING OF CONCEALMENT OF ANY PARTICULAR OR MALA-FI DE INTENTION TO REDUCE TAXABLE INCOME. ADDITION 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 P ENALTY OF RS. 1,49,051/- IMPOSED U/S 271(1)(C) OF THE I.T. ACT BY THE A.O., IS HEREBY DELETED AND THE GROUNDS OF APPEAL, RAISED AS ABOVE, ARE ALLOWED. ITA NO. 345/MUM/2019 ITO VS M/S PRAYOSHA BUILDMAT P LTD. 4 3. AGAINST THE ABOVE ORDER OF THE LD. CIT(A), THE R EVENUE IS IN FURTHER APPEAL BEFORE THE ITAT. 4. I HAVE CONSIDERED THE CONTENTIONS OF THE LD DR A ND FOUND THAT THE ADDITION HAS BEEN MADE BY THE A.O. BY ALLEGING THAT THE ASSESSEE HAS OBTAINED BOGUS BILL OF RS. 4,82,367/-. AS THE A DDITION WAS VERY MEAGER, THE ASSESSEE DID NOT FILE THE APPEAL AND PA ID THE TAX. HOWEVER, THE A.O. ALSO LEVIED PENALTY U/S 271(1)(C) OF THE ACT WHICH WAS DELETED BY THE LD. CIT(A) AFTER CONSIDERING VAR IOUS JUDICIAL PRONOUNCEMENTS IN TERMS OF FINDING GIVEN AT PARA 5 TO 9 OF ITS APPELLATE ORDER. NOTHING WAS BROUGHT TO OUR NOTICE BY THE LD DR TO CONTROVERT THE FINDING SO RECORDED BY THE LD. CIT(A ). ACCORDINGLY, I DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF TH E LD. CIT(A) FOR DELETING THE PENALTY IMPOSED BY DISALLOWING PURCHAS ES WITHOUT FINDING ANY CONCEALMENT OF ANY PARTICULARS OR MALAFIDE INTE NTION TO REDUCE TAXABLE INCOME. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 22/01/2020 *RANJAN ITA NO. 345/MUM/2019 ITO VS M/S PRAYOSHA BUILDMAT P LTD. 5 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//