ITO 25(3)(1), Mumbai V. MADHUBEN PRAKASH PAREKH, Mumbai

ITA 350/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7712 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 25-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K BHOOPATHI
• Keywords: Bogus purchase; Tax effect; Reassessment proceedings
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 350/MUM/2019 ( / ASSESSMENT YEARS : 2010-11 ITO 25(3)(1) R.NO. 606, 6 TH FLOOR C- 10, PRATYAKSH KAR BHAVAN BKC BANDRA EAST, MUMBAI 400 051. / VS. MADHUBEN PRAKASH PAREKH 701 LAXMI NARAYANA KRUPA BAPU BHAI VASHI ROAD, VILE PARLE WEST, MUMBAI 400 056. ./ ./ PAN/GIR NO. : AAEPP6219N ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI K. BHOOPATHI, DR / RESPONDENT BY : SHRI RUSHABH MEHTA, AR / DATE OF HEARING 28/01/2020 !'# / DATE OF PRONOUNCEMENT 29 /01/2020 / O R D E R PER SHRI VIKAS AWASTHY- JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) 6, MUMBAI, (HEREIN AFTER REFERRED TO AS CIT(A)) DATED 12.11.2018 FOR THE A.Y 2010-11, PAR TLY ITA NO .350/MUM/2019. MADHUBEN PRAKASH PAREKH, MUMBAI. - 2 - DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME TA X ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) 2. SHRI RUSHABH MEHTA APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT IN THE COURSE OF REASSESSMENT PROCEEDINGS, THE A.O HELD THAT THE ASSESSEE HAS INDULGED IN BOGUS PURCHASES TO THE TUN E OF RS. 92,01,585/- AND MADE ADDITIONS OF ENTIRE SUC H BOGUS PURCHASES. THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE THE LD. CIT(A). THE CIT(A) VIDE ORDE R DATED 10.01.2018 RESTRICTED THE ADDITION ON ACCOUNT OF BOGUS PURCHASES TO 6.5% OF SUCH ALLEGED BOGUS PURCHASES. THE REVENUE FILED APPEAL BEFORE THE TRIBUNAL IN ITA NO. 2079/MUM/2018 ASSAILING FINDING OF THE CIT(A) IN RESTRICTING THE ADDITION TO 6.5% O F THE ALLEGED BOGUS PURCHASES. THE TRIBUNAL DISMISSED TH E APPEAL OF REVENUE VIDE ORDER DATED 07.06.2019. 2.1 THE A.O INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IN RESPECT OF ADDITION ON ACCO UNT OF BOGUS PURCHASES. THE A.O VIDE ORDER DATED 20.09.2016 LEVIED PENALTY OF RS. 28,40,415/- ON ENTIRE ADDITIONS MADE DURING ASSESSMENT PROCEEDINGS . THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AGAINST ITA NO .350/MUM/2019. MADHUBEN PRAKASH PAREKH, MUMBAI. - 3 - PENALTY ORDER. THE CIT(A) CONFIRMED PENALTY ONLY I N RESPECT OF BOGUS PURCHASES CONFIRMED BY THE TRIBUNAL. THUS, THE CIT(A) UPHELD LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ONLY TO THE EXTENT OF RS. 1,01,959/-. 3. THE LD. AR SUBMITTED THAT THE PRESENT APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT IN LIGHT OF CBDT CIRCULAR NO. 17/201 9 DATED 08.08.2019. EVEN OTHERWISE, THE APPEAL OF REVENUE IS LIABLE TO BE DISMISSED ON MERITS AS THE PENALTY HAS BEEN LEVIED ON ADDITION MADE ON ESTIMATION BASIS. 4. ON THE OTHER HAND, SHRI K. BHOOPATHI REPRESENTING THE DEPARTMENT, VEHEMENTLY DEFENDED PENALTY ORDER DATED 20.09.2016. THE LD. DR SUBMITTED THAT THIS APPEAL BY THE REVENUE FALLS IN EXCEPTIONS AS PER PARA 10 OF CBDT CIRCULAR DATED 20.08.2019, AS THE INFORMATION WAS RECEIVED FROM EXTERNAL INVESTIGATING AGENCIES. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE REVENUE IN ITA NO .350/MUM/2019. MADHUBEN PRAKASH PAREKH, MUMBAI. - 4 - APPEAL HAS ASSAILED THE FINDINGS OF THE CIT(A) IN RESTRICTING THE PENALTY TO THE EXTENT ADDITION OF 6 .5% CONFIRMED BY TRIBUNAL ON ALLEGED BOGUS PURCHASES. 5.1 IT IS WELL SETTLED LAW THAT PENALTY LEVIED ON ESTIMATED ADDITIONS IS NOT SUSTAINABLE. THE CIT(A) VIDE ORDER DATED 10.01.2018 HAD ESTIMATED GP @ 6.5% ON THE ALLEGED BOGUS PURCHASES. THE SAID FINDINGS OF THE CIT(A) WERE CONFIRMED BY THE TRIBUNAL IN APPEAL BY THE REVENUE I.E ITA NO. 2079/MUM/2018 (SUPRA). THE CIT(A) VIDE IMPUGNED ORDER HAS RESTRICTED PENAL TY ONLY ON THE ADDITION CONFIRMED. THE ASSESSEE HAS ACCEPTED THE IMPUGNED ORDER AND HAS NOT FILED ANY APPEAL BEFORE THE TRIBUNAL. WE DO NOT FIND ANY MERI T IN THIS APPEAL BY THE REVENUE, ACCORDINGLY THE SAME IS DISMISSED. 6. THE APPEAL OF THE REVENUE IS ALSO LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT. THE EXCEPTIONS PROVIDED IN PARA 10 OF AMENDMENT CBDT CIRCULAR DATED 20.08.2019 DOES NOT APPLY TO PENALTY PROCEEDINGS. 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ITA NO .350/MUM/2019. MADHUBEN PRAKASH PAREKH, MUMBAI. - 5 - ORDER PRONOUNCED IN OPEN COURT ON WEDNESDAY, THE 29 TH DAY OF JANUARY 2020 . SD/- SD/- (S.RIFAUR RAHMAN) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 29/01/2020 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. &'( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# , & / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// / ( ASST. REGISTRAR) $%, / ITAT, MUMBAI