ITO WARD 1(5), Thane V. M/S DURGA INDUSTRIES, Thane

ITA 353/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8114 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 25 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: 28-01-2019
• 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. 353/MUM/2019 ( ASSESSMENT YEAR: 2010-11) I.T.O., WARD 1(5), THANE, ROOM NO. 14, 6 TH FLOOR, B-WING, WAGLE INDUSTRIAL ESTATE, THANE (W), 400604. VS. M/S DURGA INDUSTRIES, C-2/202, VEDANT COMPLEX, VARTAK NAGAR, THANE (WEST)-400606. PAN/GIR NO.AAEFD 6248 F (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)-1, THANE DATED 27/11/2018 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.3 2,490/-. 2. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND FOUND THAT THE A.O. HAS LEVIED PENALTY OF RS. 32,49 0/- WITH RESPECT TO ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES BY ESTI MATING PROFIT THEREON. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS DELETED THE PENALTY AFTER OBSERVING AS UNDER: ITA NO. 353/MUM/2019 ITO VS M/S DURGA INDUSTRIES 2 DECISION ON GROUND NO. 1 TO 3:- 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E, FINDINGS OF THE AO, SUBMISSION OF THE AR OF THE APPELLANT AND M ATERIAL PLACED ON RECORD. IT IS OBSERVED THAT THERE IS A NO RMAL TENDENCY TO SUBJECT AN ASSESSEE TO PENALTY U/S 271(1)(C) IN ALL CASES WHERE 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 QUANTU M 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 FOR NOT PROTESTING AND AGREEING TO AN ADDIT ION BUT THAT DOES NOT FOLLOW TO THE CONCLUSION THAT THE AMOUNT A GREED TO BE ADDED WAS CONCEALED INCOME. THE HON'BLE KARNATAK A 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 A ND DID NOT CHALLENGE THE ASSESSMENT ORDER, CANNOT BE CONSTRUED AS MALA FIDE.' 6. 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 CANN OT AUTOMATICALLY ADOPTED IN PENALTY PROCEEDINGS AND TH E AUTHORITIES HAVE TO CONSIDER THE MATTER AFRESH FROM DIFFERENT ANGLE. MOREOVER, IN THE CASE OF AJAY LOKNATH LOHIA, ORDER DATED 5.10.2018, MUMBAI ITAT HAS ADDRESSED THAT WHE N AO HAD ESTIMATED COST GP ON ALLEGED PURCHASES, SUCH DISALL OWANCE DOES NOT TANTAMOUNT TO WILLFUL FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. THIS WAS ALSO ECHOED IN T HE CASE OF ETCO PROFILES PVT. LTD. VS. ACIT, BY MUMBAI ITAT. ITA NO. 353/MUM/2019 ITO VS M/S DURGA INDUSTRIES 3 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 INACCU RATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN TH E RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED 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 PE NALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE IN TENDMENT OF THE LEGISLATURE'. 8. THE LEVY OF PENALTY IS MERELY ON DISALLOWANCE O F PURCHASES AND NOT FINDING OF CONCEALMENT OF ANY PARTICULAR OR MAL A-FIDE INTENTION TO REDUCE TAXABLE INCOME. ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PURCHASES AS BOGUS AUTOMATICALLY CA NNOT JUSTIFY THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORD INGLY, THE PENALTY OF RS. 32,490/-, IMPOSED U/S 271(1)(C) OF T HE I.T. ACT, BY THE AO, IS HEREBY DELETED AND THE GROUNDS OF APPEAL, RA ISED AS ABOVE, ARE ALLOWED. 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 RIVAL CONTENTIONS AND FOUN D THAT IT IS CLEAR FROM THE ORDERS OF THE LOWER AUTHORITIES THAT THE P ENALTY HAS BEEN LEVIED FOR DISALLOWANCE OF MEAGER AMOUNT OF PURCHAS ES ALLEGED TO BE BOGUS. SINCE THE ADDITION WAS VERY MEAGER, THE ASSE SSEE DID NOT FILE APPEAL AGAINST THE SAME. HOWEVER, THE A.O. ALSO LEV IED PENALTY FOR THE ITA NO. 353/MUM/2019 ITO VS M/S DURGA INDUSTRIES 4 ALLEGED BOGUS PURCHASES WHICH WAS DELETED BY THE LD . CIT(A) AFTER CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS. THE DE TAILED FINDING SO RECORDED BY THE LD. CIT(A) AT PARA 5 TO 8 OF HIS AP PELLATE ORDER HAS NOT BEEN CONTROVERTED BY THE LD DR. ACCORDINGLY, I DO N OT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) FOR DEL ETING THE PENALTY IMPOSED FOR DISALLOWANCE OF PART OF THE PURCHASES. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 22/01/2020 *RANJAN 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//