ITO 27(1)(4), NAVI MUMBAI V. DHIRAJ D. CHHADWA, MUMBAI

ITA 3634/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4397 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 27-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI RAMLAL NEGI (JM) I.T.A. NO. 3634/MUM/2019 (ASSESSMENT YEAR 2009-10 ) ITO 27(1)(4) ROOM NO. 409 4 TH FLOOR TOWER NO. 6 VASHI RAILWAY STATION NAVI MUMBAI-400703. VS . SHRI DHIRAJ DHARAMSHI CHHADWA G-505, VIKRAM APARTMENT LBS MARG, NEW MANEKLAL ESTATE, GHATKOPAR-W MUMBAI-400 086. PAN : ADBPC3088N (APPELLANT) (RESPONDENT) ASSESSEE BY WRITTEN SUBMISSION DEPARTMENT BY SHRI JEETENDRA KUMAR DATE OF HEARING 20.10.2020 DATE OF PRONOUNCEMENT 22.10.2020 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE REVENUE WHEREIN THE REVENUE IS AGGRIEVED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SH ORT LEARNED CIT(A)] HAS ERRED IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT AMOUNTING TO RUPEES 142,366/- BY ORDER DATED 7 .3.3019 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER MADE DISALLOWANCE OF 100% OF THE PURCHASES AMOUNTING TO RS. 21,46,011/-. IN APPEAL LEARNED CIT(A) DIRECTED TO REDUCE THE DISALLOWANCE TO 16.82% BY TH E AVERAGE GROSS PROFIT. PENALTY UNDER SECTION 271(1)(C) OF THE ACT AMOUNTIN G TO RUPEES 1,42,366/- WAS ALSO LEVIED. 3. UPON ASSESSEE'S APPEAL LEARNED CIT(APPEALS) DELE TED THE PENALTY BY CONCLUDING AS UNDER :- SHRI DHIRAJ DHARAMSHI CHHADWA 2 FURTHER, IN A RECENT DECISION OF DELHI ITAT IN THE C ASE OF SHRUTI FASTNERS LTD. VS. DCIT (2017) 49 CCH 0183 DEL-TRIB AND ITAT M UMBAI IN THE CASE OF RAKESHKUMAR M. GUPTA VS. ITO(2O17) 49 CCH 0066 MUM-T RIB, IT HAS BEEN HELD THAT WHERE INCOME HAS BEEN ESTIMATED, THE APPELL ANT CANNOT BE SAID TO HAVE CONCEALED PARTICULARS OF INCOME OR FURNISHED I NACCURATE PARTICULARS OF INCOME AND THEREFORE, PENALTY U/S 271(1)(C) WAS NOT LEVIABLE. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND R ESPECTFULLY FOLLOWING THE PRECEDENTS, AS ABOVE, I AM OF THE CONSIDERED VIEW THA T THE APPELLANT HAS NOT CONCEALED THE PARTICULARS OF INCOME AND NOR HAS IT F URNISHED INACCURATE PARTICULARS OF INCOME, THERE BEING ARE NO FINDINGS OF THE AO THAT THE DETAILS FURNISHED BY THE APPELLANT IN HIS RETURN ARE FOUND TO B E INACCURATE OR ERRONEOUS OR FALSE. ACCORDINGLY, I DELETE THE PENALT Y OF RS. 1,42,366/- LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT. 4. AGAINST THIS ORDER REVENUE IS IN APPEAL BEFORE T HE ITAT. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED . WE FIND THE ADDITION ON ACCOUNT OF BOGUS PURCHASES HAS BEEN DONE ON ESTIMAT ED BASIS. THE LEARNED CIT(A) IS CORRECT IN HOLDING THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT THIS CASE IS NOT SUSTAINABLE. WE FURTHER NOTE THAT THE CONDUCT OF THE ASSESSEE IN THIS CASE CANNOT BE CONSIDERED BE CONTUMACIOUS W ARRANT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 5. THIS PROPOSITION IS SUPPORTED BY THE DECISION OF THE LARGER BENCH OF HONOURABLE SUPREME COURT DECISION THE CASE OF HINDU STAN STEEL VS. STATE OF ORISSA VS. (83 ITR 26)(SC). MOREOVER IN THE WRITTEN SUBMISSION BY THE ID COUNSEL OF THE ASSESSEE IT HAS POINTED OUT THAT TAX EFFECT IN THIS CASE IS BELOW THE LIMIT FIXED BY CBDT VIDE CIRCULAR NO. 17/2019 D ATED 8.8.2019. 6. THE LD DR TRIED TO MENTION THAT SINCE THE ADDITI ON IS BASED UPON INFORMATION FROM SALES TAX AUTHORITY AN OUTSIDE AGE NCY THE PENALTY CAN ALSO BE CONSIDERED TO BE SO BASED AND HENCE WOULD FALL UNDE R THE EXEMPTION CARVED OUT IN THE SAID CBDT CIRCULAR. WE ARE NOT CONVINCED BY THIS ARGUMENT. ONCE THE REVENUE CONCEDES THAT PENALTY HAS BEEN LEVIED B ASED UPON OUTSIDE AGENCY INFORMATION THE PENALTY WOULD HAVE NO LEGS TO STAND . 7. BE AS IT MAY WE UPHOLD THE ORDER OF LD CIT(A) DE LETING THE PENALTY. SHRI DHIRAJ DHARAMSHI CHHADWA 3 8. IN THE RESULT APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULE S ON 22.10.2020. SD/- SD/- (RAMLAL NEGI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 22/10/2020 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI