ITO, W-3(4), , KALYAN V. HITESH N MEWADI, THANE

ITA 364/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4537 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• 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: R BHOOPATHI
• Keywords: Bogus purchase; Tax effect; Reassessment proceedings
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO. 364/MUM/2019 ( / ASSESSMENT YEARS : 2010-11 ITO, WARD 3(4) 2 ND FLOOR, RANI MANSDION, MURBAD ROAD, KALYAN 421301. / VS. HITESH N MEWADI PROP. OF M/S.PRAKASH TRADING CO. ARJUN SMRUTI, 2 ND FLOOR, NR JANKI HOTEL, KALYAN ROAD, DOMBIVLI, THANE 421201. ./ ./ PAN/GIR NO. : AKMPM0364M ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R. BHOOPATHI, DR / RESPONDENT BY : NONE / DATE OF HEARING 22/01/2020 !'# / DATE OF PRONOUNCEMENT 07 /02/2020 / O R D E R PER VIKAS AWASTHY- JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, TH ANE, DATED 15/11/2018 FOR THE A.Y 2010-11, DELETING PEN ALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (H EREIN AFTER REFERRED TO AS THE ACT). ITA NO . 364/MUM/2019. HITESH N MEWADI, MUMBAI. - 2 - 2. WHEN THE APPEAL WAS CALLED FOR HEARING NONE APPEARED TO REPRESENT THE ASSESSEE. EVEN NO APPLICATION SEEKING ADJOURNMENT HAS BEEN RECEIVED FROM THE ASSESSEE. AS IS EVIDENT FROM THE ACKNOWLEDGEMENT CARD AVAILABLE ON RECORD THE NOTICE OF HEARING OF APPEAL WAS DULY SERVED ON THE ASSESS EE. CONSIDERING THE ABOVE, WE PROCEED TO DECIDE THE APPEAL WITH THE ASSISTANCE OF LEARNED DEPARTMENTA L REPRESENTATIVE AND THE MATERIAL AVAILABLE ON RECO RD. 3. THE ADDITION WAS MADE BY THE ASSESSING OFFICER I N REASSESSMENT PROCEEDINGS ON ACCOUNT OF ALLEGED BOGU S PURCHASES. THE ASSESSING OFFICER VIDE ORDER DATED 28.07.2015 LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON THE ADDITION OF ALLEGED BOGUS PURCHASES. 4. SHRI R. BHOOPATHI, APPEARING ON BEHALF OF DEPARTMENT, VEHEMENTLY DEFENDED THE PENALTY ORDER AND PRAYED FOR REVERSING THE FINDINGS OF THE CIT(A) . THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SINCE REOPENING WAS DONE ON THE BASIS OF INFORMATIO N RECEIVED FROM EXTERNAL INVESTIGATING AGENCY, THE ITA NO . 364/MUM/2019. HITESH N MEWADI, MUMBAI. - 3 - APPEAL WOULD NOT BE COVERED BY CBDT CIRCULAR DATED 08/082019 ON MONETARY LIMITS FOR FILING APPEALS BY THE DEPARTMENT. 5. I HAVE CONSIDERED THE SUBMISSIONS MADE BY LD.DR AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. EVERY ADDITION MADE IN ASSESSMENT PROCEEDINGS DOES NOT AUTOMATICALLY LEAD TO LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. IN THE INSTANT CASE PENALTY U/S. 271(1)(C) HAS BEEN LEVIED ON THE DISALLOWANCE OF BOGUS PURCHASES. THE ASSESSING OFFICER HAS MADE ADDITION OF ENTIRE BOGUS PURCHASES AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSEE. TH E TRIBUNAL IN VARIOUS DECISIONS HAVE CONSISTENTLY HEL D THAT WHERE SALES ARE NOT DISPUTED BY THE DEPARTMENT , ENTIRE ALLEGED BOGUS PURCHASES CANNOT BE DISALLOWED . IT IS ONLY THE GP ON ALLEGED BOGUS PURCHASES THAT SHOULD BE DISALLOWED. THUS, THE ENTIRE ISSUE OF BO GUS PURCHASES BOILS DOWN TO ESTIMATION OF UNDISCLOSED G P ON ALLEGED BOGUS PURCHASES. MERELY FOR THE REASON THAT ADDITION HAS BEEN ACCEPTED BY THE ASSESSEE DOE S NOT IPSO FACTO RESULT IN INITIATION OF PENALTY ITA NO . 364/MUM/2019. HITESH N MEWADI, MUMBAI. - 4 - PROCEEDINGS. THUS, IN THE FACTS OF THE CASE, I AM O F CONSIDERED VIEW THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. I FIND NO REASON TO INTERFERE WITH THE IMPUGNED ORDER, HENCE, THE SAME IS UPHELD. 6. I FURTHER OBSERVE THAT THE QUANTUM OF PENALTY WHICH IS SUBJECT MATTER OF DISPUTE IS RS. 44,992/- ONLY. THE TAX EFFECT IN THIS APPEAL BY THE REVENUE IS FAR LESS THAN THE LIMIT PRESCRIBED BY CBDT FOR FILI NG APPEALS BY THE DEPARTMENT BEFORE THE TRIBUNAL. IT WOULD BE RELEVANT TO MENTION HERE THAT DEPARTMENT APPEALS EMANATING FROM PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ON THE ADDITIONS CONSEQUENT T O INFORMATION RECEIVED FROM EXTERNAL INVESTIGATING AGENCIES ARE NOT COVERED BY EXCEPTIONS PROVIDED IN PARA 10 OF THE CBDT CIRCULAR DATED 20.08.2018. 7. THUS, FOR THE REASONS CITED ABOVE THE APPEAL OF REVENUE IS LIABLE TO BE DISMISSED. I HOLD AND DIRE CT ACCORDINGLY. ITA NO . 364/MUM/2019. HITESH N MEWADI, MUMBAI. - 5 - 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT AFTER HEARING ON FRIDAY, THE 7 TH DAY OF FEBRUARY, 2020. SD/- (VIKAS AWASTHY) JUDICIAL MEMBER MUMBAI, DATED 07/02/2020 VM,SR.PS (O/S) / 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