ITO - WD- 3 (5), KALYAN V. RADHESHYAM BABULAL VYAS, DOMBIVALI

ITA 366/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4052 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATI
• Assessee Lawyers: SANJAY PRAIKH
• Keywords: Bogus purchase; Initiation of penalty proceedings; Tax effect; Reassessment proceedings
• Section: 271(1)(c); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. 366/MUM/2019(A.Y.2009-10) INCOME TAX OFFICER , WARD 3(5) 2 ND FLOOR, RANI MANSION. MURBAD ROAD, KALYAN(W) 421 301 ...... APPE LLANT VS. SHRI RADHESHYAM BABULAL VYAS, 9, ANAGHA CO-OP SOCIETY, PANDIT DINDAYAL MARG, DOMBIVALI 421 201 PAN: ACDPV 9022C ..... RESPONDENT APPELLANT BY : SHRI R. BHOOPATI RESPONDENT BY : SHRI SANJAY PRAIKH DATE OF HEARING : 22/01/2020 DATE OF PRONOUNCEMENT : 20/02/2020 ORDER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, THANE, DATE D 02/11/2018 FOR THE A.Y 2009-10, DELETING PENALTY LEVIED U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2 ITA NO. 366/MUM/2019(A.Y.2009-10) 2. AN ADDITION OF RS.3,26,134/- WAS MADE BY THE AS SESSING OFFICER IN REASSESSMENT PROCEEDINGS ON ACCOUNT OF ALLEGED BOGU S PURCHASES MADE BY THE ASSESSEE. THE ASSESSING OFFICER VIDE ORDER DATED 16/02/2015 LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON THE ADDI TION OF ALLEGED BOGUS PURCHASES. 3. SHRI R. BHOOPATHI, APPEARING ON BEHALF OF DEPAR TMENT, VEHEMENTLY DEFENDED THE PENALTY ORDER AND PRAYED FO R REVERSING THE FINDINGS OF THE CIT(A). THE DEPARTMENTAL REPRE SENTATIVE SUBMITTED THAT SINCE REOPENING WAS DONE ON THE BASI S OF INFORMATION RECEIVED FROM EXTERNAL INVESTIGATING AG ENCY, THE APPEAL WOULD NOT BE COVERED BY CBDT CIRCULAR DATED 08/082019 ON MONETARY LIMITS FOR FILING APPEALS BY THE DEPART MENT. 4. SHRI SANJAY PARIKH, APPEARING ON BEHALF OF THE A SSESSEE VEHEMENTLY DEFENDED THE ORDER OF CIT(A) IN DELETING THE PENALTY. 5. I HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. EVER Y ADDITION MADE IN ASSESSMENT PROCEEDINGS DOES NOT AUTOMATICAL LY 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 DISAL LOWANCE OF BOGUS PURCHASES. THE ASSESSING OFFICER HAS MADE AD DITION OF ENTIRE BOGUS PURCHASES AND THE SAME HAS BEEN ACCEPT ED BY THE ASSESSEE. THE TRIBUNAL IN VARIOUS DECISIONS HAVE CO NSISTENTLY HELD THAT WHERE SALES ARE NOT DISPUTED BY THE DEPARTMENT , ENTIRE ALLEGED BOGUS PURCHASES CANNOT BE DISALLOWED. IT I S ONLY THE GP ON ALLEGED BOGUS PURCHASES THAT SHOULD BE DISALLOWE D. THUS, THE 3 ITA NO. 366/MUM/2019(A.Y.2009-10) ENTIRE ISSUE OF ADDITION ON BOGUS BOGUS PURCHASES B OILS DOWN TO ESTIMATION OF UNDISCLOSED GP ON ALLEGED BOGUS PURCH ASES. MERELY FOR THE REASON THAT ADDITION HAS BEEN ACCEPT ED BY THE ASSESSEE DOES NOT IPSO FACTO RESULT IN INITIATION OF PENALTY 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 IMP UGNED ORDER, HENCE, THE SAME IS UPHELD. 6. I FURTHER OBSERVE THAT THE QUANTUM OF PENALTY WH ICH IS SUBJECT MATTER OF DISPUTE IS RS. 96,880/- ONLY. TH E TAX EFFECT IN THIS APPEAL BY THE REVENUE IS FAR LESS THAN THE LI MIT PRESCRIBED BY CBDT FOR FILING APPEALS BY THE DEPARTMENT BEFORE TH E TRIBUNAL. IT WOULD BE RELEVANT TO MENTION HERE THAT DEPARTMENT A PPEALS EMANATING FROM PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ON THE ADDITIONS CONSEQUENT TO INFORMATION RECEIVED F ROM EXTERNAL INVESTIGATING AGENCIES ARE NOT COVERED BY EXCEPTION S PROVIDED IN PARA 10 OF THE CBDT CIRCULAR DATED 20.08.2018. 7. THUS, FOR THE REASONS RECORDED ABOVE, THE APPEAL OF REVENUE IS LIABLE TO BE DISMISSED. I HOLD AND DIRE CT ACCORDINGLY. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY , THE 20 TH DAY OF FEBRUARY , 2020. SD/- (VIKAS AWASTHY) JUDICIAL MEMBER MUMBAI, DATED 20/02/2020 4 ITA NO. 366/MUM/2019(A.Y.2009-10) VM , SR. PS(O/S) 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// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI