ITI, WARD-1(2), THANE WEST V. M/S M T PHAD - KHERADE ENTERPRISES, THANE

ITA 370/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4050 (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: 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); 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. 370/MUM/2019(A.Y.2010-11) INCOME TAX OFFICER , WARD 1(2) 6 TH FLOOR, BWING, ROOM NO.24, ASHAR IT PARK, ROAD NO.16Z, WAGLE INDUSTRIAL ESTATE, THANE(W) 400 604 ...... APPEL LANT VS. M/S. M.T.PHAD-KHERADE ENTERPRISES, 5, SIDDHARTH TOWER, PALI ROAD, KOPARI, THANE 400 603, PAN: AARFN1941P ..... RESPONDENT APPELLANT BY : SHRI R. BHOOPATHI RESPONDENT BY : NONE DATE OF HEARING : 22/01/2020 DATE OF PRONOUNCEMENT : 20/02/2020 ORDER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, THANE, DATE D 15/11/2018 FOR THE A.Y 2010-11, DELETING PENALTY LEVIED U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ADDITION WAS MADE BY THE ASSESSING OFFICER I N REASSESSMENT PROCEEDINGS VIDE ORDER DATED 05/02/2015 PASSED UNDE R SECTION 143(3) 2 ITA NO. 370/MUM/2019(A.Y.2010-11) R.W.S. 147 OF THE ACT BY ESTIMATING GP @ 20% ON AL LEGED BOGUS PURCHASES. THE ASSESSING OFFICER VIDE ORDER DATED 19/08/2015 LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON THE ESTIMATED ADDITION 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 FURTHER SUBMITTED THAT SINCE REOPENING WAS DONE ON THE BASIS 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. I HAVE CONSIDERED THE SUBMISSIONS MADE BY LD.DEPARTMENTAL REPRESENTATIVE AND HAVE PERUSED TH E ORDERS OF AUTHORITIES BELOW. EVERY ADDITION MADE IN ASSESSME NT 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 MADE ON ESTIMATION. IT IS A WELL SETTLED LEGAL POSITION TH AT NO PENALTY IS LEVIABLE ON ADDITIONS BASED ON ESTIMATIONS. MERELY FOR THE REASON THAT ADDITION HAS BEEN ACCEPTED BY THE ASSES SEE DOES NOT IPSO-FACTO RESULT IN INITIATION OF PENALTY PROCEEDI NGS. I SEE NO REASON TO INTERFERE WITH THE IMPUGNED ORDER IN DELE TING THE LEVY OF PENALTY. 5. I FURTHER OBSERVE THAT THE QUANTUM OF PENALTY WH ICH IS SUBJECT MATTER OF DISPUTE IS RS. 70,770/- ONLY. TH E TAX EFFECT IN 3 ITA NO. 370/MUM/2019(A.Y.2010-11) 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. 6. THUS, FOR THE REASONS RECORDED ABOVE THE APPEAL OF REVENUE IS LIABLE TO BE DISMISSED. I HOLD AND DIRE CT ACCORDINGLY. 7. 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 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