ITO 33 (1)(1), Mumbai V. SHRI. ASHOK KUMAR SHYMLAL GUPTA, Mumbai

ITA 4023/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1483 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 06-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Bogus purchase; Reason to believe; Set aside
• Section: 271(1)(c); 250; 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 4023/MUM/2019 (A.Y: 2010-11) INCOME TAX OFFICER - 33 (1) (1), ROOM NO. 945, 9 TH FLOOR, KAUTILYA BHUVAN, C-41 TO C-43, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400051 / VS. SHRI ASHOK KUMAR SHYAMLAL GUPTA, A/605, MILLENNIUM TOWER, AKURLI JAI DURGA CHS LTD., AKURLI ROAD, KRANTI NAGAR, LAST BUST STOP, KANDIVALI (EAST), MUMBAI - 400101 ./ ./ PAN/GIR NO. : ADYPG5268P ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI BRAJENDRA KUMAR , D R / RESPONDENT BY : SHRI VIMAL PUNMIYA (AR) / DATE OF HEARING 08/02 /20 2 1 / DATE OF PRONOUNCEMENT 11 /02 /202 1 / O R D E R ITA NO. 4023/MUM/2019 SHRI ASHOK KUMAR SHYAMLAL GUPTA - 2 - PER PAVAN KUMAR GADALE: THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 45, MUMBAI, PASSED U/S. 271 (1) (C) AND 250 OF THE INCOME TAX ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DELETING THE PENALTY U/S 271 (1) (C) OF THE ACT WITHOUT APPRECIATING THE FACT THAT ASSESSING OFFICER HAS CORRECTLY HELD THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE TRANSACTIONS CLAIMED IN ITS RETURN OF INCOME THEREBY EVADED TAXES TO THAT EXTENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT THE ACT OF ASSESSEE CLEARLY FALLS WITHIN THE AMBIT OF PROVISIONS OF EXPLANATION-1 TO SECTION 271 (1) (C) OF THE ACT AS THE ASSESSEE HAD FAILED TO SUBMIT ANY DETAILS AT THE TIME OF SCRUTINY PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS FAILED TO APPRECIATE THE FACT THAT BY RESTRICTING THE DISALLOWANCE TO 12.5% AS AGAINST THE 100% PURCHASES DISALLOWED BY THE ITA NO. 4023/MUM/2019 SHRI ASHOK KUMAR SHYAMLAL GUPTA - 3 - ASSESSING OFFICER, THE LD. CIT (A) HAS TACITLY ACCEPTED THAT THE TRANSACTION IS BOGUS AND HENCE HAS ALL THE MALAFIDE INTENT IN IT. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT 9A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS ENGAGED IN THE BUSINESS AS RESELLER OF FERROUS AND NON-FERROUS METALS AND FILED THE RETURN OF INCOME FOR THE AY 2010-11 ON 10.10.2010 DECLARING A TOTAL INCOME OF RS. 2,11,119/-.SUBSEQUENTLY, THE ASSESSING OFFICER (AO) HAS RECEIVED INFORMATION FROM SALES TAX DEPARTMENT AND DIRECTOR GENERAL OF INVESTIGATION, MUMBAI (DGIT) (INV.) THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS FROM 10 HAWALA OPERATERS/ ENTITIES AGGREGATING TO RS. 2,01,06,486/-.THEREFORE, THE A.O. HAS REASON TO BELIEVE THAT, THE INCOME HAS ESCAPED ASSESSMENT AND ISSUED NOTICE U/S 148 OF THE ACT AND THERE WAS NO RESPONSE TO THE NOTICE. FURTHER, THE A.O. HAS ISSUED NOTICE U/S 142 (1) OF THE ACT ALONG WITH QUESTIONNAIRE BUT NO EXPLANATIONS WERE FILED. SINCE, THERE WAS NO RESPONSE TO THE NOTICE ISSUED U/S 148 AND 142 (1) OF THE ACT. THE AO ITA NO. 4023/MUM/2019 SHRI ASHOK KUMAR SHYAMLAL GUPTA - 4 - INITIATED PENALTY PROCEEDINGS U/S 271 (1) (B) OF THE ACT. THE A.O. ALSO OBSERVED THAT INSPITE OF PROVIDING OPPORTUNITY TO THE ASSESSEE, NONE APPEARED NOR ANY INFORMATION WAS FILED THEREFORE THE AO MADE BEST JUDGMENT ASSESSMENT U/S 144 OF THE INCOME TAX ACT. THE A.O. CONSIDERED THE MATERIAL ON RECORD AND FIND THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE PURCHASES BILLS AND THE NOTICE ISSUED U/S 133 (6) OF THE ACT ON THE HAWALA OPERATORS/ENTITIES ADDRESSES WERE RETURNED UN-SERVED. HENCE MADE AN ADDITION OF RS.2,01,06,486/- AND ASSESSED THE TOTAL INCOME OF RS.2,03,17,605/-AND PASSED THE ORDER U/S 144 R.W.S. 147 OF THE ACT DATED 29.02.2016. 4. SUBSEQUENTLY, THE AO HAS INITIATED THE PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE ACT. THE AO RELIED ON THE FINDINGS IN THE SCRUTINY ASSESSMENT AND OBSERVED THAT THE ASSESSEE HAS NOT FILED ANY EXPLANATIONS TO THE NOTICE IN RESPECT OF CONCEALMENT OF INCOME AND THEREFORE LEVIED PENALTY OF RS. 59,94,170/- AND PASSED THE ORDER U/S 271 (1) (C) DATED 26.08.2016. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE LD.CIT (APPEALS). THE LD. CIT (APPEALS) CONSIDERED THE ITA NO. 4023/MUM/2019 SHRI ASHOK KUMAR SHYAMLAL GUPTA - 5 - GROUNDS OF APPEAL, A.O. FINDINGS AND SUBMISSIONS OF THE ASSESSEE AT PARA 3.1 OF THE ORDER. THE CIT(A) OBSERVED THAT THE ASSESSMENT WAS COMPLETED U/S 144 R.W.S.147 OF THE ACT WITH ADDITION OF 100% OF BOGUS PURCHASES AS NON-GENUINE. ON APPEAL AGAINST THE ADDITION, THE APPELLATE AUTHORITY HAS REDUCED THE ESTIMATION @ 12.5% OF BOGUS PURCHASES. BUT THE A.O. HAS LEVIED THE PENALTY ON ENTIRE BOGUS PURCHASES. THE CIT(A) DEALT ON THE PROVISIONS OF SECTION 271 (1) (C) OF THE ACT AND RELIED ON THE JUDICIAL DECISIONS AND OBSERVED THAT NO PENALTY CAN BE LEVIED ON THE ESTIMATED INCOME AND DIRECTED THE ASSESSING TO DELETE THE PENALTY AND ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. AT THE TIME OF HEARING, THE LD. DR SUBMITTED THAT THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY, WHEREAS THE AO HAS VALID INFORMATION THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASES BILLS WHICH COULD NOT BE OVERLOOKED AND PRAYED FOR ALLOWING THE REVENUE APPEAL . CONTRA, THE LD.AR SUPPORTED THE ORDER OF THE CIT (APPEALS) AND EMPHASIZED THAT THE LD.CIT(A) HAS PASSED REASONED ORDER CONSIDERING THE FACTS AND PROVISIONS ON NON ITA NO. 4023/MUM/2019 SHRI ASHOK KUMAR SHYAMLAL GUPTA - 6 - SUSTAINABILITY OF PENALTY. THE LD.AR SUBSTANTIATED HIS ARGUMENTS WITH WRITTEN SUBMISSIONS AND JUDICIAL DECISIONS AND PRAYED FOR DISMISSAL OF THE REVENUE APPEAL. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE CRUX OF THE DISPUTED ISSUE AS ENVISAGED BY THE LD. DR IS WITH RESPECT TO CIT(A) DELETING THE PENALTY U/S 271(1)(C) OF THE ACT LEVIED BY THE A.O BASED ON THE ORDER U/SEC 144 R.W.S 147 OF THE ACT. WHEREAS,THE LD.AR HAS EMPHASIZED THAT AGAINST THE ADDITION OF BOGUS PURCHASES, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE APPELLATE AUTHORITIES. THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASES AND WAS ACCEPTED AND THE PENALTY CANNOT BE LEVIED ON ESTIMATED INCOME. WE FOUND STRENGTH IN THE SUBMISSIONS OF THE LD. AR. THE A.O HAS MADE TOTAL DISALLOWANCE OF BOGUS PURCHASES BUT ACCEPTED THE SALES IN THE BOOKS OF ACCOUNTS AND THE LD.CIT(A) IN QUANTUM APPEAL HAS ESTIMATED THE INCOME OF THE ASSESSEE ON PURCHASES. WE ARE OF THE OPINION THAT, WHERE THE ADDITION IS SUSTAINED ON THE ESTIMATED BASIS, NO PENALTY U/S 271(1)(C) OF THE ACT CAN BE LEVIED ON SUCH ADHOC ITA NO. 4023/MUM/2019 SHRI ASHOK KUMAR SHYAMLAL GUPTA - 7 - ESTIMATED INCOME. THE LD.DR COULD NOT CONTROVERT THE FINDINGS OF THE CIT(A) WITH ANY NEW COGENT EVIDENCE OR INFORMATION. ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF LD. CIT (A) AND UP HOLD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.02.2021. SD/- SD/- (SHAMIM YAHYA) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 11.02.2021 AK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. , , / DR, ITAT, MUMBAI ITA NO. 4023/MUM/2019 SHRI ASHOK KUMAR SHYAMLAL GUPTA - 8 - 6. / GUARD FILE. / BY ORDER, //TRUE COPY// 1. / ( ASST. REGISTRAR) , / ITAT, MUMBAI 2. OTHER MEMBER ON WHICH THE