THE WATCH MAKERS (TWM), MUMBAI V. ACIT 17(2), MUMBAI

ITA 41/MUM/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6671 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 11-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 02-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CAPT PRADEEP ARYA
• Assessee Lawyers: SHREYA MANE
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G B ENCH, MUMBAI . , !'# $ $ $ $ , %& '()* , %+ ,- % # BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ I.T.A. NO.41/MUM/2013 ( . . . . / ASSESSMENT YEAR :2007-08 M/S. TIME WATCH MAKERS, D-14, EMPIRE MAHAL, DADAR T.T. MUMBAI-400 014 / VS. THE ACIT, CIRCLE 17(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400 012 -/ %+ ./ 0 ./ PAN/GIR NO. : AAAFT 2280 R ( /1 / APPELLANT ) .. ( 23/1 / RESPONDENT ) /1 4 % / APPELLANT BY: MS. SHREYA MANE 23/1 5 4 % / RESPONDENT BY: CAPT. PRADEEP ARYA 5 6+ / DATE OF HEARING :12.06.2014 7. 5 6+ / DATE OF PRONOUNCEMENT :12.06.2014 ,%8 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-29, MUMBAI DT.5.10.2012 PERTAINING TO A.Y. 2007-08. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN LEVYING A PENALTY OF RS. 2,32,980/- U/S. 271(1)(C) OF THE ACT. ITA NO. 41/MUM/2013 2 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASS ESSMENT ORDER DT. 18.12.2009 PASSED U/S. 143(3) OF THE ACT. WHILE SC RUTINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE ASSE SSEE HAS SHOWN SUNDRY CREDITORS AMOUNTING TO RS. 1,07,16,417/-. THE AO C ALLED INFORMATION FROM THE SUNDRY CREDITORS U/S. 133(6) ON RANDOM BAS IS. THE NOTICES SENT TO M/S. SHEETAL ENTERPRISES AND M/S. NIVIL ENTERPRI SES RETURNED UNSERVED. THE AO SOUGHT CLARIFICATION FROM THE ASSESSEE WHY T HE AMOUNT IN THE NAME OF THESE TWO FIRMS AMOUNTING TO RS. 7,76,587/- SHOULD NOT BE ADDED TO THE TOTAL INCOME AS THE PARTIES HAVE NOT RESPON DED TO THE NOTICES ISSUED U/S. 133(6) OF THE ACT. THE ASSESSEE EXPLAINED THA T BILLS RELATING TO THE SAID PARTIES RELATE TO THE PURCHASES FROM THE ABOVE PARTIES. COPIES OF THE BILLS WERE SUBMITTED BEFORE THE AO AND ALSO DETAILS OF PAYMENTS IN RESPECT OF BOTH THE PARTIES WERE SUBMITTED. IT WA S ALSO CLAIMED THAT THE SAID PARTIES MIGHT HAVE CHANGED THEIR ADDRESSES. T HE EXPLANATION OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE AO WHO WE NT ON TO DISALLOW RS. 7,76,587/-. PENALTY PROCEEDINGS WERE INITIATED. 3.1. DURING THE COURSE OF THE PENAL PROCEEDINGS, TH E ASSESSEE REITERATED THAT THE DETAILS RELATING TO THE PURCHASES AND PAYM ENTS THEREOF FROM THE SAID PARTIES WERE FURNISHED. THUS THERE WAS NO MAL AFIDE INTENTION NOR THE ASSESSEE HAS CONCEALED OR FURNISHED INACCURATE INFO RMATION. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE DID NOT FILE AN Y APPEAL AGAINST THE QUANTUM ADDITION TO AVOID LONG DRAWN LITIGATION WHI CH SHOULD NOT BE CONSTRUED AS AN ADMISSION OF CONCEALMENT. THE AO W AS NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE AND WENT ON TO LEVY PENALTY AT THE RATE OF 100% OF TAX SOUGHT TO BE EVADED. 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. ITA NO. 41/MUM/2013 3 5. AGGRIEVED, THE ASSESSEE IS BEFORE US. THE ASSES SEE FILED THE DETAILS RELATING TO THE PURCHASES FROM TWO PARTIES M/S. SHE ETAL ENTERPRISES AND M/S. NIVIL ENTERPRISES. THE ASSESSEE ALSO POINTED OUT HOW THE PAYMENTS WERE MADE TO THESE TWO PARTIES. 6. WE HAVE CAREFULLY PERUSED THE DETAILS FURNISHED BY THE ASSESSEE. WE FIND THAT INVOICES OF M/S. SHEETAL ENTERPRISES A RE DT. 28.6.2005, 29.6.2005, 30.6.2005 AND THAT OF M/S. NIVIL ENTERPR ISES IS DT. 11.5.2005. THE PURCHASES RELATE TO THE FINANCIAL YEAR 2005-06 RELEVANT TO A.Y. 2006- 07 WHEREAS THE PRESENT PROCEEDINGS ARE FOR A.Y. 200 7-08. WE FAIL TO UNDERSTAND HOW THE PURCHASES OF F.Y. 2005-06 TREATE D AS BOGUS PURCHASES ARE RELEVANT FOR LEVY OF PENALTY IN A.Y. 2007-08. WITH THESE FACTUAL BACKGROUNDS, WE DO NOT FIND ANY REASON FOR THE LEVY OF PENALTY DURING THE YEAR UNDER CONSIDERATION. WE, ACCORDINGLY DIRECT T HE AO TO DELETE THE PENALTY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 12.6.2014 . ,%8 5 . +% 9 :, ; 12.6.2014 5 < SD/- SD/- (D.MANMOHAN ) (N.K. BILLAIYA) !'# /VICE PRESIDENT %+ ,- / ACCOUNTANT MEMBER MUMBAI; :, DATED 12.6.2014 . . ./ RJ , SR. PS ITA NO. 41/MUM/2013 4 ,%8 ,%8 ,%8 ,%8 5 55 5 26' 26' 26' 26' =%'.6 =%'.6 =%'.6 =%'.6 / COPY OF THE ORDER FORWARDED TO : 1. /1 / THE APPELLANT 2. 23/1 / THE RESPONDENT. 3. > ( ) / THE CIT(A)- 4. > / CIT 5. '?< 26 , , / DR, ITAT, MUMBAI 6. < @ / GUARD FILE. ,%8 ,%8 ,%8 ,%8 / BY ORDER, 3'6 26 //TRUE COPY// ! !! ! / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI