M/s. Safe Lifters, Pune V. Deputy Commissioner of Income-tax, Circle - 4, Pune

ITA 433/PUN/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5256 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 18-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAHU KAUL
• Keywords: Bogus purchase; Initiation of penalty proceedings
• Section: 271(1)(c); 143(3); 133A; 143(1); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NOS.432 & 433/PUN/2019 / ASSESSMENT YEARS : 2006-07 AND 2007-08 M/S. SAFE LIFTERS, OFFICE NO.5, 6 PANDOL APARTMENT, 160 M.G. ROAD, PUNE. PAN : AASFS5535L. . / APPELLANT V/S THE DY.COMMISSIONER OF INCOME TAX, CIRCLE 4, PUNE. . / RESPONDENT. ASSESSEE BY : SHRI RAHU KAUL. REVENUE BY : SHRI SUDHENDU DAS. / ORDER PER ANIL CHATURVEDI, AM : 1. THESE TWO APPEALS FILED BY THE ASSESSEE ARE EMANATING OUT OF THE CONSOLIDATED ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , PUNE-5, PUNE DATED 27.12.2018 FOR A.YS. 2006-07 AND 2007-08. 2. BEFORE US, AT THE OUTSET, BOTH THE PARTIES SUBMITTED T HAT THOUGH THE APPEALS FILED BY THE ASSESSEE ARE FOR TWO DIFFERENT ASSESSM ENT YEARS BUT THE FACTS AND ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL EXCEPT FOR THE ASSESSMENT YEAR AND THE AMOUNTS INVOLVED AND THEREFOR E THE SUBMISSIONS MADE BY THEM WHILE ARGUING ONE APPEAL WOULD BE EQUALLY A PPLICABLE TO THE OTHER APPEAL ALSO AND THUS BOTH THE APPEALS CAN BE HE ARD TOGETHER. IN / DATE OF HEARING : 18.07.2019 / DATE OF PRONOUNCEMENT: 19.08.2019 2 ITA NOS.432 & 433/PUN/2019 VIEW OF THE AFORESAID SUBMISSIONS OF BOTH THE PARTIES, WE, F OR THE SAKE OF CONVENIENCE, PROCEED TO DISPOSE OF BOTH THE APPEALS BY A CONSOLIDATED ORDER. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF TRADING OF STEEL MATERIAL. ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME ON 31.10.2006 FOR A.Y. 2006-07 DECLARING TOTAL INCOME AT RS.29 ,57,090/-. THE RETURN OF INCOME WAS INITIALLY PROCESSED U/S 143(1) OF T HE ACT. THEREAFTER, SURVEY ACTION U/S 133A OF THE ACT WAS CONDU CTED AT THE PREMISES OF THE ASSESSEE ON 22.10.2012 WHEREIN ON VERIFIC ATION OF CERTAIN PURCHASE BILLS IT WAS FOUND THAT THE PURCHASES OF CERTAIN PARTIES WERE NOT VERIFIABLE. THE STATEMENT OF MR. KAID LOKHANDWALA, ONE OF T HE PARTNERS OF THE ASSESSEE FIRM WAS RECORDED WHEREIN HE ADMITTED TO DISCLOSE ADDITIONAL INCOME OF RS.19,10,720/- ON ACCOUNT OF BOGUS PURCHASES. THEREAFTER, NOTICE U/S 148 OF THE ACT DT.12.13.2013 WAS ISSUED AND S ERVED ON THE ASSESSEE. IN RESPONSE TO WHICH ASSESSEE FILED RETURN OF IN COME DECLARING TOTAL INCOME OF RS.48,68,827/- WHICH INCLUDED THE ADDITIONAL INC OME OF RS.19,10,720/- BEING THE INCOME RETURNED BY THE ASSESSEE . CONSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AND THEREAFTER ASSE SSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DT.16.12.2013 AN D THE TOTAL INCOME WAS DETERMINED AT RS.48,68,827/-. ON THE ADDITION OF RS.19,10,720/- ON ACCOUNT OF ALLEGED BOGUS PURCHASES, AO V IDE ORDER DT.30.06.2014 PASSED U/S 271(1)(C) OF THE ACT LEVIED PENALTY OF RS.6,45,000/- U/S 271(1)(C) OF THE ACT. FOR A.Y. 2007-08 THE DETAILS OF INCOME OFFERED BY THE ASSESSEE, ADDITIONAL INCOME AND THE P ENALTY LEVIED ARE AS UNDER : 3 ITA NOS.432 & 433/PUN/2019 A.Y. TOTAL INCOME PROCESSED U/S 143(1) OF THE ACT IN RS. TOTAL INCOME AS PER RETURN TOTAL INCOME ASSESSED U/S 143(3) IN RS. PENALTY LEVIED 2007-08 50,27,325/- 64,86,926/- (INCLUDING THE ADDITIONAL INCOME OF RS.14,59,600/-) 54,86,926/- RS.4,92,000/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A), WHO VIDE CONSOLIDATED ORDER FOR A.YS. 2006-07 AND 2007-08 DT.27.12.2018 UPHELD THE LEVY OF PENALTY. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAIS ED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE HONORABLE CIT (A) - 5, PUNE ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 6,45,0001- UNDER SECTION 271(1) (C) OF THE INCOME T AX ACT 1961 WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE LEGAL PO SITION. THE APPELLANT HEREBY PRAYS THAT THE PENALTY LEVIED UNDER SECTION 271 (1) (C) MAY PLEASE BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS), ERR ED IN NOT APPRECIATING THE FACT THAT THE LEARNED AO INITIATED PENALTY UNDE R SECTION 271 (1)(C) OF THE I T ACT IN A CAUSAL MANNER WITHOUT ISSUING A PROPER N OTICE STATING AS TO WHETHER THE APPELLANT IS GUILTY OF CONCEALMENT OF I NCOME OR FURNISHING OF INACCURATE PARTICULARS. THE HONORABLE CIT(A) FAILED TO APPRECIATE THE VARIOUS JUDGMENTS CITED BY THE APPELLANT IN SUPPORT OF THE CLAIM. THE APPELLANT HEREBY PRAYS THAT THE PENALTY ORDER PASSED U/S 271( 1)(C) MAY PLEASE BE QUASHED AND OBLIGE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS), ERR ED IN NOT APPRECIATING THE FACT THAT THE LEARNED AO INITIATED PENALTY UNDE R SECTION 271(1)(C) OF THE I T ACT ON THE GROUND THAT THE APPELLANT HAS FURNISHED THE INACCURATE PARTICULARS OF INCOME AND LEVIED THE PENALTY ON THE GROUND THAT THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME TO EVADE THE TA X AND THEREFORE HE IS LEVYING PENALTY FOR FURNISHING INACCURATE PARTICULA RS OF INCOME. THE LEARNED AO LEVIED THE PENALTY ON CONCEALMENT OF PARTICULARS OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE INITIATION OF PENALTY PROCEEDINGS AND LEVY OF PENALTY ARE ON DIFFERENT GR OUNDS AND THEREFORE THE PENALTY IS NOT TENABLE IN LAW. THE APPELLANT HEREBY PRAYS THAT THE PENALTY ORDER PASSED U/S 271(1) (C) MAY PLEASE BE QUASHED A ND OBLIGE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE HONORABLE CIT (A) - 5 PUNE ERRED IN CONFIRMING THE LEVY OF PE NALTY OF RS. 6,45,000/- UNDER SECTION 271 (1 )(C) OF THE INCOME TAX ACT 196 1 WITHOUT APPRECIATING THE FACT THAT 4 ITA NOS.432 & 433/PUN/2019 A) THE APPELLANT HAS OFFERED TO TAX THE INCOME DECL ARED DURING THE COURSE OF SURVEY ACTION AND THE SAME HAS BEEN ACCEPTED BY THE INCOME TAX DEPARTMENT. THEREFORE, IS NO DIFFERENCE IN THE RETU RNED INCOME AND THE INCOME AS ASSESSED BY THE INCOME TAX DEPARTMENT B) THE APPELLANT HAS PAID THE ENTIRE TAX ON THE ADD ITIONAL INCOME OFFERED TO TAX DURING THE COURSE OF SURVEY ACTION BEFORE THE I SSUE OF NOTICE U/S 148 OF THE I. T. ACT. THE APPELLANT HEREBY PRAYS THAT THE PENALTY LEVIED UNDER SECTION 271 (1) (C) MAY PLEASE BE DELETED. 4. SIMILAR GROUNDS HAVE BEEN RAISED IN ITA NO.433/PUN/201 9 FOR A.Y. 2007-08. 4.1. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT THOUG H ASSESSEE HAS RAISED VARIOUS GROUNDS BUT THE SOLE CONTROVERSY IS WITH RESPECT TO THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND SUBMITTED THAT DURING THE COURSE OF SURVEY PROCEEDINGS WITH RESPECT TO IMPUGNED PURCHASES, IT WAS SUBMITTED BY THE ASSESSEE THAT THE PURCHASES WERE NOT BOGUS AND WERE MADE FROM MARKET A ND THE ASSESSEE HAS ALSO BOOKED SALES AGAINST THE PURCHASES. HE SUBMITTED THAT DUR ING THE COURSE OF SURVEY, NO EVIDENCE ABOUT EXCHANGE OF CASH IN RESPECT OF THE PURCHASES WAS FOUND. HE SUBMITTED THAT THE ASSESSEE O FFERED THE ENTIRE AMOUNT OF TAX TO BUY PEACE OF MIND AND AVOID LITIGATION. HE FURTHER SUBMITTED THAT ASSESSEE HAD PAID THE ENTIRE TAX ON ADD ITIONAL INCOME BEFORE THE ISSUANCE OF NOTICE U/S 148 OF THE ACT AND THA T THE INCOME RETURNED BY THE ASSESSEE U/S 148 OF THE ACT HAS BEEN ACCEPTED. HE FURTHER SUBMITTED THAT THE RETURN OF INCOME FILED BY THE ASSESSE E IN RESPONSE TO NOTICE U/S 148 OF THE ACT WAS ACCEPTED BY THE AO IN TO TO AND THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULAR S OF INCOME. HE THEREFORE SUBMITTED THAT THE PENALTY BE DELETED. HE ALSO RELIED ON THE 5 ITA NOS.432 & 433/PUN/2019 DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF C HETAS CONTROL SYSTEMS PVT. LTD., (ITA NOS.1241 TO 1246/PUN/2016) ORDER DATED 06.03.2019. HE ALSO PLACED ON RECORD THE COPY OF THE AFOR ESAID DECISION. LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT T O LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IT IS AN UNDISPUTED FACT THAT IN THE PRESENT CASE D URING THE SURVEY, ASSESSEE HAD ADMITTED TO DISCLOSE ADDITIONAL IN COME OF RS.19,10,720/- ON ACCOUNT OF BOGUS PURCHASES. THE PER USAL OF STATEMENT RECORDED DURING THE COURSE OF SURVEY ALSO REVEALS THAT IT WAS STATED THAT ASSESSEE FIRM HAD MADE ACTUAL PURCHASES FROM THE MARKET FOR WHICH IT HAD RECEIVED THE BILLS FROM THE PARTIES AND HAD ALSO MADE PAYM ENTS THROUGH ACCOUNT PAYEE CHEQUES BUT SINCE ASSESSEE WAS UNABLE T O PROVE THE GENUINENESS OF THE PURCHASES TO THE EXTENT REQUIRED BY THE REVENUE, AND IN ORDER TO AVOID LITIGATION AND BUY PEACE OF MIND, THE INCOME WAS OFFERED BY THE ASSESSEE. IT IS A FACT THAT THE INCOME DECLARED DUR ING THE COURSE OF SURVEY WAS INCLUDED IN THE RETURN OF INCOME FILED BY THE A SSESSEE IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THEREAFTER IN TH E ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 OF THE ACT THE AO HAD ACCEP TED THE RETURN OF INCOME FILED BY THE ASSESSEE AND NO ADDITION WAS MADE THE REIN. IN SUCH A SITUATION, WE RELYING ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN ITA NOS.1241 TO 1246/PUN/2016 (SUPRA) AND FOR SIMILAR REASONS ARE OF THE VIEW THAT THERE IS NO QUESTION OF LEVYING PENALTY ON ACCOUNT OF CON CEALMENT ON THE ASSESSEE. HENCE, WE DIRECT TO DELETE THE PENALTY LEVIED BY THE AO AND WHICH WAS CONFIRMED BY LD.CIT(A). THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 6 ITA NOS.432 & 433/PUN/2019 7. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO.432 /PUN/2019 FOR A.Y. 2006-07 IS ALLOWED. 8. NOW, WE TAKE UP ASSESSEES APPEAL IN ITA NO.433/PUN/2 019 FOR A.Y. 2007-08. 8.1. AS FAR AS THE GROUNDS RAISED IN APPEAL IN ITA NO.4 33/PUN/2019 FOR A.Y. 2007-08 IS CONCERNED, IN VIEW OF THE SUBMISSION OF BOTH THE PARTIES THAT THE FACTS OF THE CASE IN THE YEAR BEING IDENTICAL TO THE FACTS AN D ISSUE OF THE CASE IN ITA NO.432/PUN/2019 FOR A.Y. 2006-07, WE TH EREFORE FOR THE REASONS STATED HEREIN WHILE DISPOSING OF THE APPEAL IN ITA NO.432/PUN/2019 FOR A.Y. 2006-07 AND FOR SIMILAR REASONS A LLOW THE GROUNDS OF ASSESSEE. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO.433 /PUN/2019 FOR A.Y. 2007-08 IS ALLOWED. 10. TO SUM UP, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED . ORDER PRONOUNCED ON 19 TH DAY OF AUGUST, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 19 TH AUGUST, 2019. YAMINI 7 ITA NOS.432 & 433/PUN/2019 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-5, PUNE. PR. CIT 4, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.