DCIT CENTRAL CIRCLE -4(2) , MUMBAI V. M/S. SKYLARK BUILD, MUMBAI

ITA 435/MUM/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1403 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-07-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 03-03-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 271(1)(c); 133A; 250; 153C

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI SHRI BASKARAN BR, ACCOUNTANT MEMBER & MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER I.T.A. No.435/Mum/2022 (A.Y. 2010-11) Dy. Commissioner of Income Tax Central. Circle-4(2) Room No. 1918, 19 th Floor, Air India Building, Nariman Point, Mumbai- 400021 Vs. Skylark build 4 th Floor, 54B, Sagar avenue, S V Road, Lallubhai Park, Andheri(W), Mumbai-400058 PAN AAZFS0404K (Appellant) (Respondent) Assessee by Shri Jayant R. Bhatt & Jitali Gandhi Department by Shri Chetan M. Kacha Date of Hearing 14.07.2022 Date of Pronouncement 10.10.2022 O R D E R PER KAVITHA RAJAGOPAL:- This appeal has been filed by the Revenue as against the order of the Ld. CIT(A) u/s 250 of the IT Act pertaining to assessment year 2010-11. The AO has challenged the ground of deletion of penalty levied u/s 271(1)(C) of the Act amounting to Rs. 93,34,664/- on the basis that the quantum on which it has been levied was deleted by the Tribunal. 2. The brief facts are that assessee company is a partnership firm and had filed its return of income for the impugned year Skylark build ITA No. 435/Mum/2022 2 dated 14/10/2010 declaring total income of Rs. 1,45,77,600/-. The assessee’s case pursuant to a search and seizure Action carried out at the residential premises of Mr. Sudhakar Shetty the chairman of Sahana Group dated 22/09/2011 and also at the business premises of Sahana Group of companies and the survey Action u/s 133A of the Act carried out at business premises of the assessee as well as other entities of Sahana Group, notice u/s 153C of the Act was issued to the assessee. The assessee then filed its return of income date 20/03/2013 declaring total income of Rs. 5,65,391/- and the AO subsequent to this passed an assessment order u/s 143 (3) r.w.s. 153C of the Act determing the purchase amount of Rs. 70,13,571/- as bogus and reducing the same from the closing WIP shown by the assessee in its return of income. The AO observed that the assessee has transferred its WIP to M/s Oasis Reality on its book value of Rs.104,18,41,670/- for which the value determined by the AO for such WIP transferred to M/S Oasis Reality after reducing the bogus purchases worked out to Rs. 6,20,469/- , Rs. 1,89,06,091/-, Rs 3,20,09,599/- for AY 2007- 08, 2008-09, 2009-10 respectively. The AO determine the correct book value of WIP to be Rs. 98,32,91,940/- and had calculated the final difference in book value of WIP shown by the assessee and the book value determined by the closing WIP as on 30/09/2009 was worked out to Rs. 101,67,87,535/- which were said to be transferred by the assessee to M/s Oasis Realty and the STCG u/s 45(3) of the IT Act was determined at Rs. 2,50,54,135/- by the AO. The AO initiated penalty proceeding u/s 271 (1)(C) of the Act and penalty amounting to Rs. 93,34,664/- was levied for the impugned transaction. The assessee preferred an appeal before the Ld.CIT(A) on the said penalty on the ground that there was no basis for the levy of penalty as the impugned addition made on bogus purchases were subsequently deleted, the penalty cannot be Skylark build ITA No. 435/Mum/2022 3 sustained for the same reason. The Ld.CIT(A) relying on the decision of the order of the Hon’ble Supreme Court in the case of K.C. Builders vs. ACIT (265 ITR 562) deleted the impugned penalty on the basis that since the addition was deleted there remains no basis for the levy of penalty. Aggrieved by this Revenue is in appeal before us. The Ld. DR for the Revenue contended that the Revenue has challenged the deletion of addition on bogus purchases before the Hon’ble jurisdictional Bombay High Court and that the Ld.CIT(A) has erred in deleting the penalty levied u/s 271(1)(C) of the Act on the ground that since the quantum has been deleted there is no basis for confirming the penalty levied on such addition. The learned AR on the other hand relied on the decision of the Ld.CIT(A) and contended that the decision of Hon’ble Supreme Court in the case of K.C. Builders (supra) holds good in assessee’s case. 3. Having heard the rival submissions and perused the materials on record it is evident that the coordinate bench has deleted the addition made by the AO in assessee’s case pertaining to bogus purchases. The Ld. DR’s contention that the Revenue has not accepted the decision of the tribunal and that the Revenue has preferred an appeal against the said order before the Hon’ble jurisdictional Bombay High Court is not acceptable in our view. We would like to place our reliance on the decision of the Hon’ble Supreme Court in the case of K.C. Builders (supra) wherein it was held that when assessment or reassessment order on the basis of which penalty has been levied is finally set aside or cancelled by the tribunal or otherwise, the penalty as a consequence of the said addition cannot be said to stand by itself and the same is liable to be cancelled. It is pertinent to point out that the Hon’ble Apex Court has laid the proposition that if any addition has been Skylark build ITA No. 435/Mum/2022 4 nullified on the basis of the decision passed by the Tribunal or other higher authority the consequential penalty order of the said addition cannot be sustained. The ld. CIT(A) in assessee’s case has rightly deleted the said penalty by laying emphasis on the proposition laid by the Apex court in the said decision. We find no infirmity in the order of the ld. CIT(A). Resultantly, we uphold the decision of the ld CIT(A)and dismiss the appeal filed by the Revenue. 4. In the result the appeal filed by the revenue is dismissed. Order pronounced in the open court on 10.10.2022. Sd/- Sd/- (BASKARAN BR) (KAVITHA RAJAGOAPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated : 10/10/2022 ANIKET RAJPUT (STENOGRAPHER) 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// Skylark build ITA No. 435/Mum/2022 5 (Assistant Registrar) ITAT, Mumbai