ITO WARD 1(5), Mumbai V. SHRI. DINESH RAMKUMAR SINGHAL, Thane

ITA 4526/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1317 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 04-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 271(1)(c); 133(6); 250; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 4526/MUM/2019 (A.Y: 2009-10 ) INCOME TAX OFFICER, WARD 1 (5), ASHAR I.T. PARK, 6 TH FLOOR, B WING, ROOM NO. 14, WAGALE INDUSTRIAL ESTATE, THANE (WEST) - 400604 / VS. SHRI DINESH RAMKUMAR SINGHAL, C-301, SHRUTI CO-OP HSG LTD., KOLSHET ROAD, DHOKALI, THANE (WEST)- 400607 ./ ./ PAN/GIR NO. : BASPS7416P ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI BHARAT ANDHLE, DR / RESPONDENT BY : NONE / DATE OF HEARING 28/01/2021 / DATE OF PRONOUNCEMENT 08/02/2021 / O R D E R PER PAVAN KUMAR GADALE: THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, THANE, ITA NO. 4526/MUM/2019 SHRI DINESH RAMKUMAR SINGHAL - 2 - 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. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY LEVIED ULS 271( L)(C) WITHOUT PROPERLY APPRECIATING THE DECISIONS OF THE HON'BLE APEX COURT IN THE CASE OF MAK DATA PVT. LTD. VS CIT ( CIVIL APPEAL NO. 9772 OF 2013 )', THE HON'BLE GUJARAT HIGH COURT'S DECISION IN THE CASE OF N. K. PROTEINS LTD, TAX APPEAL NO. 242 OF 2003 DATED 20/06/2016 AGAINST WHICH THE SLP WAS DISMISSED BY THE HON'BLE SUPREME COURT AND ALSO IGNORING THE FACT THAT DEPARTMENT RECEIVED SPECIFIC CREDIBLE INFORMATION IN THIS CASE FROM THE SALES TAX DEPARTMENT OF THE STATE GOVERNMENT OF MAHARASHTRA' IN RESPECT OF NON-GENUINE PURCHASES. 2. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY LEVIED TI/S 271(L)(C) WITHOUT APPRECIATING THE FACT THAT THERE WAS A DEFINITE FINDING IN THE ASSESSMENT ORDER IN RESPECT OF BOGUS PURCHASES AND OF FURNISHING INACCURATE PARTICULARS OF INCOME RELATING TO PURCHASES RESULTING INTO CONCEALMENT OF INCOME. 3. IT IS HUMBLY REQUESTED THAT PRESENT APPEAL IS BEING FILED IN ACCORDANCE WITH THE CBDT'S INSTRUCTION NO. 3/2018 DATED 11/07/2018 AMENDED VIDE LETTER DATED 20.08.20 18 AS PER PARA 10(E) OF THE SAID CIRCULAR. THEREFORE, THE ORDER OF THE ITA NO. 4526/MUM/2019 SHRI DINESH RAMKUMAR SINGHAL - 3 - CIT(A) MAY KINDLY BE VACATED AND THAT OF THE AO MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY GROUND OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL AND FILED THE RETURN OF THE INCOME ELECTRONICALLY ON 23.09.2009 WITH THE TOTAL INCOME OF RS.4,29,790/-.THE RETURN OF INCOME WAS PROCESSED U/S 143 (1) OF THE ACT. FURTHER THE A.O. HAS RECEIVED THE INFORMATION THAT, THE ASSESSEE HAS OBTAINED BOGUS PURCHASES BILLS FROM 4 PARTIES. THEREFORE, NOTICE U/S 148 OF THE ACT WAS ISSUED. SUBSEQUENTLY, NOTICE U/S 143 (2) AND 142 (1) OF THE ACT WAS ISSUED ALONG WITH QUESTIONNAIRE. THE AO TO ASCERTAIN GENUINENESS OF THE PURCHASES CALLED FOR THE EVIDENCES OF PURCHASE BILLS AND LEDGER ACCOUNT. THE AO HAS FURTHER ISSUED NOTICE U/S 133(6) OF THE ACT TO THE FOUR PARTIES BUT WERE RETURNED UNSERVED.SINCE THE ASSESSEE HAS NOT SUPPORTED THE GENUINENESS OF PURCHASES WITH EVIDENCES. THE A.O. HAS RELIED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT CIT VS SIMIT P SHETH (356 ITR 451) AND MADE THE ADDITION @ 9.64% OF THE BOGUS PURCHASES AND ASSESSED THE TOTAL INCOME OF RS.11,95,080/- AND ITA NO. 4526/MUM/2019 SHRI DINESH RAMKUMAR SINGHAL - 4 - PASSED THE ORDER U/S 143 (3) R.W.S. 147 OF THE INCOME TAX ACT. 4. SUBSEQUENTLY, THE PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE ACT WAS INITIATED. THE AO CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND FINDINGS IN THE ASSESSMENT PROCEEDINGS AND WAS NOT SATISFIED WITH THE EXPLANATIONS OF THE ASSESSEE AND LEVIED MINIMUM PENALTY OF RS. 2,56,385/-AND PASSED THE ORDER U/SEC271(1)(C) OF THE ACT. 5. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE LD. CIT (A). THE LD. CIT (A) CONSIDERED THE GROUNDS OF APPEAL, FINDINGS OF THE AO AND THE ASSESSEE SUBMISSIONS AND FINALLY OBSERVED THAT THE AO HAS MADE DISALLOWANCE OF PERCENTAGE OF BOGUS PURCHASES ON ADHOC BASIS, THEREFORE THE PENALTY IS NOT SUSTAINABLE DELETED THE PENALTY AND ALLOWED THE ASSESSEES APPEAL. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE HAS FILED THE APPEAL BEFORE THE HONBLE TRIBUNAL. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. WE HAVE HEARD THE LD.DR SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE THE AO HAS ESTIMATED THE INCOME OF BOGUS PURCHASES @ 9.64% AND MADE AN ADDITION. WHEREAS THE PENALTY LEVIED BY THE AO HAS BEEN ITA NO. 4526/MUM/2019 SHRI DINESH RAMKUMAR SINGHAL - 5 - DELETED BY THE LD.CIT (A) WITH THE OBSERVATIONS THAT THE PENALTY CANNOT BE SUSTAINABLE IN THE HANDS OF THE ASSESSEE AS THE INCOME IS ESTIMATED ON PERCENTAGE BASIS. WE FOUND THAT THE LD.CIT (A) HAS PASSED THE ORDER CONSIDERING THE JUDICIAL DECISIONS AND FINDINGS AT PAGE 4, PARA 5 TO 10 WHICH IS READ AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, FINDINGS OF THE AO, SUBMISSION OF THE APPELLANT AND MATERIAL PLACED ON RECORD. IT IS OBSERVED THAT THERE IS A NORMAL TENDENCY TO SUBJECT AN ASSESSEE TO PENALTY U/S 271(1)(0) IN ALL CASES WHERE THE ASSESSEE REFRAINS TO FILE AN APPEAL PURSUANT TO AN ASSESSMENT ORDER, WITH A HOPE TO END THE NIGHTMARE WHICH BEGAN WITH SELECTION OF CASE FOR SCRUTINY BY ACCEPTING THE GENERAL ADDITIONS IN ASSESSMENT ORDER. PENALTY IS STRAIGHTAWAY LEVIED MERELY BECAUSE NO APPEAL HAS BEEN FILED AGAINST THE QUANTUM ORDER. THE HON'BLE SUPREME COURT IN THE CASE OF SIR SHADILAL SUGAR MILLS (168 ITR 7051) HELD THAT THERE MAY BE A HUNDRED AND ONE REASONS FOR NOT PROTESTING AND AGREEING TO AN ADDITION BUT THAT DOES NOT FOLLOW TO THE CONCLUSION THAT THE AMOUNT AGREED TO BE ADDED WAS CONCEALED INCOME. THE HONBIE KARNATAKA HIGH COURT IN CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY (2013 35 TAXMANN.COM 250) CATEGORICALLY HELD THAT:- THE VERY FACT THAT THE ASSESSEE AGREED TO PAY TAX AND DID NOT CHALLENGE THE ASSESSMENT ORDER, CANNOT BE CONSTRUED AS MALA FIDE.' 6. THE SUPREME COURT HAS RECENTLY REITERATED THE LAW IN CASE OF DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519 BY ITA NO. 4526/MUM/2019 SHRI DINESH RAMKUMAR SINGHAL - 6 - HOLDING IN PARA 62 THAT FINDING IN ASSESSMENT PROCEEDINGS CANNOT AUTOMATICALLY ADOPTED IN PENALTY PROCEEDINGS AND THE AUTHORITIES HAVE TO CONSIDER THE MATTER AFRESH FROM DIFFERENT ANGLE. MOREOVER, IN THE CASE OF AJAY LOKNATH LOHIA, ORDER DATED 5.10.2018, MUMBAI ITAT HAS ADDRESSED THAT WHEN AO HAD ESTIMATED COST GP ON ALLEGED PURCHASES, SUCH DISALLOWANCE DOES NOT TANTAMOUNT TO WILLFUL FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 7. IN THE CASE OF ETCO PROFILES PVT. LTD. VS. ACIT, IN ITA NO. 5351/MUM/2012, HON'BLE MUMBAI ITAT HAD HELD THAT: THE AO HAS DISALLOWED 20% OF PURCHASES ONLY ON PRESUMPTIONS WITHOUT ESTABLISHING FULLY THAT THE ASSESSEE HAS MADE PURCHASES FROM GREY MARKET. EVEN, IF IT IS ASSUMED FOR A MOMENT THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM GREY MARKET, IT WAS NOT ESTABLISHED THAT THE AMOUNT OF PURCHASES WAS LESS THAN THAT RECORDED IN THE BOOKS OF ACCOUNT. UNDER THESE SET OF FACTS, IT HAS TO BE HELD THAT THE IMPUGNED ADDITION HAS BEEN MADE ONLY ON ESTIMATED BASIS THAT TOO ON PRESUMPTIONS ONLY. HENCE, BY FOLLOWING THE DECISION RENDERED BY THE TRIBUNAL IN THE ASSESSEE'S SISTER CONCERN'S CASE (SUPRA), WE HOLD THAT THE IMPUGNED PENALTY IS LIABLE TO DELETED.' 8. IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 322 ITR 158 (SC) IT WAS HELD AS UNDER:- 'WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF ITA NO. 4526/MUM/2019 SHRI DINESH RAMKUMAR SINGHAL - 7 - INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE' 9. THE LEVY OF PENALTY IS MERELY ON DISALLOWANCE OF A PERCENTAGE OF PURCHASES AND NOT FINDING OF CONCEALMENT TO REDUCE TAXABLE INCOME. ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF A PERCENTAGE OF PURCHASES AS BOGUS AUTOMATICALLY CANNOT JUSTIFY THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE PENALTY OF RS. 2,56,385/-, IMPOSED U/S 271(1)(C) OF THE IT. ACT, BY THE AO, IS HEREBY DELETED AND THE GROUNDS OF APPEAL, RAISED AS ABOVE, ARE ALLOWED. 10.1N RESULT THE APPEAL IS ALLOWED. 7. THE LD.DR HAS ONLY SUPPORTED THE ORDER OF A.O. AND COULD NOT CONTROVERT THE FINDINGS OF THE LD.CIT (A) WITH ANY NEW COGENT EVIDENCE OR INFORMATION. WE FIND THE LD.CIT(A) HAS A PASSED A REASONED ORDER CONSIDERING THE FACTS AND JUDICIAL DECISIONS. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT (A) AND UPHOLD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. ITA NO. 4526/MUM/2019 SHRI DINESH RAMKUMAR SINGHAL - 8 - 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.02.2021 SD/- SD/- (RAJESH KUMAR) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 08.02.2021 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 6. / GUARD FILE. / BY ORDER, //TRUE COPY// 1. / ( ASST. REGISTRAR) , / ITAT, MUMBAI 2. THER MEMBER ON WHICH THE