ITO 12 (1)(2), MUMBAI V. ASHISH WATERPROOFING (INDIA) PVT. LTD., MUMBAI

ITA 4641/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8801 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 09-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Bogus purchase; Question of law; Difference of opinion; Onus to prove
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4641/MUM/2019 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, 12(1)(2), ROOM NO. 146A, 1 ST FLOOR, AAYAKAR BHAVAN, CHURCHGATE, MUMBAI-400020. VS. M/S ASHISH WATERPROOFING (INDIA) PVT. LTD., GALA NO. 2085, 2 ND FLOOR, NIRMAN INDUSTRIAL ESTATE, VILLAGE CHINCHOLI LINK ROAD, MALAD (W), MUMBAI-400064 PAN NO. AABCA 3892 Q APPELLANT RESPONDENT REVENUE BY : MR. BRAJENDRA KUMAR, DR ASSESSEE BY : NONE DATE OF HEARING : 07/01/2021 DATE OF PRONOUNCEMENT : 11/01/2021 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-20, MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THOUGH THE CASE WAS FIXED FOR HEARING ON 7.01.20 21, NEITHER THE ASSESSEE NOR ITS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE TRIBUNAL ON THE ABOVE DATE. AS THERE IS NON-COMPLIANCE BY THE A SSESSEE, THE PRESENT ITA NO. 4641/M/2019 M/S ASHISH WATERPROOFING 2 APPEAL IS DISPOSED OFF AFTER EXAMINING THE MATERIAL S AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE ( DR). 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2009-10 ON 2 3.09.2009 DECLARING TOTAL INCOME OF RS.5,86,344/-. THE ASSESSMENT WAS C OMPLETED U/S 143(3) BY THE ASSESSING OFFICER (AO) ON 20.03.2015 DETERMININ G THE TOTAL INCOME AT RS.10,93,521/- BY MAKING AN ADDITION OF RS.5,07,182 /- ON ACCOUNT OF BOGUS PURCHASES. SUBSEQUENTLY, ON APPEAL BY THE ASSESSEE, THE LD. C IT(A) RESTRICTED THE DISALLOWANCE TO RS.63,398/- BEING 12.5% OF THE DISP UTED PURCHASES. THEREAFTER, THE AO LEVIED A PENALTY OF RS.19,590/- U/S 271(1)(C) ON THE INCOME SOUGHT TO BE CONCEALED OF RS.63,398/-. 4. AGAINST THE PENALTY OF RS.93,590/- LEVIED BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 30.04.2019, THE LD. CIT(A) DELETED THE ABOVE PENALTY ON THE FOL LOWING GROUND : 5.1 I HAVE CONSIDERED THE RIVAL CONTENTIONS. I FIN D FROM PARA 5.5 OF THE ORDER OF THE CIT(A) THAT THE SUM OF RS.63,398/- IN RESPECT O F WHICH THE PENALTY WAS IMPOSED WAS BASED ON ESTIMATE. I FIND THAT THE AO F AILED TO BRING ANY CONCRETE EVIDENCE TO PROVE THAT THE SUM OF RS.63,398/- ACTUA LLY REPRESENTED INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAD BEEN FU RNISHED BY THE APPELLANT. I FIND THAT THE FACTS IN THE CASE CITED BY THE APPELL ANT [HARIGOPAL SINGH VS. CIT (2002) (SUPRA)] IS SIMILAR TO THE FACTS OF THE APPE LLANT'S CASE. IN THAT CASE, THE QUESTION OF LAW BEFORE THE HON'BLE COURT WAS WHETHE R PENALTY IS ATTRACTED UNDER SECTION 271(1)(C) OF THE ACT WHERE INCOME IS ASSESS ED PURELY ON ESTIMATE BASIS AND ADDITIONS ARE MADE IN THE DECLARED INCOME ON TH AT BASIS. IN THAT CASE, THE HON'BLE HIGH COURT OF PUNJAB & HARYANA HELD AS UNDE R: ITA NO. 4641/M/2019 M/S ASHISH WATERPROOFING 3 '3. IN ORDER TO ATTRACT CLAUSE (C) OF SECTION 271(1 ), IT IS NECESSARY THAT THERE MUST BE CONCEALMENT BY THE ASSESSEE OF THE PA RTICULARS OF HIS INCOME OR IF HE FURNISHES INACCURATE PARTICULARS OF SUCH INCOME. WHAT IS TO BE SEEN IS WHETHER THE ASSESSEE IN THE PRESENT CASE HAD CONCEALED HIS INCOME AS HELD BY THE ASSESSING OFFICER AND THE TRI BUNAL. HE HAD NOT MAINTAINED ANY ACCOUNTS AND HE FILED HIS RETURN OF INCOME ON ESTIMATE BASIS. THE ASSESSING OFFICER DID NOT AGREE WITH THE ESTIMATE OF THE ASSESSEE AND BROUGHT HIS INCOME TO TAX BY INCREASIN G IT TO RS.2,07,500/-. THIS, TOO, WAS ON ESTIMATE BASIS. THE TRIBUNAL AGRE ED THAT THE INCOME OF THE ASSESSEE HAD TO BE ASSESSED ON AN ESTIMATE OF T HE TURNOVER BUT WAS OF THE VIEW THAT THE ESTIMATE AS MADE BY THE ASSESSING OFFICER WAS HIGHLY EXCESSIVE AND IT FIXED THE TOTAL INCOME OF THE ASSE SSEE AT RS.1,50,000/- FOR THE YEAR UNDER APPEAL. IT IS, THUS, CLEAR THAT THER E WAS A DIFFERENCE OF OPINION AS REGARDS THE ESTIMATE OF THE INCOME OF TH E ASSESSEE. SINCE THE ASSESSING OFFICER AND THE TRIBUNAL ADOPTED DIFFEREN T ESTIMATES IN ASSESSING THE INCOME OF THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME' SO AS TO ATTRACT CLAUSE (C) OF SECTION 271(1). THERE IS NOT EVEN AN IOTA OF EVIDEN CE ON THE RECORD TO SHOW THAT THE INCOME OF THE ASSESSEE DURING THE YEA R UNDER APPEAL WAS MORE THAN THE INCOME RETURNED BY HIM. ADDITIONS IN HIS INCOME WERE MADE, AS ALREADY OBSERVED ON ESTIMATE BASIS AND THA T BY ITSELF DOES NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE EITHER CON CEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF S UCH INCOME. THERE HAS TO BE A POSITIVE ACT OF CONCEALMENT ON HIS PART AND THE ONUS TO PROVE THIS IS ON THE DEPARTMENT. WE ARE ALSO OF THE CONSIDERED VIEW THAT THE TRIBUNAL GROSSLY ERRED IN LAW IN RELYING ON EXPLANATION 1(B) TO SECTION 271(1)(C) TO RAISE A PRESUMPTION AGAINST THE ASSESSEE. THE ASSES SEE HAD JUSTIFIED HIS ESTIMATE OF INCOME ON THE BASIS OF HOUSEHOLD EXPEND ITURE AND OTHER INVESTMENTS MADE DURING THE RELEVANT PERIOD. IT IS NOT THE CASE OF THE REVENUE THAT HE HAD, IN FACT, INCURRED EXPENDITURE IN EXCESS OF WHAT HE HAD STATED. IN THIS VIEW OF THE MATTER, IT CANNOT B E SAID THAT THE ITA NO. 4641/M/2019 M/S ASHISH WATERPROOFING 4 EXPLANATION FURNISHED BY THE ASSESSEE HAD NOT BEEN SUBSTANTIATED OR THAT HE HAD FAILED TO PROVE THAT SUCH EXPLANATION WAS NO T BONA FIDE. 5.2 IN VIEW OF THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT DISCUSSED ABOVE, THE PENALTY IMPOSED IS NOT SUSTAINABLE. ACCO RDINGLY I DIRECT THE AO TO DELETE THE PENALTY OF RS.19,590/-. 5. THE LD. DR RELIES ON THE ORDER OF THE TRIBUNAL, JAIPUR BENCH IN THE CASE OF ITO V. M/S BHANSALI TRADING CORPORATION (ITA NO. 735/JP/2012) FOR AY 2005-06 AND SUBMITS THAT THE PENALTY OF RS.19,59 0/- LEVIED BY THE AO BE RESTORED. 6. WE HEARD THE LD. DR AND PERUSED THE RELEVANT MAT ERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. IN THE CASE OF M/S BHANSALI TRADING CORPORATION (SUPRA), THE TRIBUNAL OBSERVED THAT THE ADDITION MADE BY THE AO WAS SPECI FIC ON ACCOUNT OF UNVERIFIABLE PURCHASES ON WHICH GP @ 25% WAS APPLIE D AND ADDED TO INCOME ; THE ASSESSEE WAS NOT ABLE TO PRODUCE THE C ONCERNED PARTIES FOR VERIFICATION AND ALSO SUMMONS WERE RETURNED BACK TO THE AO UN-SERVED. ON THAT GROUND, THE TRIBUNAL REVERSED THE ORDER OF THE LD. CIT(A) AND RESTORED THE PENALTY LEVIED BY THE AO. IN THE INSTANT CASE, IN RESPONSE TO THE SHOW CAUSE NOTICE DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSEE FILED A REPLY DATED 21.02.2018 STATING THAT THEY HAD SUBMITTED COPY OF THE LEDGER ACCOUNT, BILLS OF THE CONCERNED PARTIES ALONG WITH DELIVERY CHALLANS, BAN K STATEMENTS WHERE PAYMENTS HAD BEEN REFLECTED TO PROVE THE GENUINENES S OF THE PURCHASES. IT WAS STATED BEFORE THE AO THAT RAW MATERIALS WERE PU RCHASED FROM THE CONCERNED PARTIES WHO WERE HAVING TIN NUMBER AND WE RE REGISTERED DEALERS. IT WAS STATED THAT DURING THE YEAR UNDER C ONSIDERATION, THE ITA NO. 4641/M/2019 M/S ASHISH WATERPROOFING 5 ASSESSEE HAD NO TRANSACTION WITH THE SAID PARTIES A ND THEREFORE, IT WAS NOT ABLE TO PRODUCE THEM BEFORE THE AO. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE PERSUADED BY THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIG H COURT IN HARIGOPAL SINGH (SUPRA) INSTEAD OF THE ORDER OF THE TRIBUNAL IN THE CASE OF BHANSALI TRADING CORPORATION (SUPRA). WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) H AS RIGHTLY FOLLOWED THE JUDGMENT OF THE HONBLE PUNJAB & HARYA NA HIGH COURT IN HARIGOPAL SINGH (SUPRA) AND DELETED THE PENALTY OF RS.19,590/-. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/01/2021. SD/- SD/- (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 11/01/2021 RAHUL SHARMA, SR. P.S. 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// (DY./ASSISTANT REGISTRAR) ITAT, MUMBAI