Rameshkumar Laxmanlal Siroya, Mumbai V. Income Tax Officer, Wd-3(2)(6), Surat

ITA 48/SRT/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9721 (ITAT-SURAT)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-09-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Condonation of delay
• Section: 148; 271(1)(c); 144; 274

Judgement Text

आयकर अपीलȣय अͬधकरण, स ु रत Ûयायपीठ, स ु रत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT ‘SMC BENCH’ BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER आ.अ.सं./ITA Nos.48 & 49/SRT/2022 (AY 2009-10) (Hearing in Virtual Court) Rameshkumar Laxmanlal Siroya, 7/C Supari Baugh Mension, Nirmala Niwas, 34 Dr. Ambedkar Road, Parel, Mumbai-400012 PAN : AFAPS 0153 D Vs Income Tax Officer, Ward- 3(2)(6), Anavil Business Center, Adajan Hazira Road, Adajan, Surat-395 007 अपीलाथȸ/Appellant Ĥ×यथȸ /Respondent Ǔनधा[ǐरती कȧ ओर से /Assessee by Shri Himanshu Gandhi, CA राजèव कȧ ओर से /Revenue by Shri Vinod Kumar, Sr-DR सुनवाई की तारीख/Date of hearing 17.09.2022 उɮघोषणा कȧ तारȣख/Date of pronouncement 26.10.2022 Order under section 254(1) of Income Tax Act 1. This set of two appeals by assessee are directed against the separate orders of National Faceless Appeal Centre [for short to as “Ld. NFAC”]/Ld. CIT(A) dated 02.10.2021 & 08.11.2011 for the same assessment year i.e. 2009-10, which in turn arise out of assessment order passed under section 144 r.w.s. 147 of Income-Tax Act,1961 (hereinafter referred to as ‘the Act’) dated 20.10.2016 and penalty levied under section 271(1)(c) on 20.04.2017. Certain facts in both the appeals are common ITA Nos.48-49/SRT/2022 (A.Y 09-10) Rameshkumar L Siroya 2 therefore, with the consent of the parties both the appeals are clubbed, heard and are decided by consolidate order to avoid the conflicting decision. For appreciation of facts, the assessee has raised the following grounds of both the appeals: ITA No.48/SRT/2022 “1. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in dismissing the appeal on assumption that assessee had settled the appeal filed against the order u/s 144 r.w.s. 147 of Income Tax Act, 1961 of Ld. AO dated 20.10.2016 under VSV Scheme is factually incorrect. 2.On the facts and circumstances of the case and law, the Ld. CIT(A) failed to consider that notice under section 148 of Income Tax Act, 1961 is bad in law and required to be quashed. 3. On the facts and circumstances of the case and law, the Ld. CIT(A) failed to consider that notice under section 148 of Income Tax Act, 1961 is issued without obtaining proper permission under section 151 oof Income Tax Act, 1961 from appropriate authority. 4. On the facts and circumstances of the case and law, the Ld. CIT(A) failed to consider that addition of Rs.1675337 being 25 percent of Rs.6701349 made by Ld. AO on account of suspicious purchases is unwarranted and required to be deleted.” ITA No.49/SRT/2022 1.On the facts and circumstances of the case and law, the Ld. CIT(A) erred in dismissing the appeal on assumption that assessee had settled the appeal filed against the order u/s 271(1)(c) of Income Tax Act, 1961 of Ld. AO dated 20.04.2017 under VSV which is factually incorrect. ITA Nos.48-49/SRT/2022 (A.Y 09-10) Rameshkumar L Siroya 3 2.On the facts and circumstances of the case and law, the Ld. CIT(A) failed to consider that levy of penalty of under section 271(1)(c) on ambiguous notice under section 274 of Income Tax Act, 1961 is bad in law and required to be deleted. 3.On the facts and circumstances of the case and law, the Ld. CIT(A) failed to consider that levy of penalty of Rs.509681 under section 271(1)(c) of Income Tax Act, 1961 by Ld. AO is bad in law and required to be deleted.” 2. On perusal of record, it shows that both the appeals are barred by 91 days and 54 days the prescribed period of limitation for filing those appeals before the Tribunal. The Ld. Authorized Representative (AR) for the assessee submits that NFAC/Ld.CIT(A) passed the order on 02.10.2021 and 08.11.2021. Both appeals were filed on 02.03.2022 before Tribunal. Thus, there is delay of 91 and 54 days respectively in filing the appeal before the Tribunal. The Ld. AR for the assessee submits that the Hon'ble Supreme Court in suo motu writ petition(C) No.3 of 2020 has already allowed the period of limitation till 01.03.2022 and further 90 days’ period was granted to file appeal before various courts. Thus, the entire period of delay is covered by the decision of Hon'ble Apex Court that there was no intimation or deliberate delay in filing ITA Nos.48-49/SRT/2022 (A.Y 09-10) Rameshkumar L Siroya 4 of appeal before this Tribunal. The ld AR for the assessee prayed for condoning the delay in filing both the appeals. 3. On the other hand, the ld. Senior departmental representative (Sr-DR) for the Revenue submits that the Bench may take decision in accordance with law. 4. I have considered the rival submissions of both the parties on the plea of condonation of delay and find that the assessee has filed both the appeal within the grace period allowed by Hon’ble Apex Court in suo motu Writ Petition No. (C) No. 3 of 2022, vide order dated 10.01.2022. Therefore, respectfully following the directions of the Hon’ble Apex Court, the delay in filing both the appeals are condoned and the appeals are accepted for adjudication on merit. Now I shall advert to the merits of the appeals 5. At the outset of hearing Ld. AR for the assessee submits that the Assessing Officer completed the assessment order under section 144 r.w.s 147 on 20.10.2016. The Assessing Officer also levied penalty under section 271(1)(b)/271(1)(c) on 20.04.2017 respectively. Against all the three orders the assessee has filed appeal before the NFAC/Ld. CIT(A). In the ITA Nos.48-49/SRT/2022 (A.Y 09-10) Rameshkumar L Siroya 5 meantime, the Department introduced Vivad Se Vishwas Scheme, 2020. The assessee opted the Vivad Se Vishwas Scheme (VSV) only against the order of penalty under section 271(1)(b) of the Act dated 10.04.2017, which was accepted by competent authority. However, the PCIT/NFAC inadvertently and mistakenly assumed that the assessee availed benefit of VSV in all three appeals and dismissed the appeals of assessee summarily. The Ld.NFAC/Ld. CIT(A) has not considered the merits of the facts in quantum assessment as well as in appeal against the penalty levied under section 271(1)(c). The Ld. AR for the assessee submits that matter may be restored back to the file of NFAC/Ld. CIT(A) for adjudicating the issue afresh in accordance with law. 6. The Ld. AR for the assessee filed copy of Form-1, Form-2, Form-3, Form-4 and Form-5 of Vivad se Vishwas Scheme, 2020 with regard to appeal filed against the order dated 10.04.2017 passed under section 271(1)(b) of the Act. 7. In alternative and without prejudice submission, Ld. AR for the assessee submits that case of assessee was reopened by Assessing Officer on the ground that assessee is a beneficiary ITA Nos.48-49/SRT/2022 (A.Y 09-10) Rameshkumar L Siroya 6 of bogus purchases shown from Bhanwarlal Jain and his group. The Investigation Wing made a search and seizure action on 03.10.2013. In the said search, certain incriminating material and evidence was allegedly recovered to show that Bhanwarlal Jain group was indulging and providing accommodation entries. The Assessing Officer made re- opening on the basis of such information and made addition of 100% of purchase shown from Bhanwarlal Jain group. The Assessing Officer made addition of 25% of such purchases (25% of Rs.67,01,349/-). The NFAC/CIT(A) dismissed the appeal of assessee on wrong assumption of fact that the assessee has availed benefit of VSV-20. The ld AR for the assessee submits that Division Bench of this Tribunal in similar cases wherein the assessees were found beneficiary of similar bogus purchases from Bhanwarlal Jain and his group, has restricted the addition on similar disallowance to the extent of 6% on such similar bogus purchases. Thus, the disallowance of disputed purchases may be restricted to 6% of aggregate of impugned purchase. ITA Nos.48-49/SRT/2022 (A.Y 09-10) Rameshkumar L Siroya 7 8. The Ld. AR for the assessee submits that the appeal in ITA No.49/SRT/2022 against the penalty order admittedly the addition was made on estimation basis by treating the purchases expenses as non-genuine expense and already 25% of the expense was disallowed. The Ld. AR for the assessee submits that it is an admitted position under law that no penalty under section 271(1)(c) is leviable on estimated addition. 9. On the other hand, Ld. Senior Departmental Representative (Sr-DR) for the Revenue submits that matter may be restored back to the file of NFAC/CIT(A) to adjudicate both the appeals on merit. 10. I have considered the submission of both the parties. I find that Assessing Officer while passing the assessment order treated the purchase shown from the Bhanwarlal Jain and his entities as bogus purchase and made disallowance of 25% of aggregate purchase shown from Meenakshi Exports and Mayur Exports. On appeal before NFAC/ld.CIT(A), the appeal of assessee was dismissed by taking view that assessee has opted for VSV-2020. In find that such view of NFAC/CIT(A) is ITA Nos.48-49/SRT/2022 (A.Y 09-10) Rameshkumar L Siroya 8 contrary to the facts. Therefore, that the grounds of appeal raised by the assessee are back to the file of NFAC/CIT(A) to adjudicate the issue afresh on merit in accordance with law. The Ld. AR for the assessee is given liberty to make reliance of decisions of this Tribunal wherein the Division Bench of this Tribunal has restricted the addition on similar disputed purchase to the extent of 6%. Thus, the grounds of appeal raised by assessee’s appeal are allowed for statistical purposes in above terms. 11. In the result, assessee’s appeal ITA No.48/SRT/2022 is allowed for statistical purposes. ITA No.49/SRT/2022 12. Now adverting to assessee’s appeal in ITA No.49/SRT/2022 in the matter of penalty under section 271(1)(c) of the Act. I find that the Assessing Officer at the time of passing assessment order dated 20.10.2016 initiated penalty under section 271(1)(c). The Assessing Officer levied penalty @ 100% of tax sought to be evaded and worked out the minimum penalty of Rs.5,09,681/- vide order dated 20.04.2017. The Assessing Officer while passing the penalty order without waiting for ITA Nos.48-49/SRT/2022 (A.Y 09-10) Rameshkumar L Siroya 9 outcome of result in appeal in quantum assessment. Considering the fact that I have already restored the grounds of appeal in quantum assessment to the file of NFAC/CIT(A), hence, this appeal is also restored back to the file of NFAC/CIT(A) to adjudicate afresh in accordance with law. The assessee would be at liberty to make his submission that no penalty is leviable on the estimated addition. The NFAC/CIT(A) is directed to consider such facts and pleas of assessee and pass a speaking order in accordance with law. In the result, the grounds of appeal raised by assessee is allowed for statistical purposes in above terms. 13. In the result, assessee’s appeal is allowed for statistical purposes. 14. In combined result, both the appeals of assessee are allowed for statistical purposes. Copy of this order be placed in the respective case file(s). Order pronounced in the open court on 26/10/2022. Sd/- (PAWAN SINGH) [᭠याियक सद᭭य JUDICIAL MEMBER] स ू रत /Surat, Dated:26/10/2022 Dkp. Out Sourcing Sr.P.S ITA Nos.48-49/SRT/2022 (A.Y 09-10) Rameshkumar L Siroya 10 Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Sr.P.S./Assistant Registrar, ITAT, Surat