ACIT 27(1), Mumbai V. M/S ASHAPURA CONSTRUCTION CO., Mumbai

ITA 4869/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3917 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 22-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AZHAR ZAIN
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVANKUMAR GADALE ( JM) I.T.A. NO. 4869/MUM/2019 (ASSESSMENT YEAR 2011-12) ACIT-27(1) ROOM NO. 408 TOWER NO. 6 VASHI RAILWAY STATION COMPLEX, VASHI NAVI MUMBAI-400 703 . VS. M/S. ASHAPURA CONSTRUCTION CO. SHOP NO. 4, VIKRAM APARTMENT, NEW MANEKLAL ESTATE GHATKOPAR WEST MUMBAI-400 086. PAN : AAFFA2914E (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI AZHAR ZAIN DATE OF HEARING 07.04.2021 DATE OF PRONOUNCEMENT 01.06.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A) DATED 18.4.2019 AND PERTAINS TO ASSESSMENT YEAR 20 11-12. 2. THE ISSUE RAISED IS THAT LEARNED CIT(A) ERRED IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE I.T.ACT AMOUN TING TO RS.8,83,647/-. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IN THI S CASE IS A BUILDER. ASSESSEE HAD MADE A TOTAL PURCHASE OF RUPEES 11,59, 26,335/-. ASSESSING OFFICER RECEIVED INFORMATION THAT ASSESSEE HAS ENGA GED IN BOGUS PURCHASES AMOUNTING TO RUPEES 28,59,700/- FROM FOUR PARTIES. ASSESSING OFFICER PROCEEDED TO MAKE THE IMPUGNED ADDITION ON THE GROU ND THAT ASSESSEE WAS NOT IN A POSITION TO PRODUCE THE ALLEGED SUPPLIERS AND THE DELIVERY CHALLAN WERE NOT PRODUCED. PENALTY UNDER SECTION 271(1)(C) OF TH E ACT WAS ALSO LEVIED ON THIS. M/S. ASHAPURA CONSTRUCTION CO. 2 4. UPON ASSESSEE'S APPEAL LEARNED CIT(A) REFERRED T O THE DECISION OF HONOURABLE SUPREME COURT THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (322 ITR 158). ACCORDINGLY, HE HELD THAT A DISALLOWANCE OF THE ASSESSEE'S CLAIM CANNOT LEAD TO LEVY OF PENALTY UNDER SECTION 271(1) (C) OF THE ACT. 5. AGAINST THIS ORDER REVENUE IS IN APPEAL BEFORE U S. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE. NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. UPON CAREFUL CONSIDERATION WE NOTE THAT ASSESSEE HAS MADE A HUGE AMOUNT OF TOTAL PURCHASES. OUT OF THE SAME A MINUSC ULE AMOUNT HAS BEEN DISALLOWED AS BOGUS PURCHASES ON THE REASONING THAT ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE ALLEGED SUPPLIERS AND THE CONCE RNED DELIVERY CHALLAN IS NOT PRODUCED. IN OUR CONSIDERED OPINION THE AFORESAID P URCHASE IS A VERY MINUSCULE OF THE TOTAL PURCHASES MADE BY THE ASSESS EE. THE DISALLOWANCE OF BOGUS PURCHASE ON THE INFORMATION OF SALES TAX DEPA RTMENT WITHOUT ANY DOUBT OR DISTURBANCE IN ANY OF THE OTHER ASPECTS OF THE W ORKING OF THE ASSESSEE IS NOT SUSTAINABLE. ON MANY OCCASIONS ON SEARCH REASONING THE ENTIRE ADDITION HAS BEEN DELETED ON THE TOUCHSTONE OF HONOURABLE BOMBAY HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISE PVT. LTD. (372 ITR 619). FURTHERMORE LEARNED CIT(A) HAS RIGHTLY RELIED UPON THE DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS. THE A FORESAID DECISION EXPOUNDED THAT THE DISALLOWANCE OF THE CLAIM OF THE ASSESSEE DOES NOT IPSO FACTO LEAD TO THE CONCLUSION THAT ASSESSEE SHOULD BE VISITED WITH THE REGOURS OF PENALTY IF THE CLAIM MADE IS NOT FOUND TO BE EX-FACIE BOGUS. I N OUR CONSIDERED OPINION, THE CLAIM OF THE ASSESSEE IS NOT AT EX FACIE BOGUS. HENCE WE FIND NO INFIRMITY IN THE ORDER OF LEARNED CIT(A) IN DELETING THE PENALTY . 7. WE FURTHER NOTE THAT THE TAX EFFECT IN THIS CASE IS LESS THAN LIMIT FIXED BY THE CBDT FOR FILING APPEALS BEFORE THE ITAT. THE RE ASONING OF THE REVENUE IS THAT ADDITION HAS BEEN MADE ON THE BASIS OF SALES T AX DEPARTMENT INFORMATION. SO THE PENALTY LEVIED ALSO FALLS UNDER THE EXCEPTIO N CARVED OUT OF THE CBDT CIRCULAR ON THE REASONING THAT THIS IS BASED UPON O UTSIDE AGENCY INFORMATION. M/S. ASHAPURA CONSTRUCTION CO. 3 WE DO NOT ACCEPT THE SUBMISSION OF THE REVENUE. WE FIND THAT ONCE THE REVENUE CONTENDS THAT THIS PENALTY IS BASED UPON THE INFORM ATION FROM AN OUTSIDE AGENCY REVENUES GROUND OF LEVY OF PENALTY WILL HAVE NO LEGS TO STAND. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSSI ON WE DISMISS THE GROUND RAISED BY THE REVENUE. 8. IN THE RESULT THIS APPEAL BY THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 1.6.2021. SD/- SD/- (PAVANKUMAR GADALE) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 01/06/2021 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// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI