ITO 25 (3)(3), Mumbai V. RAJAN NANALAL SHANGHVI, Mumbai

ITA 4919/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3628 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 25-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MU MBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM ITA NO. 4919/MUM/2019 (ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER-25(3)(3) ROOM NO. 233, 2 ND FLOOR, KAUTILYA BHAWAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 VS. RAJEN NANALAL SHANGHVI B-701, SWAPNALOK, DIXIT ROAD, VILE PARLE (E), MUMBAI-400 057 PAN/GIR NO. AAEPS 4098 N ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI BHARAT ANDHLE RESPONDENT BY : MS. KINJAL BHUTA DATE OF HEARING : 09.03.2021 DATE OF PRONOUNCEMENT : 09.03.2021 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-37, MUMBAI (L D.CIT(A) FOR SHORT) DATED 29.05.2019 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y .) 2009-10, WHEREIN FOLLOWING PENALTY LEVIED U/S.271(1)(C) HAS BEEN CONFIRMED AS UNDER: ASSESSMENT YEAR AMOUNT OF PENALTY 2009-10 RS.59,390/- 2. BRIEF FACTS OF THE CASE LEADING TO THE LEVY OF P ENALTY ARE THAT THE ASSESSING OFFICER IN THIS CASE MADE DISALLOWANCE OF 15% ON ACCOUNT OF BOGUS PURCHASES. ASSESSEE HAS SUPPLIED THE PURCHASE VOUCHERS AND THE PAYMENT WHER E SHOWN TO HAVE BEEN MADE BY BANKING CHANNEL. HOWEVER, DRAWING ADVERSE INFERENCE FOR THE NON-PRODUCTION OF THE SUPPLIERS, THE A.O. DISALLOWED 15% OF THE BOGUS PUR CHASES. HOWEVER, THE A.O. DID NOT DOUBT THE SALES. THE LD. CIT(A) REDUCED THE ADDITIO N. ITAT REDUCED THE DISALLOWANCE TO 5%. PENALTY U/S. 271(1)(C) WAS ALSO LEVIED. THE LD. CIT(A) DELETED THE PENALTY BY HOLDING THAT PENALTY ON EXTENDED ADDITION IS NOT SUSTAINABL E. HE RELIED ON SEVERAL CASE LAWS IN THIS REGARD. 2 ITA NO. 4919/MUM/2019 (ASSESSMENT YEAR: 2009-10) 3. AGAINST THIS ORDER, THE REVENUE IS IN APPEAL BEF ORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. AS CLEAR FROM THE FACTS RECORDED ABOVE, THE DISALLOWANCE HAS BEEN MADE ON A N ESTIMATED BASIS ON ACCOUNT OF THE NON PRODUCTION OF SUPPLIERS BEFORE THE ASSESSING OF FICER. THE PURCHASE VOUCHERS WERE DULY PRODUCED AND THE PAYMENTS WERE THROUGH BANKING CHANNEL. IN THIS BACKGROUND, IN OUR CONSIDERED OPINION, THE ASSESSEE CANNOT BE VISI TED WITH THE RIGORS OF PENALTY U/S. 271(1)(C) OF THE ACT. AS A MATTER OF FACT, ON MANY OCCASIONS, ON SIMILAR CIRCUMSTANCES, IN QUANTUM PROCEEDINGS, THE DISALLOWANCE ITSELF HAS BE EN DELETED. IN OUR CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASS ESSEE CANNOT BE SAID TO HAVE BEEN GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. IN THIS REGARD, WE DRAW SUPPORT FROM THE DECISION OF A LARGER BENCH OF THE HONBLE SUPREME COURT COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA [1972] 83 ITR 26 (SC), WHEREIN IT WAS HELD THAT THE AUTHORITY MAY NOT LEVY THE PENALTY, IF THE CONDUCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMAC IOUS. 5. WE FURTHER NOTE THAT TAX EFFECT IN THIS CASE IS BELOW THE LIMIT FIXED BY CBDT FOR FILING APPEALS BEFORE ITAT. THE REVENUE HAS TRIED T O MAKE OUT A CASE THAT SINCE THE ADDITION WAS MADE PURSUANT TO INFORMATION FROM SALE S TAX DEPARTMENT, THIS PENALTY APPEAL FALLS IN THE EXCEPTION CARVED OUT IN THE CBD T CIRCULAR REGARDING APPEALS ARISING OUT OF ADDITIONS MADE PURSUANT TO INFORMATION FROM OUTSIDE AGENCIES. WE ARE OF THE OPINION THAT THIS PLEA IS NOT TENABLE INASMUCH AS O NCE REVENUE ACCEPTS THAT PENALTY IS LEVIED ON OUTSIDE AGENCY INFORMATION ,THE PENALTY L EVIED WILL HAVE NO LEGS TO STAND. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT, W E UPHOLD THE ORDER'S OF LD. CIT(A) AND DELETE THE LEVY OF PENALTY. 6. IN THE RESULT, THE REVENUES 'S APPEAL IS DISMISS ED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD ON 09.03.20 21. SD/- SD/- (RAM LAL NEGI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 09.03.2021 ROSHANI , SR. PS 3 ITA NO. 4919/MUM/2019 (ASSESSMENT YEAR: 2009-10) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI