ITO-28(2)(1), Mumbai V. M/S LESLY BABY THOMAS , Mumbai

ITA 4934/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3756 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD BHASKARAN DR P DANIEL
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI , , # BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTNT MEMBER .4934//2019 (. . 2009-10 ) ITA NO.4934/MUM/2019 (A.Y.2009-10) ITO-28(2)(1), R. NO. 326, 3 RD FLOOR, TOWER NO.6, VASHI RLY. STATION COMPLEX, VASHI, NAVI MUMBAI-400703. ...... . / APPELLANT VS. M/S LESLY BABY THOMAS SHOP NO.22, MAHAVIR BHAKTI, PLOT NO. 93, SECTOR-15, KOPERKHAIRANE, NAVI MUMBAI-400709. PAN: ADBPT4067A ..... /1/ RESPONDENT . 2/ APPELLANT BY : SHRI VINOD BHASKARAN /1 2/ RESPONDENT BY : DR. P. DANIEL 3 / DATE OF HEARING : 17/03/2021 3 / DATE OF PRONOUNCEMENT : 21/05/2021 / ORDER PER VIKAS AWASTHY, J.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-26, MUMBAI [HEREINAFTER REF ERRED TO AS THE CIT(A)] 2 . 4934 //201 9 (. .2009-10 ) ITA NO.4934/MUM/2019 (A.Y.2009-10) DATED 24.05.2019 FOR THE ASSESSMENT YEAR (AY) 2009- 10, DELETING PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS A RESELLER OF PETROLEUM PRODUCTS. THE ASSESSMENT FOR THE IMPUGNED ASESSMENT YEAR (AY) IN THE CASE OF ASSESSEE WAS RE-OPENED ON THE G ROUND THAT THE ASSESSEE HAS INDULGED IN OBTAINING BOGUS PURCHASE BILLS FROM HAW ALA OPERATORS. THE AO MADE ADDITION OF RS. 36,62,952/- BY ESTIMATING GROSS PRO FIT (GP) AT THE RATE OF 25% ON ALLEGED HAWALA PURCHASES. FURTHER, THE AO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT ON THE ADDI TION MADE IN RESPECT OF ALLEGED BOGUS PURCHASES. THE AO VIDE ORDER DATED 22.05.2017 LEVIED PENALTY OF RS. 6,71,111/- FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C) OF THE ACT. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) FOLLOWING THE DECISION OF TRIBUNAL IN THE CA SE OF SHRUTI FASTNERS LTD. VS. DCIT [49 CCH 183 (DEL. TRIB.)] AND IN THE CASE OF R AKESH KUMAR GUPTA VS. ITO [49 CCH 66 (MUM.TRIB.)] DELETED PENALTY ON THE GROUND T HAT NO PENALTY CAN BE LEVIED ON ADDITIONS MADE ON ESTIMATE BASIS. HENCE, THE PRE SENT APPEAL BY THE REVENUE. 3. SHRI VINOD BHASKARAN REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER LEVYING PENALTY UNDER SECTION 271(1)(C) O F THE ACT. THE DR SUBMITTED THAT THE AO LEVIED PENALTY ONLY AFTER VERIFYING THE FACT THAT THE ASSESSEE HAS EVADED TAX ON BOGUS PURCHASE BILLS. THE ASSESSEE FA ILED TO DISCHARGE ITS ONUS IN PROVING GENUINENESS OF THE PURCHASES AND HAD ILLEGA LLY ENRICHED HIMSELF WITHOUT DISCHARGING TAX LIABILITY. 3 . 4934 //201 9 (. .2009-10 ) ITA NO.4934/MUM/2019 (A.Y.2009-10) 4. ON THE CONTRARY, DR. P. DANIEL APPEARING ON BEHA LF OF THE ASSESSEE VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED F OR DISMISSING THE APPEAL OF REVENUE ON THE SHORT GROUND OF LOW TAX EFFECT IN THE LIGHT OF CBDT CIRCULAR NO. 3/2018. THE LD. COUNSEL FURTHER SUBMITTED THAT THE PENALTY HAS BEEN RIGHTLY DELETED BY THE CIT(A) AS THE PENALTY HAS BEEN LEVIE D ON ESTIMATED ADDITIONS. IT IS A WELL-SETTLED LAW THAT NO PENALTY IS LEVIABLE ON ADD ITIONS MADE ON ESTIMATIONS. 5. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. UNDISPUTEDLY PENALTY UNDER SECTION 271(1)(C) HAS BEEN LEVIED BY THE AO ON BOGUS PURCHASE ADDITIONS MADE ON ESTIMATIONS. THE ASSESSEE HAS ALL EGEDLY OBTAINED BOGUS PURCHASE BILLS TO THE TUNE OF RS. 1,46,51,809/-. TH E AO HAS ESTIMATED PROFITS AT THE RATE 25% ON SUCH PURCHASES AND MADE ADDITION OF RS. 36,62,952/-. IT IS ON THIS ADDITION THAT THE AO HAS LEVIED PENALTY UNDER THE P ROVISIONS OF SECTION 271(1)(C) OF THE ACT. THE HONBLE HIGH COURTS AND VARIOUS BEN CHES OF THE TRIBUNAL HAVE TIME AND AGAIN HELD THAT NO PENALTY IS LEVIABLE WHERE AD DITION HAS BEEN MADE MERELY ON ESTIMATIONS. THE CIT(A) HAS DELETED THE PENALTY BY FOLLOWING THE ORDER OF TRIBUNAL. 6. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AERO TRADERS PVT. LTD. REPORTED AS 322 ITR 326 HAS HELD THAT NO PENALTY UN DER SECTION 271(1)(C) OF THE ACT CAN BE IMPOSED WHERE INCOME IS DETERMINED ON ES TIMATE BASIS. PENALTY BEING QUASI CRIMINAL PROCEEDINGS, DUTY IS CAST UPON THE A O TO ESTABLISH GUILT OF THE ASSESSEE IN CONCEALING THE INCOME OR FURNISHING INA CCURATE PARTICULARS OF SUCH INCOME. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SUBHAS TRADING CO. REPORTED AS 221 ITR 110 HAS HELD THAT WHERE THE AO AFTER REJECTING ACCOUNTS OF THE ASESSEE HAS ASSESSED THE INCOME BY APPLYING EST IMATED GROSS PROFIT (GP) RATE, 4 . 4934 //201 9 (. .2009-10 ) ITA NO.4934/MUM/2019 (A.Y.2009-10) NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE. SIM ILAR VIEW HAS BEEN TAKEN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. S .P. BHATT REPORTED AS 97 ITR 440. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CAS E OF CIT VS. SANGRUR VANASPATI MILLS LTD. REPORTED AS 303 ITR 53 HAS HEL D THAT WHERE AN ADDITION HAS BEEN MADE ON THE BASIS OF ESTIMATIONS AND NOT ON AC COUNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, PENALTY UNDER SECTION 271( 1)(C) OF THE ACT IS NOT LEVIABLE. THERE ARE OTHER CATINA OF JUDGMENTS BY HONBLE DIF FERENT HIGH COURTS TAKING SIMILAR VIEW. THE DIFFERENT BENCHES OF THE TRIBUNAL IN SEVERAL DECISIONS HAVE HELD THAT PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVI ED, WHERE THE ADDITIONS HAVE BEEN MADE ON ESTIMATIONS. 7. WE FIND NO INFIRMITY IN THE IMPUGNED ORDER, HENC E THE SAME IS UPHELD AND THE APPEAL OF REVENUE IS DISMISSED, SANS MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY , THE 21 ST DAY OF MAY, 2021. SD/- SD/- ( M. BALAGANESH) (VIKAS AWASTHY) /ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, 7/ DATED: 21/05/2021 SK, PS 5 . 4934 //201 9 (. .2009-10 ) ITA NO.4934/MUM/2019 (A.Y.2009-10) / 8 / 8 / 8 / 8 COPY OF THE ORDER FORWARDED TO : 1. . / THE APPELLANT , 2. /1 / THE RESPONDENT. 3. 9 ( )/ THE CIT(A)- 4. 9 CIT 5. / , . . . , / DR, ITAT, MUMBAI 6. < / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI