ELCON PIPE AND FITTINGS PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER - WARD 1(1), MUMBAI

ITA 496/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6482 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 23-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries
• Section: 271(1)(c); 143(2); 148; 144

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL E BENC H MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 496/MUM/2018 FOR (ASSESSMENT YEAR 2009-10) ELCON PIPE AND FITTINGS PVT. LTD. B-8, GODOWN NO.7, PRITHVI COMPLEX II, PIPE LINE, KALHER, BHIWANDI-421302. PAN: AACFE1857D VS. ITO-WARD- 1(1), MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA, KALYAN (WEST), THANE-421301. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVINDRA POOJARY (AR) RESPONDENT BY : SHRI CHAUDHARY ARUN KUMAR SINGH (DR) DATE OF HEARING : 11.02.2019 DATE OF PRONOUNCEMEN T : 11.02.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LEARNED COMMISSIONER (APPEALS)-2, PUNE DATED 09.11.2017, WH ICH IN TURN ARISES FROM THE PENALTY ORDER PASSED BY ASSESSING OFFICER UNDER SECTION 271(1)(C) DATED 26.09.2014 FOR ASSESSMENT YEAR 2009-10. THE A SSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 2, PUNE. GENERAL: 1. ERRED IN PARTLY CONFIRMING THE ORDER OF THE ASSE SSING OFFICER THAT YOUR APPELLANT HAS CONCEALED THE INCOME. CONFIRMING THE PENALTY U/S 271(1)(C) ON ADDITION TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASES ITA NO. 496 MUM 2018-ELCON PIPE AND FITTINGS PVT. L TD. 2 2. FAILED TO APPRECIATE THAT THE THERE IS NO DELIBE RATE CONCEALMENT OF INFORMATION OR ANY FURNISHING OF FALSE PARTICULARS OF INCOME IN YOUR APPELLANT'S CASE. THEREFORE PENALTY IMPOSED UNDER SECTION 271(1)(C) I S BAD IN LAW. 3. ERRED IN IGNORING THAT ASSESSMENT PROCEEDINGS AN D CONCEALMENT ARE DIFFERENT, MERELY BECAUSE THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT REGARDING HAWALA PURCHASES, IT CANNOT BE SAID THERE IS A CONC EALMENT.; 4. FAILED TO APPRECIATE THAT ADDITIONS IN THE ASSES SMENT ORDER WERE MADE PURELY BASED ON INFORMATION RECEIVED FROM SALES TAX DEPART MENT AND WITHOUT CONDUCTING ANY INDEPENDENT ENQUIRY ON HIS OWN. 5. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDE R OF ASSESSING OFFICER IMPOSING PENALTY U/S. 271(1)(C) WITHOUT APPRECIATIN G THAT THE PENALTY NOTICE ISSUED BY HIM IN THIS REGARD WAS DEFECTIVE. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY, ENGAGED IN THE BUSINESS OF TRADING OF PIPE MATERIAL . THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED ON 21.03.201 4 UNDER SECTION 144 R.W.S. 147 OF THE ACT. THE ASSESSING OFFICER MADE T HE RE-OPENING OF THE ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED FRO M SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSE SSEE IS ONE OF THE BENEFICIARIES WHO HAS TAKEN ACCOMMODATION ENTRIES F ROM HAWALA DEALERS. THE ASSESSEE MADE PURCHASES OF RS. 71,58,777/- FROM PARTIES NAMELY MARUTI STEEL TRADERS OF RS. 37,70,068/-, SHIV INDUS TRIES OF RS. 14,57,315/- AND ANUPAM METAL OF RS. 19,31,394/-. THE NAME OF TH E SAID PARTIES WAS INCLUDED IN THE LIST OF HAWALA DEALERS. ON THE BASI S OF INFORMATION RECEIVED BY ASSESSING OFFICER, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 DATED 19.03.2013. THE NOTICE WAS NOT SERVED UPON TH E ASSESSEE; THEREAFTER NOTICE UNDER SECTION 143(2) AND 141(1) WAS ISSUED O N 26.12.2013. THE SAID ITA NO. 496 MUM 2018-ELCON PIPE AND FITTINGS PVT. L TD. 3 NOTICE WAS ALSO RETURNED BACK TO THE ASSESSING OFFI CER AS RECORDED IN PARA-3 OF THE ASSESSMENT ORDER. THE ASSESSING OFFIC ER COMPLETED THE ASSESSMENT UNDER SECTION 144 R.W.S. 147 AND DISALLO WED THE AGGREGATE PURCHASE OF RS. 71,58,777/-. ON FURTHER APPEAL BEFO RE THE LD. CIT(A) THE ADDITION WAS SUSTAINED TO THE EXTENT OF RS. 8,94,84 7/- ( @ 12.5%) AND BALANCE OF RS. 62,63,930/- WAS DELETED VIDE ORDER D ATED 30.06.2016. ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE DISALLOWANC E WAS CONFIRMED @ 12.5% OF THE BOGUS PURCHASES VIDE ITA NO. 5355/M/20 15 & 5689/M/3016 DATED 18.08.2017. 3. THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECT ION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER LEVIED THE PENALTY @ 100 % OF TAX SOUGHT TO BE EVADED. IN APPEAL AGAINST THE PENALTY LEVIED UNDER SECTION 271(1)(C), THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO RESTRICT T HE LEVY OF PENALTY TO THE EXTENT OF ADDITION CONFIRMED IN THE APPEAL. THEREFO RE, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORISED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. A R OF THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER PASSED THE ASSES SMENT ORDER EX-PARTE AND DISALLOWED THE ENTIRE PURCHASES WITHOUT GIVING ANY OPPORTUNITY OF HEARING TO THE ASSESSEE. ON APPEAL BEFORE THE TRIBU NAL THE DISALLOWANCE WAS RESTRICTED TO 12.5% OF THE ALLEGED BOGUS PURCHA SES. THE LD. AR OF THE ITA NO. 496 MUM 2018-ELCON PIPE AND FITTINGS PVT. L TD. 4 ASSESSEE SUBMITS THAT IT IS SETTLED LAW THAT NO PEN ALTY IS LEVIABLE ON ADHOC DISALLOWANCE. THEREFORE, THE ORDER OF LD. CIT(A) IN DIRECTING THE ASSESSING OFFICER FOR RESTRICTING THE PENALTY ON THE PARTIAL DISALLOWANCE IS ALSO LIABLE TO BE SET-ASIDE. 5. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO DELIBERATED ON THE VARIOUS CASE LAWS REFERRED AND RELIED BY LOWER AUTH ORITIES. WE HAVE NOTED THAT IN APPEAL IN QUANTUM ASSESSMENT, THE CO-ORDINA TE BENCH OF THIS TRIBUNAL IN CROSS APPEAL FOR ASSESSMENT YEAR 2009-1 0 & 2011-12 OF BOTH THE PARTIES, RESTRICTED THE DISALLOWANCE OF ALLEGED BOGUS PURCHASES @ 12.5% OF THE ALLEGED BOGUS PURCHASES. IT IS SETTLED LEGAL POSITION THAT NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE ON ADHOC DISALLOWANCE. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE DI RECT THE ASSESSING OFFICER TO DELETE THE ENTIRE PENALTY LEVIED UNDER S ECTION 271(1)(C) OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 /02/20 19. SD/ SD/- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATE: 11 .02.2019 SK ITA NO. 496 MUM 2018-ELCON PIPE AND FITTINGS PVT. L TD. 5 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR E BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI