ASSISTANT COMMISSIONER OF INCOME TAX-3(2)(1), MUMBAI V. M/S. LIPI DATA SYSTEM LTD, MUMBAI

ITA 5028/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1484 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 01-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Bogus purchase; Wrong claim; Set aside
• Section: 271(1)(c); 14A; 115JB; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 5028 /MUM/20 19 (A.Y : 2011 - 12 ) THE ACIT - 3 (2) (1), ROOM NO. 674, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 / VS. M/S LIPI DATA SYSTEM LTD., 1, MITTAL CHAMBERS, NARIMAN POINT, MUMBAI - 400021 ./ ./ PAN/GIR NO. : AAACL0916F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI BRAJENDRA KUMAR , D R / RESPONDENT BY : NONE / DATE OF HEARING 09 /02 /20 2 1 / DATE OF PRONOUNCEMENT 11 /02 /202 1 / O R D E R PER PAVAN KUMAR GADALE : THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 8 ITA NO . 5028 /MUM/20 19 M/S LIPI DATA SYSTEM LTD. - 2 - M UMBAI , PASSED U/S. 271 (1) (C) AND 250 OF THE INCOME TAX ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY OF RS.80,5551 - WITHOUT APPRECIATING THAT THE ASSESSEE FAILED TO ESTABLISH THE GENU INENESS OF THE TRANSACTION WITH RESPECT TO ITS NATURE AND SOURCE OF INVESTMENT AND THEREFORE THE AO WAS CORREC T IN HOLDING THE TRANSACTION OF THE ASSESSEE WITH M/S DEV ENTERPRISES AS BOGUS TRANSACTION? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW,, THE ORDER OF THE LD. CI T ( A) IS NOT PERVERSE IN STALING IN PARA 3.1.8 OF HIS ORDER THAT PENALTY LEVIED U/S 271 (1) (C) OF THE ACT, 1961 IS NOT MAINTAINABLE IN VIEW OF CBDT CIRCULAR NO 25/2015 (F. NO . 279/MISC/140120151ITJ DATED 31.12.201 5 WIT HOUT APPRECIATING THAT FOR THE YEAR UNDER CONSIDERATION THE INCOME TAX PAYABLE ON TOTAL INCOME WAS COMPUTED UNDER NORMAL PROVISIONS OF THE A CT AND NOT ON BOOK PROFIT U/S 11 5 JB OF THE ACT? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY OF RS.80,5551 - WITHOUT APPRECIATING THAT HONBLE M P HIGH COURT IN THE CASE OF STEEL INFOTS LTD VS. CIT (269 ITR 228) HAS HELD THA T IN CASE OF CONCEALMENT OF INCOME CHARGEABLE TO TAX BY MAKING BOGUS CLAIM, LEVY OF PENALTY IT IS 271(L)(C) READ WITH EXPLANATION 2 IS JUSTIFIED AND THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS ESCORTS FINANCE LTD (2010) (328 ITR 44) (DEL ) WHEREIN IT IS HELD THAT IN CASE OF A CLAIM MADE IN RETURN OF INCOME FOUND TO ITA NO . 5028 /MUM/20 19 M/S LIPI DATA SYSTEM LTD. - 3 - BE BOGUS, IT WOULD BE TREATED AS A CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THEREFORE PENALTY PROCEEDINGS WOULD BE JUSTIFIED? 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS RIGHT IN D ELETING THE PENALTY OF RS.80,555/ - LEVIED U/S.271(1)(C) OF THE I.T. ACT, 1961 WITHOUT APPRECIATING TILE FACT THAT THE CLAIMS MADE IS NOT ONLY INCORRECT IN LAW HUT IS ALSO WHOLLY W ITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY THE ASSESSEE FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONAFIDE TRIGGERING EXPLANATION I TO SECTION 271 (1)(C OF THE I.T. ACT, 1961 AS HELD BY HON'BLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATIONS PV T. LTD., 40 DTR 249 (2010). 5. THE APPELLANT PRAYS THAT THE ORDER OF C!T(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED . 6. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, DELETE OR ADD GROUNDS WHICH MAY BE NECESSARY . AT TH E TIME OF HEARING, NONE APP EARED ON BEHALF OF THE ASSESSEE NOR ADJOURNMENT PETITION WAS FILED. WE HEARD THE LD. DR AND PERUSED THE MATERIAL ON RECORD. 3. THE BRIEF FACTS OF THE CASE ARE THAT , THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PRINT ERS, ATM MACHINES AND CARTRIDGE ETC. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 12.09.2011 DECLARING TOTAL I NCOME AT RS. 8,62,21,670/ - AND B OOK PROFIT U/S ITA NO . 5028 /MUM/20 19 M/S LIPI DATA SYSTEM LTD. - 4 - 115JB OF RS. 12,41,01,207/ - . SUBSEQUENTLY, NOTICE U/S 143 (2) AND 142 (1) O F THE ACT ALONG WITH QUESTIONNAIRE WERE ISSUED . I N COMPLIANCE THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAILS. THE A.O. FOUND THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASES BILL S FROM THE OPERATORS AS PER THE INFORMATION REC EIVED FROM SALES TAX D EPARTMENT . THE ASSESSEE WAS ALSO SERVED WITH THE SHOW CAUSE NOTICE , AND THE EXPLANATIONS WERE FILED REFEREED AT PARA 5. 2 OF THE ORDER. W HEREAS , THE AO WAS NOT SATISFIED WITH THE EXPLANATIONS AND OBSERVE THAT THE ASSESSEE COULD NOT PROVE THE GENUIN ENESS OF THE PURCHASES , HENCE MADE AN ADDITION OF RS 1,21,25,460/ - OF BOGUS PURCHASES AND DISALLOWANCE U/S 14A OF THE ACT RS 1,00,186/ - A ND ASSESSED THE TOTAL INCOME OFRS.9,84,47,320/AND PASSED THE ORDER U/S 143 (3) OF THE A CT DATED 26.03.2013. 4. SUBSEQUENTLY, THE A .O. INITIATED PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE A CT . I N RESPONSE TO THE NOTICE, THE ASSESSEE HAS EXPLAINED THAT AGAINST THE 100% ADDITION OF BOGUS PURCHASES. ON APPEAL BY THE ASSESSEE, THE LD. CIT (A) HA S RESTRICTED THE ADDITION @ 25% OF BOGUS PURCHASES . FURTHER, ON THE APPEAL BY THE REVENUE AS WELL AS THE ASSESSEE , THE HONBLE ITAT IN THE CASE OF THE ITA NO . 5028 /MUM/20 19 M/S LIPI DATA SYSTEM LTD. - 5 - REVENUE APPEAL HAS DIRECTED THE AO TO RESTRICT THE ADDITION BY ESTIMATING FURTHER GROSS PROFIT OF 2% OF BOGUS PURCHASES. THE ASSESSEE HAS FILED EXPLANATION S IN THE PENALTY PROCEEDING S, WHERE AS THE AO WAS NOT SATISF IED WITH THE SUBMISSIONS AND LEVIED PENALTY OF RS. 80,555/ - AND PASSED THE ORDER U/S 271 (1) (C) OF THE ACT. AGGRIEVED BY THE O RDER, THE ASSESS EE HAS FILED AN APPEAL WITH THE CIT (A). THE LD. CIT (A) CONSIDERING THE FACTS AND SUBMISSION S OF TH E ASSESSEE DEALT ON THE DISPUTE ISSUE AND RELIED ON THE JUDICIAL DECISION S AND OBSERVED THAT THE PENALT Y IS NOT SUSTAINABLE ON ADHOC DISALLOWANCE S WERE THE INCOME IS ESTIMATED AND DELETED THE PENALTY AND ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE HAS FILED THE APPEAL BEFORE THE HONBLE TRIBUNAL. AT THE TI ME OF HEARING, LD. DR SUBMITTED THAT THE CIT(A) ERRED IN DELETING THE PENALTY. WE FIND THE LD.CIT (A) RELIED ON THE JUDICIAL DECISION S AND OBSERVED AT PARA 3.1.8 AND 3.1.9 OF THE ORDER , WHICH IS READ AS UNDER: - 3 . 1.8 IT IS ALSO FOUND THAT THE BOARD ITSELF VIDE CIRCULAR F NO279/MISC/140/2015/ITJ DATED 31/12/2015 HAS DIRECTED THAT ITA NO . 5028 /MUM/20 19 M/S LIPI DATA SYSTEM LTD. - 6 - FOR A PERIOD PRIOR TO 01/04/16, NO PENALTY IS LEVIABLE WITH REFERENCE TO THE ADDITIONS AND DISALLOWANCES MADE UNDER NORMAL PROVISIONS, WHE RE THE INCOME TAX PAYABLE ON THE NORMAL INCOME IS LESS THAN THE BOOK PROFITS U/S 1 15JB. THE SAME HAS BEEN UPHELD AS SUCH BY THE HON'BLE DELHI HIGH COURT AS WELL IN THE CASE OF NALWA SONS INVESTMENT LTD. THUS , ON THESE PREMISES ALSO, THE PENALTY IS NOT MA INTAINABLE. 3.1.9 CON CLUDINGLY , THE TENETS FOR DETERMINING CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS HAVE BEEN LAID OUT IN THE ABOVE JUDGMENTS. THE PRINCIPLES LAID DOWN IN THE ABOVE MENTIONED JUDGMENTS OF THE APEX COURT AND JURISDICTIONAL COURTS AND THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE DO NOT MERIT IMPOSITION OF PENALTY U/S 271(1)(C) AT ALL. PENALTY LEVIED U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 OF RS. 80.555/ - FOR ALLEGED FURNISHING OF INACCURATE PARTICULARS IS, THEREFORE, DELETED. THE LD. DR COULD NOT CONTROVERT THE OBSERVATIONS OF THE LD. CIT (A) WITH ANY COGENT EVIDENCE OR INFORMATION. ACCORDINGLY, WE FIND THA T THE LD. CIT (A) HAS PASSED A REASONED ORDER AND RELIED ON THE JUDICIAL DECISION . ACCORDINGLY, WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF THE LD.CIT(A) AND UPHOLD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. ITA NO . 5028 /MUM/20 19 M/S LIPI DATA SYSTEM LTD. - 7 - 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONO UNCED IN THE OPEN COURT ON 11 .02 .2021 . SD/ - SD / - ( SHAMIM YAHYA ) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 11 .02.2021 AK , PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// 1. / ( ASST. REGISTRAR) , / ITAT, MUMBAI OTHER MEMBERN WHICH THE