ASST CIT 25(2), MUMBAI V. RATANSINGH M RATHORE, MUMBAI

ITA 5043/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3930 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SINGH
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI G.S.PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 5043/MUM/2013 ASSESSMENT YEAR: 2007-08 THE A CIT - 25(2 ), C-11, PRATYAKSHAKAR BHAVAN, ROOM NO. 108, BANDRA KURLA COMPLEX, BANDRA (E). MUMBAI- 400 051. VS. SHRI. RATAN SI NGH M. RATHORE. B-1, NEELA APARTMENT, S V P ROAD, OPP. MANDPESHWAR INDL. ESTATE, BORIVALI (W), MUMBAI- 400 092. PAN : AACPR4164L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. S.R.SINGH RESPONDENT BY : MS. HIRAL SEJPAL DATE OF HEARING: 0 6/05/2016 DATE OF PRONOUNCEMENT: 04/08/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST ORDER DATED 16/04/2013 PASSED U/S 271(1)(C) OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT) BY THE LD. CIT(APPEALS)-35, MUMBAI, FOR THE A SST. YEAR 2007-08, WHEREBY THE LD.CIT(A) DELETED THE PENALTY LEVIED U/S 271 (1 )(C) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT/A SSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2007-08 DECLARING THE TOTAL INC OME OF RS. 1,39,64,580/-. THE A.O COMPLETED THE ASSESSMENT U/S 143(3) DETERMI NING TOTAL INCOME OF RS. 9,22,22,795/- AFTER MAKING THE FOLLOWING ADDITIONS: - 2 ITA NO. 5043/MUM/2013 ASSESSMENT YEAR: 2007-08 I) LOAN FROM AGRICULTURISTS RS. 24,50,000/- II) OTHER LOANS U/S 68 RS. 30,00,000/- III) PENALTY CHARGES RS. 2,88,353/- IV) BOGUS PURCHASES RS. 2,87,57,709/- V) PAYMENTS U/S 40A(2)(B) FOR SUB-CONTRACT CHARGES RS. 2,13,78,870/- VI) SUB-CONTRACT CHARGES TO OTHERS RS. 2,23,83,278/- 3. THE ASSESSEE ASSAILED THE ASSESSMENT ORDER BY FI LING APPEAL BEFORE THE CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. STIL L AGGRIEVED, THE ASSESSEE CHALLENGED THE APPELLATE ORDER BEFORE THE ITAT. DUR ING PENDENCY OF SECOND APPEAL, THE A.O ISSUED NOTICE U/S 271(1)(C) OF THE ACT AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE LEVIED PENALTY OF RS. 2 5,30,668/-. THE APPELLANT/ASSESSEE CHALLENGED THE PENALTY ORDER BEF ORE THE LD. CIT(A). THE LD. CIT(A) AFTER HEARING THE CONTENTION OF THE PARTIES, ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE PENALTY. HENCE, THE REVENU E HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING EFFECTIVE GROUND OF APPEAL:- I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED UND ER SECTION 271(1)(C) OF THE INCOME TAX ACT, DESPITE THE FACT T HAT ADDITION TO THE INCOME OF THE ASSESSEE BY REJECTING THE BOOKS OF ACCOUNTS HAS BEEN CONFIRMED BY THE ITAT IN QUANTUM APPEAL. 4. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE H EAVILY RELYING UPON THE ASSESSMENT ORDER, SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY DELETED THE PENALTY LEVIED BY THE A.O. SINCE, THE ITAT HAS REJE CTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN QUANTUM APPEAL, THE ASSESSEE IS LIA BLE FOR PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF INCOME . 3 ITA NO. 5043/MUM/2013 ASSESSMENT YEAR: 2007-08 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED BY T HE A.O. THE LD. COUNSEL FURTHER SUBMITTED THAT THE DISALLOWANCE ON ACCOUNT OF LOANS FROM AGRICULTURISTS AND OTHER UNSECURED LOANS AT SR. NO (I) & (II) HAVE BEEN SET ASIDE BY THE D BENCH OF THE ITAT IN QUANTUM APPEAL WITH THE DIRECT ION TO RECONSIDER THE ISSUE AFRESH AND ADDITIONS MADE ON ACCOUNT OF BOGUS PURCH ASES, DISALLOWANCE U/S 40A(2)(B) AND DISALLOWANCE OF SUB CONTRACT PAYMENT AT SR. NO (IV), (V) &(VI) HAVE BEEN SUBSTITUTED BY ESTIMATING THE OVERALL NET PROF IT @ 8% OF TURNOVER WITHOUT PASSING ANY ADVERSE REMARKS RELATING TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF. SINCE, DISALLOWANCE AT SR. NO. (I) & (II) HAVE BEEN SET ASIDE WITH DIRECTION TO RECONSIDER THE ISSUE AF RESH, NO PENALTY CAN BE LEVIED ON ACCOUNT OF ADDITION MADE. SIMILARLY, THE CIT(A) AND THE ITAT HAS NOWHERE OBSERVED IN THEIR ORDERS THAT THE APPELLANT HAS CON CEALED HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME IN R ESPECT OF ADDITIONS AT SR. NO. (IV), (V) & (VI) SO AS TO IMPOSE PENALTY U/S 271(1) (C) OF THE ACT. THE LD. COUNSEL RELIED UPON THE FOLLOWING JUDGMENTS IN SUPPORT OF H IS CONTENTION. I) COMMISSIONER OF INCOME TAX VS. P. ROJES (2013) 3 1 TAXMANN.COM 253 II) ASSOCIATE TRADERS VS. INCOME TAX OFFICER (1992) 62 TAXMAN 151. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIAL PLACED ON RECORD AND ALSO GONE THROUGH THE ORDERS P ASSED BY THE AUTHORITIES BELOW AS WELL AS THE CASES RELIED UPON BY THE PARTI ES. THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE PENALTY HOLDING AS UNDER:- 5.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, THE ORDERS OF THE LD. CIT(A) AS WELL AS HON. ITAT AND ALSO CAREFULLY CONS IDERED THE WRITTEN FILED ON BEHALF OF THE APPELLANT AND FIND FORCE IN THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT. 4 ITA NO. 5043/MUM/2013 ASSESSMENT YEAR: 2007-08 SINCE THE ISSUES OF ADDITIONS MADE ON ACCOUNT OF LOANS FROM AGRICULTURISTS FOR RS. 24,50,000/- AND LOAN FROM O THERS FOR RS. 30,00,000/- HAVE ALREADY BEEN SET ASIDE BY THE HON. ITAT FOR EXAMINING THE LOANS AFRESH, NO PENALTY IS LEVIABLE ON THESE TWO AMOUNTS OF ADDITIONS. COMING TO THE REMAINING THREE ADDITIONS FOR A TOTAL AMOUNT OF RS. 7,25,19,857/-, SINCE THE NET PROFIT OF THE BUSINESS HAS BEEN ESTIMATED AT 8% OF THE TOTAL CONTRACT RECEIPTS AND SUCH ESTIM ATE OF 8% HAS REACHED ITS FINALITY BY REASON OF THE ORDER OF THE HON. ITAT. AS FAR AS THE ESTIMATE OF APPELLANTS PROFIT AS 8% IS CONCERNED, I AM OF THE OPINION THAT SUCH ESTIMATE OF NET PROFIT WILL NOT ATTRACT THE PROVISIONS OF PENALTY PROCEEDINGS U/S 271(1)(C). W HEN THE NET PROFIT OF THE BUSINESS IS ESTIMATED IN THIS CASE, I DO NOT FI ND ANY RIDER TO SUCH ESTIMATE IN THE APPELLATE ORDERS OF BOTH THE LD. CI T(A) AND THE HON. ITAT TO THE EFFECT THAT THE APPELLANT HAS TO FACE P ENALTY PROCEEDINGS. THE SUBMISSION MADE BY THE APPELLANT IN THIS RESPEC T IS FOUND TO BE ACCEPTABLE FOR WHICH THE FOLLOWING CASES ARE REFERR ED TO AND RELIED UPON BECAUSE AS RIGHTLY HELD IN THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. P ROJES (2013) (31 TAXMANN.C OM 253), NO PENALTY CAN BE IMPOSED U/S 271(1)(C) ON ESTIMATION OF INCOM E. 7. IN THE PRESENT CASE, SINCE, THE COORDINATE BENC H OF ITAT HAS SET ASIDE THE ADDITIONS AT SR. NO (I) & (II) TO THE FILE OF THE A O WITH THE DIRECTION TO RECONSIDER THE SAME AFRESH, IT CANNOT BE HELD CONCLUSIVELY THA T THE ASSESSEE HAS CONCEALED HIS INCOME. SIMILARLY, THE REMAINING ADDITIONS ARE SINCE BASED ON ESTIMATION, NO PENALTY CAN BE IMPOSED U/S 271(1)(C). AS PER THE SETTLED LAW, THE PENALTY PROCEEDINGS ARE PENAL IN NATURE, THEREFORE, THE AUT HORITY IS BOUND TO HOLD THE ASSESSEE GUILTY OF CONCEALMENT OF INCOME BEFORE IMP OSING PENALTY AND THE STANDARD OF PROOF REQUIRED FOR IMPOSITION OF PENALT Y IS HIGHER THAN THE PROOF 5 ITA NO. 5043/MUM/2013 ASSESSMENT YEAR: 2007-08 REQUIRED FOR MAKING ADDITIONS OR SUSTAINING THE SAM E IN QUANTUM APPEALS. HENCE, IN OUR CONSIDERED VIEW THE CIT(A) HAS PASSED THE IMPUGNED ORDER IN ACCORDANCE WITH THE SETTLED PRINCIPLES OF LAW. WE D O NOT FIND ANY LEGAL OR FACTUAL INFIRMITY IN THE ORDER OF THE CIT(A) TO INT ERFERE WITH THE SAME. WE, THEREFORE, UPHOLD THE ORDER PASSED BY THE LD. CIT(A ) AND DISMISS THIS SOLE GROUND OF APPEAL OF THE REVENUE. 8. IN THE RESULT APPEAL FILED BY THE REVENUE FOR TH E ASSESSMENT YEAR 2007-08 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN CO URT 4 TH AUGUST, 2016. SD/- SD/- ( G.S.PANNU ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 04/08/2016 / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA