ITO Ward1(4), Thane West V. Smt. Jay Naresh Purswani, Thane

ITA 5048/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2638 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 02-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI , !'#,$%!' &! BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER !. 5048/ / 2019 (%*. . 2010-11 ) ITA NO.5048/MUM/2019(A.Y.2010-11) !. 5049/ / 2019 (%*. . 2011-12 ) ITA NO.5049/MUM/2019(A.Y.2011-12) INCOME TAX OFFICER, WARD 1(4), ROOM NO.11, 6 TH FLOOR, B-WING, WAGLE INDUSTRIAL ESTATE, THANE (W) 400 604 ...... #, / APPELLANT * VS. SMT.JAYA NARESH PURSWANI, 1703, LIGHT BRIDGE, GLADY ALWARES ROAD, HIRANANDANI MEADOWS, THANE (W) 400 604 ..... %-/ RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS. USHA GAIKWAD ! *.%- #/ DATE OF HEARING : 04/02/2021 /0 .%- #/ DATE OF PRONOUNCEMENT : 17/02/2021 &/ ORDER PER VIKAS AWASTHY,JM: THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAI NST THE ORDERS OF COMMISSIONER OF INCOME TAX APPEALS-1, THANE [IN SHO RT CIT(A)] FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12, RESPECTIVELY . BOTH THE IMPUGNED ORDERS 2 ITA NO.5048/MUM/2019(A.Y.2010-11) ITA NO.5049/MUM/2019(A.Y.2011-12) ARE OF EVEN DATE I.E. 07/05/2019. SINCE, BOTH THESE APPEALS GERMINATE FROM SAME SET OF FACTS, THESE APPEALS ARE TAKEN UP TOGETHER F OR ADJUDICATION AND ARE DECIDED BY THIS COMMON ORDER. 2. MS. USHA GAIKWAD, REPRESENTING THE DEPARTMENT S UBMITTED THAT THESE APPEALS HAVE BEEN FILED BY THE DEPARTMENT ASSAILING THE FINDINGS OF CIT(A) IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). THE LD.DEPARTMENTAL REPRESENT ATIVE SUBMITTED THAT IN ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF BOGUS PURCHASES. THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS ALSO INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE A SSESSING OFFICER LEVIED PENALTY OF RS. 1,43,952/- IN ASSESSMENT YEAR 2010-11 AND R S. 46,894/- IN ASSESSMENT YEAR 2011-12 ON ADDITION RESULTING FROM BOGUS PURCHASES. THE LD.DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THOUGH THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS LESS THAN THE MONITORY LIMIT PRESCRIBED B Y CBDT VIDE CIRCULAR NO. 17/2019, DATED 08-08-2019 BUT THE CASE OF ASSESS EE FALLS UNDER EXCEPTION SPECIFIED IN PARA 10(E) OF CIRCULAR NO. 03 OF 20 18 DATED 11/07/2018 AND AMENDED ON 20/08/2018 . 3. THE LD.DEPARTMENTAL REPRESENTATIVE SUBMITTED THA T THE ASSESSEE FAILED TO SUBSTANTIATE GENUINENESS OF THE PURCHASES IN BOTH T HE IMPUGNED ASSESSMENT YEARS, HENCE, ADDITION WAS MADE IN RESPECT OF BOGUS PURCHASES. THE PENALTY WAS RIGHTLY LEVIED BY THE ASSESSING OFFICER FOR FURNISH ING INACCURATE PARTICULARS OF INCOME QUA BOGUS PURCHASES. THE CIT(A) HAS DELETED THE PENALTY BY PLACING RELIANCE ON THE DECISIONS OF TRIBUNAL AND THE JUDGM ENTS OF HON'BLE SUPREME COURT OF INDIA. THE RATIO OF SAID JUDGMENTS DO NOT APPL Y TO THE FACTS OF PRESENT CASE. 3 ITA NO.5048/MUM/2019(A.Y.2010-11) ITA NO.5049/MUM/2019(A.Y.2011-12) 4. WE HAVE HEARD THE SUBMISSIONS MADE BY LD.DEPARTM ENTAL REPRESENTATIVE AND HAVE EXAMINED THE ORDERS OF AUTHORITIES BELOW. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE ADDITION HAS BEEN MADE ON AC COUNT OF BOGUS PURCHASES. THE ASSESSING OFFICER MADE ADDITION OF ENTIRE ALLEG ED BOGUS PURCHASES. IN FIRST APPEAL, THE CIT(A) RESTRICTED THE ADDITION TO 12.5% OF SUCH PURCHASES. THE ASSESSING OFFICER LEVIED PENALTY ON THE ESTIMATED A DDITION CONFIRMED BY THE CIT(A). IT IS AN ACCEPTED LEGAL POSITION THAT NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT CAN BE LEVIED ON ADDITIONS THAT HAVE BEE N MADE MERELY ON THE BASIS OF ESTIMATIONS. LEVY OF PENALTY UNDER SECTION 271( 1)(C) OF THE ACT IS NOT AUTOMATIC. PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE FROM ASSESSMENT PROCEEDINGS. THE FINDING GIVEN IN ASSESSMENT PROCEEDINGS ARE NOT CON CLUSIVE SO FAR AS THE PENALTY PROCEEDINGS ARE CONCERNED. IN THE PRESENT CASE WE F IND THAT THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE ALLEGED BOGUS PURCHASES , THE CIT(A) RESTRICTED THE ADDITION TO 12.5% BY ESTIMATING ESCAPED PROFIT EMBE DDED IN ALLEGED BOGUS PURCHASES. 5. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF CIT VS. SANGURUR VANASPATI MILLS LTD.,303 ITR 53(P&H) HAS HELD THA T WHERE ADDITION HAS BEEN MADE ON THE BASIS OF ESTIMATION AND NOT ON ACCOUNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, PENALTY UNDER SECTION 271(1)(C) OF THE ACT CANNOT BE INVOKED. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CI T VS. KRISHI TYRE RETREADING INDUSTRIES, REPORTED AS 360 ITR 581(RAJ ), TAKING A SIMILAR VIEW HELD THAT WHERE ESTIMATED ADDITIONS ARE MADE, NO PENALTY IS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. THE TRIBUNAL IN VARIOUS DECI SIONS HAS REPEATEDLY HELD THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT LEVIED O N ADDITION RESULTING FROM ESTIMATIONS IS UNSUSTAINABLE. THUS, IN THE LIGHT OF THE FACTS OF THE CASE AND THE 4 ITA NO.5048/MUM/2019(A.Y.2010-11) ITA NO.5049/MUM/2019(A.Y.2011-12) DECISIONS REFERRED ABOVE, WE FIND NO INFIRMITY IN T HE IMPUGNED ORDERS OF CIT(A) FOR RESPECTIVE ASSESSMENT YEAR DELETING PENALTY. THEREF ORE, THE SAME ARE UPHELD AND BOTH THE APPEALS OF THE REVENUE ARE DISMISSED SANS MERIT. 5. IN THE RESULT, APPEALS BY THE REVENUE ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDA Y, THE 17 TH DAY OF FEBRUARY, 2021. SD/- SD/- (PRAMOD KUMAR) (VIKAS AWAS THY) / VICE PRESIDENT $%!' / JUDICIAL MEMBER / MUMBAI, 2*/ DATED 17 /02/2021 VM , SR. PS (O/S) %-3 4& 0- COPY OF THE ORDER FORWARDED TO : 1. #, / THE APPELLANT , 2. %- / THE RESPONDENT. 3. 5- ( )/ THE CIT(A)- 4. 5- CIT 5. 67%-%* , . . . , / DR, ITAT, MUMBAI 6. 789: / GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI