M/s. J Kumar -RPS Joint Venture, MUMBAI V. DCIT, Central Circle-5(1), Mumbai

ITA 5081/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3729 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: misc
• Appeal Filed On: 02-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Set aside
• Section: 271(1)(c); 192

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI , !'#,$%!' &! BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER !. 5081/ / 2019 (%*. . 2011-12 ) ITA NO.5081/MUM/2019(A.Y.2011-12) M/S. J. KUMAR RPS JOINT VENTURE, C-113, SHYAM KAMAL, AGARWAL MARKET, TEJPAL ROAD, VILE PARLE (EAST), MUMBAI 400 057 PAN: AABTJ1167E ...... #, / APPELLANT * VS. DCIT CENTRAL CIRCLE -5(1), AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021 ..... %-/ RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS. USHA GAIKWAD ! *.%- #/ DATE OF HEARING : 04/02/2021 /0 .%- #/ DATE OF PRONOUNCEMENT : 25/02/2021 &/ ORDER PER VIKAS AWASTHY,JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX APPEALS-53, MUMBAI [IN SHORT CIT(A) ] DATED 06/06/2019 FOR THE ASSESSMENT YEAR 2011-12 ASSAILING CONFIRMATION OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2 ITA NO.5081/MUM/2019(A.Y.2011-12) 2. THE FACTS OF THE CASE IN BRIEF ARE : IN ASSESS MENT PROCEEDINGS THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF BOGUS PURCHASE S. THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS ALSO INITIATED FOR FURNISH ING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE FILED APPEAL AGAINST THE QUAN TUM ADDITION. THE CIT(A) GRANTED PART RELIEF TO THE ASSESSEE BY ESTIMATING A DDITION @ 12.5% OF TOTAL ALLEGED BOGUS PURCHASES. THE ASSESSING OFFICER VIDE ORDER DATED 31/03/3018 LEVIED PENALTY OF RS. 1,76,910/- ON ESTIMATED ADDITION CON FIRMED BY CIT(A). 3. MS. USHA GAIKWAD, REPRESENTING THE DEPARTMENT SU BMITTED THAT THE ASSESSEE FAILED TO SUBSTANTIATE GENUINENESS OF TH E PURCHASES IN THE IMPUGNED ASSESSMENT YEAR, HENCE, ADDITION WAS MADE IN RESPEC T OF BOGUS PURCHASES. THE PENALTY WAS RIGHTLY LEVIED BY THE ASSESSING OFFICER FOR FURNISHING INACCURATE PARTICULARS OF INCOME QUA BOGUS PURCHASES. THE CIT (A) HAS UPHELD THE PENALTY ORDER ON MERITS AS WELL AS REJECTING ALLEGED TECHN ICAL DEFECTS POINTED BY THE ASSESSEE. 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 3 ITA NO.5081/MUM/2019(A.Y.2011-12) 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. THE ORDER OF CIT(A) WAS UPHELD BY THE T RIBUNAL IN APPEAL FILED BY THE REVENUE I.E. ITA NO.6515/MUM/2016 DECIDED ON 13/10/ 2017. 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 CATENA OF D ECISIONS HAS CONSISTENTLY HELD THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT LEV IED ON ADDITION RESULTING FROM ESTIMATIONS IS UNSUSTAINABLE. 6. THE CIT(A) IN IMPUGNED ORDER HAS REJECTED ASSESS EES CONTENTION THAT NO PENALTY IS ATTRACTED WHERE ADDITIONS ARE MADE ON ES TIMATIONS. THE CIT(A) HAS DRAWN SUPPORT FROM THE FOLLOWING DECISIONS TO WRECK THE ARGUMENT OF ASSESSEE:- (I) ADDL. CIT VS. CHANDRAKANTHA, 295 ITR 607(MP) (II) CIT VS. MD. WARASAT HUSSAIN, 171 ITR 405(PAT) , (III)AM SHAH & CO. VS. CIT,238 ITR 415(GUJ) (IV) CIT VS. KRISHNASWAMY & SONS, 219 ITR 157 (MAD ) NONE OF THE JUDGMENTS REFERRED BY CIT(A) IS FROM H ON'BLE JURISDICTIONAL HIGH COURT. THE HON'BLE APEX COURT IN THE CASE OF CIT VS. VEGE TABLE PRODUCTS LTD.,88 ITR 192 HAS HELD THAT WHERE TWO REASONABLE CONSTRUCTIONS OF A T AXING PROVISION ARE POSSIBLE, THAT 4 ITA NO.5081/MUM/2019(A.Y.2011-12) CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADO PTED. THUS, IN VIEW OF ABOVE, WE FIND FAVOUR IN THE ARGUMENTS OF THE ASSESSEE AND ALLOW THE APPEAL. 7. IN THE RESULT, IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY THE 25 TH DAY OF FEBRUARY, 2021. SD/- SD/- (PRAMOD KUMAR) (VIKAS AWAS THY) / VICE PRESIDENT $%!' / JUDICIAL MEMBER / MUMBAI, 2*/ DATED 25/02/2021 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