ITO -5(2)(3), MUMBAI V. M/S MUTTA STEELAGE PVT. LTD. , MUMBAI

ITA 5210/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3663 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT ANGHLE
• Keywords: Bogus purchase; Set aside
• Section: 271(1)(c); 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 5210/MUM/2019 ASSESSMENT YEAR: 2011-2012 THE INCOME TAX OFFICER, WARD-5(2)(3), ROOM NO. 566, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 VS. M/S MUTTA STEELAGE PVT. LTD. SHOP NO. 7, RIDHI APT., 10 TH KHETWADI BACK LANE, KHADILKAR ROAD, CP TANK, MUMBAI - 400004 PAN: AAFCM1258G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI BHARAT ANGHLE (DR) ASSESSEE BY : NONE DATE OF HEARING: 11/03/2021 DATE OF PRONOUNCEMENT: 31/05/20 21 O R D E R PER RAM LAL NEGI, JM THE PRESENT APPEAL HAS BEEN FILED BY THE R EVENUE AGAINST THE ORDER DATED 31.05.2019 PASSED BY THE COMMISSION ER OF INCOME TAX (APPEALS)-10 (FOR SHORT THE CIT(A), MUM BAI, FOR THE ASSESSMENT YEAR 2011-12, WHEREBY THE LD. CIT(A) HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST THE PENALT Y ORDER PASSED U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961 (FOR SH ORT THE ACT). 2 ITA NOS. 5210/MUM/2019 ASSESSMENT YEAR: 2011-12 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS.9,89,683 /- AND THE SAME WAS PROCESSED U/S 143(1) 0F THE ACT. SUBSEQUE NTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTOR GENERAL OF INCOME TAX (INV.) MUMBAI, THAT THE ASSESSEE HAD OBT AINED BOGUS PURCHASE BILLS AMOUNTING TO RS. 86,15,256/- F ROM THREE HAWALA PARTIES WITHOUT ACTUAL DELIVERY OF GOODS, AO REOPENED THE CASE OF THE ASSESSEE AND COMPLETED THE ASSESSME NT U/S 143(3) R.W.S,147OF THE ACT AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 20,66,590/- AFTER MAKING ADDITI ON OF 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES ON ESTIMATIO N BASIS. ON THE BASIS OF THE SAID ADDITION, AO INITIATED PENALT Y PROCEEDINGS U/S 271(1(C) OF THE ACT AND IMPOSED PENALTY OF RS.3 ,32,764/-. 3. THE ASSESSEE CHALLENGED THE PENALTY ORDER PASSED BY THE AO BEFORE THE CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE SET ASIDE THE IMPUGNED ORDER AND DELETED THE PENAL TY. AGAINST THE SAID FINDINGS, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 4. THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER PA SSED BY THE LD. CIT (A) ON THE FOLLOWING EFFECTIVE GROUN DS:- 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY U/S 271(1)(C) OF THE I T ACT 1961 WITHOUT APPRECIATING THAT THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE BOGUS PURCHASES BEFORE THE 3 ITA NOS. 5210/MUM/2019 ASSESSMENT YEAR: 2011-12 ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THEREFORE, THE ADDITIONS SO MADE AMOUNTED TO FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF T HE I T ACT AND PENALTY U/S 271(1)(C) OF THE I T ACT, 196 1 WAS CORRECTLY LEVIED. 5. THIS APPEAL WAS FIXED FOR HEARING ON 11.03.2012. HOWEVER, ON THE SAID DATE WHEN THE CASE WAS CALLED FOR HEARI NG, NONE APPEARED ON BEHALF OF THE ASSESSEE. SINCE THE ASSES SEE DID NOT APPEAR DESPITE SERVICE OF NOTICE, WE DECIDED TO DIS POSE OF THE APPEAL ON THE BASIS OF MATERIAL ON RECORD AFTER HEA RING THE REVENUE. ACCORDINGLY, WE ALLOWED THE LD. DEPARTMENT AL REPRESENTATIVE (DR) TO ARGUE THE APPEAL. 6. THE LD. DR SUBMITTED THAT SINCE THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE PURCHASES IN QUESTION ADDITION OF 12.5% OF THE DISPUTED PURCHASES WAS MADE TO THE INC OME OF THE ASSESSEE. HENCE, THE LD. CIT(A) HAS WRONGLY DELETED THE PENALTY LEVIED BY THE AO ON THE BASIS OF THE SAID ADDITION. THE LD. DR FURTHER SUBMITTED THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) MAY BE SET ASIDE AND THE ORDER PASSED BY THE AO MAY BE RESTORED. 7. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD . THE LD. CIT(A) HAS DELETED THE PENALTY LEVIED BY THE AO HOL DING THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM THE ASSESSME NT PROCEEDINGS AND ADDITION OF INCOME DURING ASSESSMEN T 4 ITA NOS. 5210/MUM/2019 ASSESSMENT YEAR: 2011-12 PROCEEDINGS DOES NOT IPSO FACTO MAKE THE ASSESSEE LIABLE U/S 271(1)(C) OF THE ACT. UNDER SECTION 271(1)(C) OF T HE ACT, AO HAS POWER TO IMPOSE PENALTY IF HE/SHE IS SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE LD. CIT( A HAS FURTHER HELD THAT SINCE IN THE PRESENT CASE, THE AD DITION HAS BEEN MADE ON ESTIMATION BASIS IT CANNOT BE CONCLUDE D THAT THE ASSESSEE HAS EITHER CONCEALED HIS INCOME OR FURNISH ED INACCURATE PARTICULARS OF HIS INCOME TO INITIATE PR OCEEDINGS U/S 271(1)(C) OF THE ACT. FURTHER, LD. CITA) HAS FOLLO WED THE RATIO LAID DOWN BY THE COORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF DCIT VS. UNISYNTH CHEMICALS ITA NO. 5967/MUM/2014, WHEREIN THE COORDINATE BENCH UPHOLDING THE FINDINGS OF THE LD. CIT(A) DELETED THE PENALTY LEVIED UNDER THE SIMILAR SET OF FACTS. THE LD CIT(A) HAS REPRODUCED THE FINDINGS OF THE COORDINAT E BENCH IN THE SAID CASE, WHICH READ UNDER: ON AN APPRECIATION OF THE MATERIAL ON RECORD WE AR E INCLINED TO CONCUR WITH THE VIEW OF THE CIT(A) THAT THE EXPLANATION PUT FORTH BY THE ASSESSEE IN THE PENALT Y PROCEEDINGS WAS PLAUSIBLE ONE IN AS MUCH AS THE CIRCUMSTANCES ON WHICH THE ADDITIONAL INCOME WAS OFFERED WAS BECAUSE THE DISPUTED PARTIES WITH WHOM THESE TRANSACTIONS WERE MADE WERE NON COOPERATIVE AND THE ASSESSEE HAVING NO CONTROL OVER THOSE PARTI ES WAS THEREFORE, NOT ABLE TO SUBSTANTIATE ITS CLAIM W ITH NECESSARY MATERIAL EVIDENCE. 5 ITA NOS. 5210/MUM/2019 ASSESSMENT YEAR: 2011-12 8. FURTHER, THE LD. CIT(A) HAS ALSO BASED HIS FINDI NGS ON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DEEPAK GUPTA VS. ITO ITA NO. 1396/MUM/2017 , WHEREIN THE TRIBUNAL DELETED THE PENALTY LEVIED U/S 271(1)(C) O F THE ACT ON THE BASIS OF ADDITION ON ACCOUNT OF PROFIT MADE ON ESTIMATION BASIS, HOLDING THAT THE ADDITION MADE ON ESTIMATION BASIS DOES NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING O F INACCURATE PARTICULARS OF INCOME. 9 IN OUR CONSIDERED VIEW, FINDINGS OF THE LD. CIT(A ) ARE WELL REASONED AND BASED ON THE DECISIONS OF THE TRIBUNAL DISCUSSED ABOVE. HENCE, DO NOT FIND ANY REASON TO INTERFERE W ITH THE DECISION OF THE LD. CIT(A). ACCORDINGLY, WE DISMISS THE PRESENT APPEAL AND UPHOLD THE DECISION OF THE LD. CIT(A) AN D DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) 0F TH E ACT. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED ON 31/05/2021 UNDER RULE 34 O F THE ITAT RULES. SD/- SD/- (SHAMIM YAHYA) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 31/05/2021 SK, PS 6 ITA NOS. 5210/MUM/2019 ASSESSMENT YEAR: 2011-12 / 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