DCIT-5(2), MUMBAI V. M/S. MARUTI INOX (INDIA) PVT. LTD. (FORMERLY KNOWN M/S SANSANI STEEL PVT. LTD.), MUMBAI

ITA 5226/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6846 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2021
• 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
• Keywords: Bogus purchase; Accommodation entries; Tax effect
• Section: 271(1)(c); 143(3); 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI RAMLAL NEGI (JM) I.T.A. NO. 5226/MUM/2019 (ASSESSMENT YEAR 2011-12) DCIT-5(2)(2) ROOM NO. 571 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS. M/S. MARUTI INOX (INDIA) PVT. LTD. (FORMERLY KNOWN M/S. SANSANI STEEL PVT. LTD.) ROOM NO. 16, HABIB BUILDING, 65/73, CP TANK ROAD, MUMBAI-400 004. PAN : AAKCS1663A (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI BHARAT ANDHLE DATE OF HEARING 11.03.2021 DATE OF PRONOUNCEMENT 11.03.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE REVENUE IS AGAINST ORDER'S OF LEARNED CIT-A DATED 10.6.2019 WHEREIN FOLLOWING PENALTY LEVIED UNDER SE CTION 271(1)(C) OF THE INCOME TAX ACT HAS BEEN DELETED. ASSESSMENT YEAR AMOUNT OF PENALTY 2011-12 RS. 8,84,805/- 2. BRIEF FACTS OF THE CASE LEADING TO LEVY OF PENAL TY FOR AY 2011-12, THE ASSESSEE HAD E-FILED A RETURN OF INCOME ON 30/09/2 011 DECLARING TOTAL INCOME AT RS.14,51,200/-. SUBSEQUENTLY, THE CASE WAS REOPE NED BY ISSUE OF NOTICE U/S 148 OF THE ACT, ON THE BASIS OF THE INFORMATION REC EIVED FROM THE DGIT (INVESTIGATION) THAT THE ASSESSEE IS A BENEFICIARY OF THE ACCOMMODATION ENTRIES PROVIDED BY SOME OF THE MVAT [MAHARASHTRA VALUE ADD ED TAX] DEALERS, WHO HAVE INDULGED IN ISSUING BOGUS SALE/PURCHASE BILLS WITHOUT GIVING ACTUAL DELIVERY OF GOODS AND MATERIALS FROM THE HAWALA DEA LERS. AN ASSESSMENT U/S. 143(3) R.W.S. 147 DETERMINING AN INCOME AT RS. 2,30 ,01,010/- WAS CONCLUDED M/S. MARUTI INOX (INDIA) PVT. LTD. 2 ON 10/03/2014. IN THE ASSESSMENT ORDER, THE AO MADE AN ADDITION OF RS. 2,15,49,808/- TO THE TOTAL INCOME OF THE ASSESSEE B Y DISALLOWING THE EXPENSES CLAIMED BY THE ASSESSEE-COMPANY ON ACCOUNT OF ACCOM MODATION ENTRIES OF BOGUS PURCHASES. THE APPELLANT PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO RESTRICTED THE ADDITION TO 12.5% OF THE BOGUS PURCH ASE AMOUNT. THE AO WHO HAD INITIATED PENALTY PROCEEDINGS FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME EARLIER HAS LEVIED A PENALTY OF RS. 8,84,805 A U/S 271 (1)(C) OF THE ACT VIDE ORDER DATED 26/03/2018. 3. UPON ASSESSEES APPEAL LEARNED CIT(A) DELETED TH E PENALTY HOLDING THAT ADDITION IS ONLY ON ESTIMATE BASIS HENCE PENALTY IS NOT SUSTAINABLE. HE ALSO REFERRED TO SEVERAL CASE LAWS. 4. AGAINST THIS ORDER REVENUE IS IN APPEAL BEFORE U S. 5. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E AND PERUSED THE RECORDS. AS CLEAR FROM THE FACTS RECORDED ABOVE DIS ALLOWANCE HAS BEEN MADE ON AN ESTIMATED BASIS ON ACCOUNT OF THE NON-PRODUCTION OF SUPPLIERS BEFORE THE ASSESSING OFFICER. THE PURCHASE VOUCHERS WERE DULY PRODUCED AND THE PAYMENTS WERE THROUGH BANKING CHANNEL. IN THESE BACKGROUNDS IN OUR CONSIDERED OPINION ASSESSEE CANNOT BE VISITED WITH THE REGOURS OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AS A MATTER OF FACT ON MANY OCCASIONS ON SIMILAR CIRCUMSTANCES IN QUANTUM PROCEEDINGS THE DI SALLOWANCE ITSELF HAS BEEN DELETED. IN OUR CONSIDERED OPINION ON THE FACT S AND CIRCUMSTANCES OF THE CASE ASSESSEE CANNOT BE SAID TO HAVE BEEN GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD WE DRAW SUPPORT FROM THE DECISION OF A LARGER BENCH OF THE HONOURABLE SUPREM E COURT IN THE CASE OF HINDUSTAN STEELS LTD. VS. STATE OF ORISSA (83 ITR 26) WHERE IN IT WAS HELD THAT THE AUTHORITY MAY NO T LEVY THE PENALTY IF THE COND UCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMACIOUS. M/S. MARUTI INOX (INDIA) PVT. LTD. 3 6. WE FARTHER NOTE THAT TAX EFFECT IN THIS CASE IS BELOW THE LIMIT FIXED BY CBDT FOR FILING APPEALS BEFORE ITAT. THE REVENUE HA S TRIED TO MAKE OUT A CASE THAT SINCE THE ADDITION WAS MADE PURSUANT TO INFORM ATION FROM SALES TAX DEPTT, THIS PENALTY APPEAL FALLS IN THE EXCEPTION CARVED O UT IN THE CBDT CIRCULAR REGARDING APPEALS ARISING OUT OF ADDITIONS MADE PUR SUANT TO INFORMATION FROM OUTSIDE AGENCIES. WE ARE OF THE OPINION THAT THIS P LEA IS NOT TENABLE INASMUCH AS ONCE REVENUE ACCEPTS THAT PENALTY IS LEVIED ON O UTSIDE AGENCY INFORMATION, THE PENALTY LEVIED WILL HAVE NO LEGS TO STAND. 7. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PR ECEDENT WE UPHOLD THE ORDER'S OF LD CIT(A) AND DELETE THE LEVY OF PENALTY . 8. IN THE RESULT REVENUES 'S APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 11.3.2021. SD/- SD/- (RAMLAL NEGI) (SHAMIM YA HYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 11/03/2021 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// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI