ETCO PROFILE P.LTD, NAGPUR V. ACIT CEN CIR 35, MUMBAI

ITA 5351/MUM/2012

• Counselvise Citation: 535119914 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Assessee Lawyers: HARSH BHUTA
• Keywords: Search and seizure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH ( JM ) , AND B.R.BASKARAN (AM) , . . , ./ I. T.A. NO . 5351 /MUM/20 1 2 ( / ASSESSMENT YEAR : 200 5 - 06 ) M/S ETCO PROFILES PVT.LTD., PLOT NO.13, GAJANAN NAGAR HINGNA ROAD, HINGNA, NAGPUR - 400016 / VS. ASSISTANT COMMISSIONER OF INCOME TAX CC - 35, AAYAKR BHAVAN, ROOM NO.103, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAACE8210H / ASSESSEE BY: SHRI HARSH BHUTA / REVENUE BY : SMT.N V NADKARNI / DA TE OF HEARING : 16.4.2015 / DATE OF PRONOUNCEMENT : 3. 6. 2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 02 - 07 - 2012 PASSED BY LD CIT(A) - 41, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2005 - 06. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE PENALTY OF RS.7,30,464/ - LEVIED U/S 271(1)(C) OF THE ACT . 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE REVENUE CAR RIED OUT SEARCH AND SEIZURE OPERATIONS IN ETCO GROUP AND IT WAS NOTICED THAT THE ASSESSEE HEREIN HAD MADE PURCHASES WORTH RS.3.43 CRORES FORM M/S TRITON INFOTECH PVT LTD. DURING THE COURSE OF SEARCH OPERATION, A STATEMENT WAS TAKEN FROM THE DIRECTOR OF SH RI TRITON INFOTECH PVT LTD AND HE CONFESSED THAT HE DID NOT SUPPLY MATERIALS, BUT GAVE ONLY ITA NO. 5351 /M/1 2 2 ACCOMMODATION BILLS. HOWEVER, SINCE THE ASSESSEE HEREIN HAD SHOWN SALE OF GOODS AND SINCE THE SALE COULD NOT EFFECTED WITHOUT MAKING PURCHASES, THE AO TOOK THE VIE W THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM GREY MARKET IN ORDER TO AVOID LOCAL TAXES. THEREFORE, THE AO DISALLOWED OF 20% OF PURCHASES AND MADE AN ADDITION OF RS.65,21,831/ - . THE AO LEVIED PENALTY ON THE ABOVE SAID ADDITION AND THE SAME WAS ALSO CONFIRMED BY LD CIT(A). 3. AT THE TIME OF HEARING, THE LD A.R CONTENDED THAT THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION ONLY ON PRESUMPTIONS AND THAT TOO ON ESTIMATED BASIS. ACCORDINGLY HE CONTENDED THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE AO, SINCE THE ADDITION HAS BEEN MADE ON ESTIMATED BASIS. HE FURTHER SUBMITTED THAT THE PENALTY LEVIED ON THE ADDITION MADE IN AN IDENTICAL MANNER IN ASSESSEES SISTER CONCERN HAS SINCE BEEN DELETED BY THE TRIBUNAL. TH E LD A.R FURNISHED A COPY OF ORDER DATED 17 - 12 - 2014 PASSED IN M/S ETCO TELECOM LTD IN ITA NO. 5243/MUM/2012. ON THE CONTRARY, THE LD D.R PLACED RELIANCE ON THE ORDER PASSED BY LD CIT(A). 4. HAVING HEARD RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THER E IS MERIT IN THE CONTENTIONS OF THE ASSESSEE. ADMITTEDLY, THE AO HAS DISALLOWED 20% OF PURCHASES ONLY ON PRESUMPTIONS WITHOUT ESTABLISHING FULLY THAT THE ASSESSEE HAS MADE PURCHASES FROM GREY MARKET. EVEN, IF IT IS ASSUMED FOR A MOMENT THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM GREY MARKET, IT WAS NOT ESTABLISHED THAT THE AMOUNT OF PURCHASES WAS LESS THAN THAT RECORDED IN THE BOOKS OF ACCOUNT. UNDER THESE SET OF FACTS, IT HAS TO BE HELD THAT THE IMPUGNED ADDITION HAS BEEN MADE ONLY ON ESTIMATED B ASIS THAT TOO ON PRESUMPTIONS ONLY. HENCE, BY FOLLOWING THE DECISION RENDERED BY THE TRIBUNAL IN THE ASSESSEES SISTER CONCERNS CASE (SUPRA), WE HOLD THAT THE IMPUGNED PENALTY IS LIABLE TO DELETED. ACCORDINGLY, WE ITA NO. 5351 /M/1 2 3 SET ASIDE THE ORDER OF LD CIT(A) AND DI RECT THE AO TO DELETE THE PENALTY OF RS.7,30,464/ - LEVIED U/S 271(1)(C) OF THE ACT. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 3RD JUNE , 2015 . 3RD JUNE , 201 5 SD SD ( / JOGINDER SINGH ) ( . . , / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 3 RD JUN , 201 5 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CI T(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI