RELIABLE METAL INDUSTRIES, MUMBAI V. DCIT -25(3), MUMBAI

ITA 5351/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7534 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 17-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Difference of opinion; Set aside
• Section: 142(1); 274; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL , AM / I .T.A. NO. 5351 /MUM/20 1 8 ( / ASSESSMENT YEAR: 2011 - 12 ) RELIABLE METAL INDUSTRIES 21, CHANDRA MILAN, M. G. ROAD, VILE PARLE (E), MUMBAI - 400057 . / VS. DCIT - 25(3) C - 10, PRATYASKHA KAR BHAVAN, BANDRA KURLA COMPLEX, M UMBAI. ./ ./ PAN/GIR NO. : AACFR6082K ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 10/ 0 2/ 20 20 / DATE OF PRONOUNCEMENT : 19 /0 3 / 2020 / O R D E R PER AMARJIT S INGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 18 .0 6 .201 8 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 37 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2011 - 12 WHERE IN THE PENALTY LEVIED BY THE A O HAS BEEN ORDERED TO BE CONFIRMED . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - BEING AGGRIEVED BY THE ORDERS OF THE DEPUTY COMMISSIONER OF INCOME TAX - 25 (3) MUMBAI, AND LEARNED COMMISSIONER OF INCOME - TAX (APPEAL) - 37, MUMBAI THIS APPEAL PETITIO N IS FILED ON THE FOLLOWING AMONGST OTHER ASSE SSEE BY : SHRI MEHUL SHAH REVENUE BY: MS. JOTHILAKSHMI NAYAK (SR. AR) ITA. NO. 5351 /M/201 8 A.Y. 20 11 - 12 2 GROUNDS OF APPEAL, WHICH IT IS PRAYED MAY BE CONSIDERED WITHOUT PREJUDICE TO ONE ANOTHER. 1. ON THE FACTS, AND IN CIRCUMSTANCES OF THE CASE, AND IN LAW, THE ASSESSING OFFICER ERRED IN IMPOSING PENALTY UNDER SECTION 271 (1) (C) OF THE INCOME - TAX ACT 1961 WITHOUT APPRECIATING THAT THE NOTICE INITIATING PENALTY UNDER SECTION 274 READ WITH SECTION 271 (1) (C) WAS BAD IN LAW. 2. ON THE FACTS, AND IN CIRCUMSTANCES OF THE CASE, AND IN LAW, LEARNED COMMISSIONER OF INCOME - T AX (APPEAL) ERRED IN PARTLY UPHOLDING ACTION OF THE ASSESSING OFFICER IN IMPOSING PENALTY UNDER SECTION 271(1) (C) OF THE INCOME - TAX ACT 1961 AMOUNTING TO RS. 54.070 BEING 100% OF TAX SOUGHT TO BE EVADED ON ALLEGED CONCEALED INCOME ON ACCOUNT OF DISALLOWIN G PURCHASES ON ESTIMATED BASIS AMOUNTING TO RS. 174,987 WITHOUT APPRECIATING THAT THE ADDITION OF ALLEGED NON - GENUINE PURCHASES WAS MADE ON A DIFFERENCE OF OPINION; AND THERE WAS NEITHER CONCEALMENT OF INCOME NOR FILING OF INACCURATE OF INCOME, AS THE APPE LLANT HAD FURNISHED ALL MATERIAL PARTICULARS IN SUPPORT OF ITS CLAIM OF PURCHASES FURTHER SUPPORTED BY THE ORDER OF MVAT DEPARTMENT ACCEPTING THE SAME PURCHASES WHICH THE ASSESSING OFFICER TREATED AS NON - GENUINE. 3. YOUR APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTER, MODIFY, AND / OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT OR BEFORE FINAL DISPOSAL OF APPEAL. ' 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 14 . 09 .20 11 DECLARING TOTAL I N COME TO THE TUNE OF RS.25,02,57 3 / - . THE REAFTER THE CASE OF THE ASSESSEE WAS REOPENED UPON THE INFORMATION RECEIVED FROM THE SALES TAX AUTHORITIES IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAS TAKEN THE BOGUS PURCHASE ENTRIES FROM M/S. DHANERA METALS IN SUM OF RS.11,39,606/ - AND FROM M/ S. PRIME STEEL IMPEX IN SUM OF RS.2,85,948/ - . THE TOTAL BOGUS ENTRIES WAS IN SUM OF RS.14,25,554/ - . THEREAFTER, THE CASE OF THE ASSESSEE WAS ITA. NO. 5351 /M/201 8 A.Y. 20 11 - 12 3 REOPENED. N OTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. AFTER THE REPLY OF T HE A SSESSEE 12.275% OF THE BOGUS PURCHASE WAS ADDED TO THE INCOME OF THE ASSESSEE . THE TOTAL ADDITION WAS OF RS.1,74,987/ - . THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 26,77,560/ - . THE PENALTY PROCEEDING WAS INITIATED AND AFTER THE REPLY OF THE ASSESSEE , THE PE NALTY TO THE TUNE OF RS.1,74,987/ - WAS LEVIED. FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4 . WE HAVE HEAR D THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT IN THE ASSESSEES OWN CASE IN THE SIMILAR CIRCUMSTANCES FOR THE A.Y.2009 - 10 & 2010 - 11 , THE PENALTY HAS BEEN DELE TED BY THE HONBLE ITAT IN ITA. NO. 1261/M/2017 DATED 30.08.2017 AND IN ITA. NO.758/M/2018 DATED 22.03.2019 RESPECTIVELY, THEREFORE, THE PENALTY IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. HOWEVER, ON THE OTHER , THE LD. REPRESENTATIVE OF THE DEPARTM ENT HAS REFUTED THE SAID CONTENTION. KEEPING IN VIEW OF THE ARGUMENT ADVANCED BY THE LD. REPRESENT ATIVE OF THE PARTIES AND PERUSING THE RECORD, W E NOTICED THAT THE ADDITION HAS BEEN ESTIMATED TO THE EXTENT OF 12.5% UPON THE BOGUS PURCHASE AND ON THESE FACT S THE PENALTY HAS BEEN INITIATED WHICH HAS BEEN CONFIRMED BY THE CIT(A) IN THE ORDER UNDER CHALLENGED. THE SIMILAR ISSUE HAS COME BEFORE THE HONBLE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y.2009 - ITA. NO. 5351 /M/201 8 A.Y. 20 11 - 12 4 10 BEARING ITA. NO.1261/M/2017 IN WHICH THE PENALTY HAS BE EN ORDER TO BE DELETED. THE RELEVANT PARA NO. 5 IS HEREBY REPRODUCED AS UNDER.: - 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSMENT WAS REOPENED ON THE BASIS OF THE INFORMATION RECEIVED FR OM THE DGIT (INVESTIGATION) THAT DURING THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE MADE PURCHASES FROM THE DEALERS, WHO WERE SHOWN AS HAWALA DEALERS IN THE WEBSITE OF THE SALES TAX DEPARTMENT OF STATE OF MAHARASHTRA. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE PURCHASES AMOUNTING TO ` 23,19,151/ - FROM FOUR PARTIES VIZ. NISHA ENTERPRISE, DHANERA METAL CORPORATION, MANISH INDUSTRIAL CORPORATION AND SHIDHSILA TRADELINKS PRIVATE LTD. THE ASSESSING OFFICE R, ON THE BASIS OF THE GROSS PROFIT PERCENTAGE, DISALLOWED 12.5% OUT OF THE TOTAL PURCHASES MADE FROM THE FOUR SUCH HAWALA DEALERS. ADMITTEDLY, THE ADDITION WAS MADE ON ESTIMATION BASIS. THE CO - ORDINATE BENCH OF THE AHMEDABAD TRIBUNAL IN THE CASE OF RUCHI DEVELOPERS VS. ITO (SUPRA), AND THE MUMBAI BENCH IN THE CASE OF EARTHMOVING EQUIPMENT SERVICE CORPORATION (SUPRA), HAS TAKEN A VIEW THAT WHEN A ASSESSEE MADE A BONA FIDE CLAIM COUPLED WITH DOCUMENTARY EVIDENCE BUT THE SAME REMAINED INCONCLUSIVE FOR WANT OF CONFIRMATION FROM THE SUPPLIERS AND THE ASSESSING OFFICER HAS NOT MADE FURTHER INQUIRY TO VERIFY THE CORRECTNESS OF THE CONFIRMATION, THE IMPOSITION OF PENALTY IS NOT JUSTIFIABLE. THUS, RESPECTFULLY FOLLOWING THE DECISIONS OF THE CO - ORDINATE BENCHES OF TH IS TRIBUNAL, WE FIND THAT THE PENALTY MADE ON ESTIMATED DISALLOWANCE IS NOT SUSTAINABLE. AS A RESULT, THE PENALTY LEVIED IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE SIMILAR CIRCUMSTANCES IN THE ASSESSES OWN CASE BEARING ITA. NO. 758/ M/2018 , THE HONBLE ITAT HAS DELETED THE PENALTY AND THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO.4 WHICH IS HEREBY REPRODUCED AS UNDER.: - 4 AFTER HEARING RIVAL SUBMISSIONS AND PERUSAL OF RELEVANT MATERIAL ON RECORD, THE UNDISPUTED POSITION THAT EMERGES IS THE FACT THAT THE PENALTY HAS BEEN LEVIED / CONFIRMED MERELY AGAINST ESTIMATED DISALLOWANCES OF 12.5%. NEVERTHELESS, THE ASSESSEES CLAIM HAS BEEN ACCEPTED SUBSTANTIALLY WHICH DO NOT SUGGEST THAT THERE WAS FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME WITHIN THE ITA. NO. 5351 /M/201 8 A.Y. 20 11 - 12 5 MEANING OF SECTION 271(1)(C). THEREFORE, THE FACTUAL MATRIX DOES NOT INSPIRE TO CONCUR WITH THE STAND OF FIRST APPELLATE AUTHORITY. HENCE, WE DELETE THE IMPUGNED PENALTY. 6. THE FACTS ARE NOT DISTINGUISHABLE AT THIS STA GE. THE PENALTY HAS BEEN LEVIED BY AO ON THE BASIS OF SIMILAR FACTS AND CIRCUMSTANCES WHICH HAS ALREADY BEEN ADJUDICATED BY HONBLE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y.2009 - 10 & 2010 - 11(SUPRA). MOREOVER, THE FACTS ARE QUITE SIMILAR IN WHICH THE ADD ITION HAS BEEN SUSTAINED @ 12.5% OF THE BOGUS PURCHASE . ON THE BASIS OF SIMILAR FACTS AND CIRCUMSTANCES HONBLE HIGH COURT OF GUJARAT IN THE CASE OF NATIONAL TEXTILES VS. CIT 2001 164 CTR 2009 (GUJ) HAS HELD THAT THE NO PENALTY IS LIABLE TO BE SUSTAINABLE IN THE SUCH TYPES OF CASES. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES MENTIONED ABOVE AND BY HONORING THE DECISION O F THE CO - ORDINATE BENCHES ABOVE, W E NOWHERE FOUND JUSTIFIABLE TO SUSTAIN THE ORDER OF THE CIT(A) IN QUESTION, THEREFORE, WE SET A SIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DELETE THE PENALTY. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 19 /03 /2020 SD/ - SD/ - ( MANOJ KUMAR AGGARWAL ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 19 /03 /2020 V IJAY PAL SING/SR. PS ITA. NO. 5351 /M/201 8 A.Y. 20 11 - 12 6 / 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