DEPUTY COMMISSIONER OF INCOME TAX -9(2)(2), MUMBAI V. M/S EMS ELECTRICALS & ENGINEERING, MUMBAI

ITA 5486/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9749 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 22-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Assessee Lawyers: N O N E
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. 5486 /MUM/2019 ASSESSMENT Y EAR: 2009 - 10 DCIT 9(2)(2), ROOM NO. 655A, 6 TH FLOOR, AAYAKAR BHAVAN, C HURCHGATE, MUMBAI - 400020 VS. M/S EMS ELECTRICALS & ENGINEERING PVT. LTD., 1, ARCHANA SMRUTI, MAHAKALI CAVES ROAD, ANDHERI (EAST), MUMBAI - 400093 PAN: AAACE6785H (APPELLANT) (RESPONDENT) REVENUE BY : SHRI VIJAY KUMAR MENON (D R) ASSESSEE BY : N ONE DATE OF HEARING: 28 /06 /20 21 DATE OF PRONOUNCEMENT: 20 / 07 /202 1 O R D E R PER SAKTIJIT DEY , JM THIS IS AN APPEAL BY THE REVENUE AGAINST ORDER DATED 20.05.2019 OF LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) 16 , MUMBAI DELETING THE PEN ALTY IMPOSED OF RS. 58,333/ - UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT , 1961 FOR THE ASSESSMENT YEAR 2009 - 10 . 2. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT FOR THE ASSESSEE TO REPRESENT THE CA SE. CONSIDERING THE NATURE OF DISPUTE, WE DISPOSE OF THE APPEAL EX - PARTE QUA THE ASSESSEE AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE AND BASED ON MATERIALS ON RECORD. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A RESIDENT COMPANY STATED TO BE ENGAGED IN THE BUSINESS A S ELECTRIC AL CONTRACTORS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.03.2010 DECLARING TOTAL INCOME OF RS. 94,63,730/ - . SUBSEQUENTLY, BASED ON INFORMATION RECEIVED 2 ITA NO. 5486 / MUM/2019 ASSESSMENT YEAR: 20 09 - 1 0 FROM SALES TAX AUTHORITIES INDICATIN G THAT THE ASSESSEE IS A BENEFICIARY ACCOMMODATION BILLS PROVIDED BY WAY OF BOGUS PURCHASES AMOUNTING TO RS. 15,10,247/ - , T HE ASSESSING OFFICER (AO) REOPEN ED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED UP ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE AFORESAID PUR CHASES. THOUGH, THE ASSESSEE FURNISHED SOME EVIDENCES T O CLAIM THE PURCHASE AS GENUINE, HOWEVER, REJECTING AS SESSEES CLAIM THE AO COMPLETED THE ASSESSMENT BY TREATING THE PURCHASE OF RS. 15,10,2 47/ - AS NON GENUINE. ASSESSEE CONTESTED THE AFORESAID D ECISION OF THE AO BEFORE LEARNED COMMISSIONER (APPEALS). PARTLY ACCEPTIN G THE CLAIM OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE TO THE PROFIT ELEMENT EMBEDDED IN THE ALL EGED NON GENUINE PURCHASES BY ESTIMATING AT 12.5%. THUS, HE SUSTAINED THE ADDITION TO THE EXTENT OF RS . 1,88,781/ - . BASED ON ADDITION SUSTAINED BY LEARNED COMMISSIONER (APPEAL S), THE AO INITIATED PROCEEDING FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ULTIMATELY PASSED AN ORDER IMPOSING PENALTY OF RS. 58,333/ - ALLEGING CONCEALMENT OF INCOME. WHILE CONSIDERING ASS ESSEES APPEAL ON THE ISSUE, LEARNED COMMISSIONER (APPEALS) DELETED THE PENALTY IMPOSED. 4. WE HAVE C ONSIDERED THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIALS ON RECORD. IT IS EVIDENT , THOUGH , THE AO HAS DISALLOWED CERTAIN PURCHASES MADE BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION BY RELYING UPON THE INFORMATION RECEIV ED FROM SALES TAX AUTHORIT IES, HOWEVER, LEARNED COMMISSIONER (APPEALS) ON EXAMINATION OF FACTS AND MATERIALS ON RECORD WAS CONVINCED THAT THE DISPUTED GOODS , INDEED , WERE PURCHASED BY THE ASS ESSEE. THUS, HE WAS OF THE VIEW THAT WHAT IS IN DOUBT IS THE SOURCE OF PURCHASES. FOR THIS REASON ALONE, HE RESTRICTED THE DISALLOWANCE TO THE PROFIT ELEMENT EMBEDDED IN THE ALLEGED NON - GENUINE PURCHASES BY ESTIMATING AT 12.5%. THUS, IT IS VERY MUCH CLEAR THAT THE ADDITION LEADING TO THE IMPOSITION OF PENALTY WAS MADE PURELY ON ESTIMATE BASIS BY ENTERTAINING SOME DOUBT REGARDING THE SOURCE OF PU RCHASES. THEREFORE, SUCH ESTIMATED ADDITION , IN OUR VIEW , CANNOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS 3 ITA NO. 5486 / MUM/2019 ASSESSMENT YEAR: 20 09 - 1 0 CONCEALED ITS INCOME. THAT BEING THE CASE, LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN DELE TING THE PENALTY IMPOSED UNDER SECTION 271(1) (C) OF THE ACT. 5. EVEN , OTHERWISE ALSO, PRESENT APPEAL OF THE REVENUE IS NOT MAINTAINABLE KEEPING IN VIEW CIRCULAR NO. 17/2019 DATED 08.08.2019 AS THE TAX EFFECT ON THE AMOUNT DISPUTE D IS LESS THAN THE THRESHO LD LIMIT OF RS. 50 LACS. WE MAY FURTHER ADD , IN OUR VIEW , THE APPEAL IS NOT PROTECTED UNDER ANY OF THE EXCEPTIONS TO THE AFORESAID CIRCULAR. THUS, FOR THIS REASONS ALSO, THE APPEAL DESERVES TO BE DISMISSED. 6. IN THE RESULT, APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY , 2021 . SD/ - SD/ - ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( SAKTIJIT DEY ) JUDICIAL MEMBER MUMBAI ; DATED: 20 / 07 /2021 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CI T(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI