INCOME TAX OFFICER 29(3)(1), MUMBAI V. RAKESH PRABHUDAS DOSHI, MUMBAI

ITA 5533/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6123 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR LD
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c); 143(3)

Judgement Text

ITA NO.5533/MUM/2018 RAKESH PRABHUDAS DOSHI ASSESSMENT YEAR :2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI AMARJIT SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5533/MUM/2018 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER - 2 9( 3 )( 1 ) ROOM NO.305, C-10 BANDRA KURLA COMPLEX BANDRA (E), MUMBAI-400 051. / VS. SHRI RAKESH PRA BHUDAS DOSHI 6, MULUND PARAG SOCIETY GANESH GAWADE ROAD OPP. HIRA MUNGI HOSPITAL, MULUND WEST, MUMBAI-400 080. ! ./ ./PAN/GIR NO. ADFPD-2888-K ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI V. SREEKAR-LD.DR / DATE OF HEARING : 11/02/2020 / DATE OF PRONOUNCEMENT : 11/02/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2009-10 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME- TAX (APPEALS)-40, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], ORDER DATED 26/06/2018 QUA DELETION OF PENALTY U/S 271(1)(C) FOR RS.4,25,500/- AS LEVIED BY LD. AO VIDE PENALTY ORDER DATED 29/09/201 5. ITA NO.5533/MUM/2018 RAKESH PRABHUDAS DOSHI ASSESSMENT YEAR :2009-10 2 2. NONE APPEARED FOR ASSESSEE AND NO VALID ADJOURNM ENT APPLICATION WAS PLACED ON RECORD. THEREFORE, THE MATTER WAS PRO CEEDED WITH EX- PARTE QUA THE ASSESSEE SINCE, PRIMA-FACIE, THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE IN TERMS OF LOW TAX EFFECT CIRCULA R NO.17/2019 DATED 08/08/2019 ISSUED BY CENTRAL BOARD OF DIRECT TAXES [CBDT]. 3. THE LD. DR SUBMITTED THAT THE QUANTUM ADDITIONS OF ALLEGED BOGUS PURCHASES WERE MADE UPON RECEIPT OF INCRIMINATING INFORMATION FROM SALES TAX DEPARTMENT, WHICH WAS AN EXTERNAL AGENCY. SINCE THE PENALTY WAS LEVIED AGAINST ADDITIONS SO MADE, THE PENALTY P ROCEEDINGS WOULD BE COVERED BY EXCEPTION (E) OF CLAUSE 10 OF THE CIRCUL AR NO. 3 OF 2018 AS AMENDED ON 20/08/2018, WHICH READ AS UNDER: - 10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAI LED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: - . (E) WHERE ADDITION IS BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES SUCH AS C BI / ED / DRI / SFIO / DIRECTORATE GENERAL OF GST INTELLIGENCE (DGGI). THE LD. DR ALSO SUBMITTED THAT SINCE QUANTUM ADDITI ONS WERE CONFIRMED, THE PENALTY WAS TO BE CONFIRMED AND LD. CIT(A) ERRE D IN DELETING THE IMPUGNED PENALTY. 4. WE HAVE CAREFULLY HEARD THE ARGUMENTS ADVANCED B Y LD. DR AND PERUSED RELEVANT MATERIAL ON RECORD. FROM THE PERUS AL OF CASE RECORDS, IT EMERGES THAT THE ASSESSEE WAS ASSESSED U/S 143(3) R .W.S. 147 WHEREIN IT WAS SADDLED WITH ESTIMATED ADDITIONS OF RS.12.13 LACS, BEING 12.5% OF ALLEGED BOGUS PURCHASES AGGREGATING TO RS.97.10 LACS STATED TO BE ITA NO.5533/MUM/2018 RAKESH PRABHUDAS DOSHI ASSESSMENT YEAR :2009-10 3 MADE FROM 28 ENTITIES. THE PRIMARY REASON TO MAKE T HE ADDITION WAS THE FACT THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE P URCHASE TRANSACTIONS AND FAILED TO PRODUCE ANY OF THE SUSPICIOUS SUPPLIE R. ACCORDINGLY, LD. AO MADE ESTIMATED ADDITION OF 12.5% AGAINST THESE PURC HASES. CONSEQUENTLY, PENALTY PROCEEDINGS WERE INITIATED IN QUANTUM ASSESSMENT ORDER AND THE ASSESSEE WAS SADDLED WITH IMPUGNED PENALTY U/S 271(1)(C) FOR RS.4,25,500/- VIDE PENALTY ORDER DATED 29/09/2015. UPON FURTHER APPEAL, LD. CIT(A) DELETED THE PENALTY BY NOTING THAT LD.AO FAILED TO BRING ON RECORD ANYTHING TO PROVE THE FAC T OF FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SEC. 271(1)(C) BY DISPROVING THE CLAIM OF THE ASSESSEE. AGGRIEVED, TH E REVENUE IS UNDER FURTHER APPEAL BEFORE US. 5. FIRST, WE TAKE UP THE ISSUE OF VERY MAINTAINABIL ITY OF REVENUES APPEAL. UNDOUBTEDLY, THE QUANTUM OF PENALTY UNDER D ISPUTE IS RS.4,25,500/- AND THE SAME IS CERTAINLY BELOW THE T HRESHOLD LIMIT OF RS.50 LACS AS PROVIDED IN LATEST LOW TAX EFFECT CIR CULAR NO.17/2019 DATED 08/08/2019 ISSUED BY CENTRAL BOARD OF DIRECT TAXES [CBDT]. 6. THE LD. DR HAS PLEADED THAT PENALTY SHOULD BE CO NSTRUED TO BE COVERED BY EXCEPTION CLAUSE 10(E) SINCE THE SAME WA S LEVIED ON ACCOUNT OF QUANTUM ADDITIONS WHICH WAS BASED UPON R ECEIPT OF INFORMATION FROM AN EXTERNAL AGENCY I.E. SALES TAX DEPARTMENT. WE HAVE CONSIDERED THE SAID SUBMISSIONS. IT IS SETTLED LEGA L POSITION THAT QUANTUM PROCEEDINGS AND PENALTY PROCEEDINGS ARE INDEPENDENT AND DISTINCT PROCEEDINGS AND CONFIRMATION OF ADDITIONS MAY NOT B E THE SOLE GROUND FOR CONFIRMING THE PENALTY. EXTENDING THE SAME LOGI C, UNLESS SPECIFIC EXCEPTION IS PROVIDED IN THE CIRCULAR WITH RESPECT TO PENALTY ALSO, IT COULD ITA NO.5533/MUM/2018 RAKESH PRABHUDAS DOSHI ASSESSMENT YEAR :2009-10 4 NOT BE CONSTRUED THAT THE PENALTY WAS TO BE TREATED AT PAR WITH QUANTUM ADDITIONS. THE CLAUSE 10(E) SPECIFICALLY APPLY ONLY TO ADDITIONS WHICH ARE BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES . THE LEVY OF PENALTY, BY NO STRETCH OF IMAGINATION, COULD BE CON STRUED AS ADDITION AS ENVISAGED BY CLAUSE 10(E). THEREFORE, THE SUBMISSIO NS MADE BY LD. DR COULD NOT BE HONOURED AND WE DECLINE TO ACCEPT THE SAME. 7. HAVING REACHED SUCH A CONCLUSION, THE APPEAL IS LIABLE TO BE DISMISSED IN TERMS OF LATEST LOW TAX EFFECT CIRCULA R ISSUED BY CBDT. THE SAME WOULD OBVIATE THE NEED TO DELVE INTO THE MERIT S OF THE CASE AND ACCORDINGLY, WE REFRAIN FROM DOING SO. 8. HAVING SAID SO, A LIBERTY IS GIVEN TO REVENUE TO SEEK RECALL OF THE APPEAL, IF AT A LATER STAGE, IT IS FOUND THAT THE M ATTER IS COVERED BY ANY EXCEPTIONS PROVIDED IN ANY OF THE CIRCULAR OR IN CA SE THE TAX EFFECT AS AGITATED BY REVENUE EXCEEDS THE PRESCRIBED MONETARY LIMIT. 9. RESULTANTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH FEBRUARY, 2020. SD/- SD/- (AMARJIT SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11/02/2020 SR.PS, JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ,-$. , . , / DR, ITAT, MUMBAI 6. -/0 / GUARD FILE ITA NO.5533/MUM/2018 RAKESH PRABHUDAS DOSHI ASSESSMENT YEAR :2009-10 5 / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.