TARLIKA K SHAH, MUMBAI V. INCOME TAX OFFICER 31(3)(2), MUMBAI

ITA 5557/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4256 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Keywords: Bogus purchase; Principle of natural justice; Set aside
• Section: 271(1)(c); 143(3); 142(1); 143(1); 250; 143(2); 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 5557/MUM/2018 ( ASSESSMENT YEARS: 2010-11) TARLIKA K. SHAH 704, ANMOL PRIDE, OPP. PATEL PETROL, OFF S. V. ROAD, NEAR HYUNDAI SHOW ROOM, GOREGAON (W), MUMBAI 400104. / VS. ITO WARD 31(3)(2) MUMBAI. ./ ./ PAN/GIR NO. : ABHPS3701Q ( / // / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HITESH SHAH, AR / RESPONDENT BY : SHRI AMIT PRATAP SINGH, DR ! / / / / DATE OF HEARING 22/10/2020 ! / DATE OF PRONOUNCEMENT 28/10/2020 / O R D E R PER PAVAN KUMAR GADALE - JM: THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD.CIT(A)-42, MUMBAI, PASSED U/S 271(1)(C) AND 250 OF THE INCOME TAX ACT, 1961.THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL)- 42, MUMBAI (,HEREINAFTER REFERRED TO AS 'THE CIT(A)') H AS ERRED IN CONFIRMING THE PENALTY OF RS. 1,34,9801- U /S. ITA 55 57 MUM 2018-TARLIKA K. SHAH - 2 - 271 (1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME ON THE DISALLOWANCE OF BOGUS PURCHASES OF RS . 5,22,057/-. THE APPELLANT THEREFORE PRAYS THAT THE PENALTY LEVI ED U/S. 271 (1)(C) OF RS. 1,34,980/- BEING UNJUSTIFIED , UNWARRANTED AND BAD-IN-IAW BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF TRADING OF BUILDING MATERIAL AND HAS FILED THE RETURN OF INCOME FOR THE A.Y 2010-11 ON 24.09.2010 WITH TOTAL INCOME OF RS. 2,72,120/-.THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE A.O RECEIVED INFORMATION FROM DGIT (INV) MUMBAI THAT THE ASSESSEE HAS ENTERED INTO BOGUS PURCHASES TRANSACTIONS FROM CERTAIN PERSONS,WHO PROVIDES BOGUS BILLS AS PER THE INFORMATION OF SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA AND ASSESSEE IS ONE OF THE BENEFICIARY AND HAS OBTAINED BILLS AGGREGATING TO RS.13,31,855/- FROM FIVE ENTIT IES. THE A.O. BASED ON THE INFORMATION,ISSUED NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE FILED A LETTER TO TREAT THE RETURN OF INCOME FILED UNDER SECTION 139 OF THE ACT AS COMPLIANCE. SUBSEQUENTLY, THE A.O. HAS ISSUED NOTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT. THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND THE CASE WAS ITA 55 57 MUM 2018-TARLIKA K. SHAH - 3 - DISCUSSED. THE A.O. CONSIDERING THE FACTS AND THE DETAILS SUBMITTED BY THE ASSESSEE HAS DEALT ON THE DISPUTED ISSUE AND RELIED ON THE JUDICIAL DECISIONS AND ESTIMATED THE INCOME AT 12.5% OF BOGUS PURCHASES, WERE THE DETAILS WERE PROVIDED BY THE ASSESSEE WHICH WAS WORKED OUT TO RS. 1,10,224/- AND IN RESPECT OF REMAINING TRANSACTIONS OF RS. 5,22,057/-,THE A.O. MADE 100% ADDITION AND ASSESSED THE TOTAL INCOME OF RS. 8,95,400/- AND PASSED THE ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT DATED 28.01.2016. SUBSEQUENTLY, THE A.O. INITIATED PROCEEDING UNDER SECTION 271(1)(C) AND CALLED FOR THE EXPLANATIONS. SINCE THE ASSESSEE HAS NOT FILED THE DETAILS. THE A.O. HAS LEVIED THE PENA LTY BASED ON THE ADDITION OF RS.5,22,057/- WHICH WORKED OUT TO RS.1,34,980/-AND PASSED THE ORDER UNDER SECTION 271(1)(C) DATED 29.09.2016. 3.AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A).THE CIT(A) CONSIDER ED THE GROUNDS OF APPEAL AND THE SUBMISSIONS OF THE ASSESSEE BUT THE CONFIRMED THE ACTION OF THE A.O I N LEVY OF PENALTY AND DISMISSED THE APPEAL. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. ITA 55 57 MUM 2018-TARLIKA K. SHAH - 4 - 4.AT THE TIME OF HEARING, THELDAR SUBMITTED THAT TH E CIT(A) HAS ERRED IN DISMISSING THE ASSESSEES APPEA L AND OVERLOOKED THE VARIOUS FACTS WHICH GOES TO THE ROOT OF THE CASE. FURTHER, THE LD.AR SUBMITTED THA T, IN THE QUANTUM APPEAL AGAINST THE ADDITION OF RS. 5,22,057/-.THE HONBLE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO RESTRICT THE ADDITION ON ACCOU NT OF BOGUS PURCHASES ESTIMATING AT 12.5% OF BOGUS PURCHASES AS INCOME AND WAS ACCEPTED BY THE ASSESSEE. THEREFORE, THE LEVY OF PENALTY ON ESTIMAT ED INCOME CANNOT BE SUSTAINED AND PRAYED FOR ALLOWING THE ASSESSEE APPEAL. 5. CONTRA, THE DR RELIED UPON THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE CRUX OF THE DISPUTED ISSUE AS ENVISAGED BY THE LD. AR IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT BY THE A.O BASED ON THE ORDER OF THE A.O UNDER 143 R.W.S 147 O F THE ACT. THE LDAR HAS EMPHASIZED THAT AS AGAINST THE ADDITION OF BOGUS PURCHASES,THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE HONBLE TRIBUNAL. TH E HONBLE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO RESTRICT THE ADDITION ON ACCOUNT OF BOGUS PURCHASES ITA 55 57 MUM 2018-TARLIKA K. SHAH - 5 - ESTIMATING AT 12.5% OF BOGUS PURCHASES AS INCOME OF THE ASSESSEE. WE FIND STRENGTH IN THE SUBMISSIONS O F THE LDAR. THE A.O HAS MADE DISALLOWANCE OF BOGUS PURCHASES BUT HAS ACCEPTED THE SALES IN THE BOOKS O F ACCOUNTS, AND WHEREAS THE HONBLE TRIBUNAL IN ITANO5556/M/2018 ORDER DT13-03-2020 HAS DIRECTED THE AO TO DISALLOW 12.5% OF BOGUS PURCHASES.WE ARE OF THE OPINION, THAT WHERE THE ADDITION IS SUSTAINE D ON THE ESTIMATED BASIS,NO PENALTY U/S 271(1)(C) OF THE ACT CAN BE LEVIED ON THE ESTIMATED INCOME. ACCORDINGLY, WE, CONSIDERING THE FACTS AND PRINCIPL ES OF NATURAL JUSTICE SET ASIDE THE ORDER OF THE CIT(A ) AND DIRECT THE A.O TO DELETE THE PENALTY AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.10.2020 SD/- SD/- (RAJESH KUMAR) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMB ER MUMBAI, DATED 28/10/2020 KRK, PS ) *) ) *) ) *) ) *)/ COPY OF THE ORDER FORWARDED TO : ITA 55 57 MUM 2018-TARLIKA K. SHAH - 6 - 1. / THE APPELLANT 2. / THE RESPONDENT. 3. , / THE CIT(A) 4. , ( ) / CONCERNED CIT 5. ) , , / DR, ITAT, MUMBAI 6. 4 / GUARD FILE. / BY ORDER, ) //TRUE COPY// 1. / // / ( ASST. REGISTRAR) , , , , / ITAT, MUMBAI