ITO-8(3)(1), MUMBAI V. M/S. THAKKER CHEMICALS PVT. LTD. , MUMBAI

ITA 5636/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9752 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 29-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Tax effect
• Section: 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. 5636 /MUM/2019 ASSESSMENT Y EAR: 2010 - 11 INCOME TAX OFFICER - 8(3)(1), ROOM NO. 616, 6 TH FLOOR, AAYAKA R BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S THAKKER CHEMICALS PVT. LTD., 307, MANDVI NAVJIVAN 121/127, KAZI SAYEED STREET, MASJID, MUMBAI - 400003 PAN: AAACT2753Q (APPELLANT) (RESPONDENT) REVENUE BY : SHRI VIJAY KUMAR MENON (D R) ASSESSEE BY : NONE 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 THE ORDER DATED 31.05 .2019 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 14 , MUMB AI DELETING THE PENALTY IMPOSED OF RS. 3,27,265/ - UNDER SECTION 271(1) (C) OF THE INCOME TAX ACT , 1961 FOR THE ASSESSMENT YEAR 2010 - 11 . 2. WHEN THE APPEAL WAS CALLED FOR HEARING NO ONE WAS PRESENT FOR THE ASSESSEE TO REPRES ENT THE CASE. CONSIDERING THE NATURE OF DISPUTE, WE PROCEED TO DISPOSE OF THE APPEAL EX - PARTE QUA TH E ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND BASED ON MATERIALS ON RECORD. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A RESIDENT COM PANY STATED TO BE ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS, BULK DRUGS AND BULK DRUG INTERMEDIATES . FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE FILED ITS RETURN OF INCOME ON 24.09.2010 DECLARING TOTAL INCOME OF RS. 30,65,399 / - . SUBSEQUENTLY, BAS ED ON INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, THE 2 ITA NO. 5636 / MUM/2019 ASSESSMENT YEAR: 20 10 - 1 1 ASSESSING OFFICER (AO) HAVING FOUND THAT PURCHASES WORTH RS. 84,72,880/ - ARE NOT - GENUINE , REOPEN ED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED UPO N THE ASSESSEE TO PROVE THE PURCHASES. THOUGH, THE ASSESSEE FILED SOME DOCUMENTARY EVIDENCE S TO PROVE THE PURCHASES, H OWEVER, THE AO WAS NOT CONVINCED. ULTIMATELY, HE COMPLETED THE ASSESSMENT BY DISALLOWING THE PURCHASES OF RS. 84,72,880/ - . ASSESSEE CONTES TED THE AFORESAID DISALLOWANCE BEFORE LEARNED COMMISSIONER (APPEALS). PARTLY ACCEPTING ASSESSESS SUBMISSIONS, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE TO 12.5% , BEING THE PROFIT ELEMENT EMBEDDED IN THE PURCHASES ALLEGED TO BE NON - GENUINE . NOT BEING SATISFI ED WITH THE DECISION OF LEARNED COMMISSIONER (APPEALS), ASSESSEE WENT IN FURTHER APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL GRANTED FURTHER RELIEF TO THE ASSESSEE BY RESTRICTING THE DISALLO WANCE TO 8%. HOWEVER, BEFORE ASSESSEES QUANTUM APPEAL PENDING BEFORE THE TRIBUNAL COULD BE DISPOSED OF, THE AO INITIATED PROCEEDING FOR IMPOSITION OF PENALTY BASED ON T HE ADDITION SUSTAINED BY LEARNED COMMISSIONER (APPEALS) AND ULTIMATELY PASSE D AN ORDER IMPOSING PENALTY OF R S. 3,27,265/ - . THE ASSESSE E CHALLENGED THE IMPO SITION OF PENALTY BEFORE LEARNED COMMISSIONER (APPEALS). TAKING NOTE OF THE FACT THAT THE DISALLOWANCE MADE BY THE AO BECAUSE OF ALLEGED NON GENUINE PURCHASES WAS SUBSTANTIALLY REDUCED BY THE FIRST APPELLATE AUTHORITY AND THEREAFTER BY THE TRIBUNAL AND THE ADDITIONS SUST AINED BY THE APPELLATE AUTHORITIES WAS PURELY ON ESTIMATE BASIS, THE LEARNED COMMISSIONER (APPEALS) DELETED THE PENALTY IMPOSED. 4. WE HAVE C ONSIDERED THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED TH E MATERIALS ON RECORD. IT IS EVIDENT , PRIMARILY RELYING UPON THE INFORMATION RECE IVED FROM SALES TAX AUTHORITIES; T HE AO HAS T REATED CERTAIN PURCHASES AS NON - GENUINE AND H AS DISALLOWED THEM. HOWEVER, LEARNED COMMISSIONER (APPEALS) T O SOME EXTENT BEING CONV INCED WITH THE SUBMISSIO NS OF THE ASSESSEE RESTRICTED THE DISALLOWANCE TO THE PROFIT ELEMENT EMBEDDED IN THE PURCHASES , ALLEGED TO BE NON - GENUINE , BY ESTIMATING AT 12.5% , WHICH WAS FURTHER REDUCED TO 8% BY THE TRIBUNAL. THUS, FROM THE AFORESAID FACTS IT IS VERY MUCH CLEAR THAT THE APPELLATE AUTHORITIES HAD NO DOUBT THAT THE 3 ITA NO. 5636 / MUM/2019 ASSESSMENT YEAR: 20 10 - 1 1 ASSESSEE , INDEED , HAD PURCHASED THE GOODS , THOUGH , MAY BE FROM UNVERIFIED SOURCES. FOR THIS REASON ALONE, THE DISALLOWANCE WAS RESTRICTED TO THE PROFIT ELEMENT , WHICH MAY HAVE BEEN SUPPR ESSED , THAT TO O, ON PURELY ESTIMATE BA SIS. THUS, SUCH ADDITION BASED ON GUESS WORK/ESTIMATION CANNOT L EAD TO IMPOSITION OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT , AS , NEITHER CON CEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME IS E STABLISHED. THUS, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE DISPUTED ISSUE . 5. EVEN , OTHERWISE ALSO, THE PRESENT APPEAL OF THE REVENUE IS NOT MAINTAINABLE KEEPING IN VIEW CBDT CIRCULAR NO. 17/2011 DATED 08.08.20 19 , AS , THE TAX EFFECT ON THE AMOUNT DISPUTED IS LESS THAN THE THRESHOLD 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 REASON ALSO THE APPEAL DESERVE S TO BE DISMISSED. GROUNDS ARE 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 4 ITA NO. 5636 / MUM/2019 ASSESSMENT YEAR: 20 10 - 1 1 / 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