ITO 27 (1)(4), MUMBAI V. DEVJI J. PATEL, MUMBAI

ITA 5722/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5886 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 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: 05-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAKSMI NAYAKLD
• Assessee Lawyers: RADHA HALBELD
• Keywords: Bogus purchase; Tax effect; Capital expenditure
• Section: 271(1)(c); 143(3)

Judgement Text

ITA NO.5722/MUM/2018 DEVJI J. PATEL 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.5722/MUM/2018 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER - 2 7 ( 1 )( 4 ) TOWER NO.6, 4 TH FLOOR ROOM NO.409 VASHI RAILWAY STATION COMPLEX VASHI, NAVI MUMBAI. / VS. M/S. DEVJI J.PATEL 15,K.K.APARTMENT NEW MANEKLAL ESTATE LBS MARG, MUMBAI 400 086 ! ./ ./PAN/GIR NO. AAAPP-6034-H ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : MS. RADHA HALBE-LD. AR REVENUE BY : MS. JYOTI LAKSMI NAYAK--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)-24, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], DATED 21/06/2018 QUA DELETION OF PENALTY U/S 271(1)(C) FO R RS.4.57 LACS AS LEVIED BY LD. AO VIDE PENALTY ORDER DATED 29/09/201 5. ITA NO.5722/MUM/2018 DEVJI J. PATEL ASSESSMENT YEAR :2009-10 2 2. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE ( AR), AT THE OUTSET, RAISED A PRELIMINARY ISSUE BY SUBMITTING TH AT THE APPEAL IS NOT MAINTAINABLE IN VIEW OF LOW TAX EFFECT CIRCULAR NO. 17/2019 DATED 08/08/2019 ISSUED BY CENTRAL BOARD OF DIRECT TAXES [CBDT]. 3. THE LD. DR CONTROVERTED THE SAME BY SUBMITTING T HAT 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 AGAIN ST ADDITIONS SO MADE, THE PENALTY PROCEEDINGS WOULD BE COVERED BY E XCEPTION (E) OF CLAUSE 10 OF THE CIRCULAR 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. OUR ATTENTION HAS BEEN DRAWN TO T HE FACTUAL ERROR COMMITTED BY LD. CIT(A) IN THE IMPUGNED ORDER BY OB SERVING THAT THE ADDITIONS WERE ON ADHOC BASIS AS AGAINST THE ARGUME NT OF THE ASSESSEE THAT THE EXPENDITURE WAS CAPITAL EXPENDITURE. THE L D. DR SUBMITTED THAT IT WAS NEVER THE SUBMISSIONS OF THE ASSESSEE THAT T HE EXPENDITURE WAS CAPITAL EXPENDITURE. IN THE ABOVE BACKGROUND, LD. D R PLEADED FOR SET- ITA NO.5722/MUM/2018 DEVJI J. PATEL ASSESSMENT YEAR :2009-10 3 ASIDE OF IMPUGNED ORDER AND CONFIRMATION OF PENALTY AS IMPOSED BY LD.AO. 4. WE HAVE CAREFULLY HEARD RIVAL SUBMISSIONS AND PE RUSED RELEVANT MATERIAL ON RECORD. FROM THE PERUSAL OF CASE RECORD S, IT EMERGES THAT THE ASSESSEE WAS ASSESSED U/S 143(3) R.W.S. 147 WHEREIN IT WAS SADDLED WITH ESTIMATED ADDITIONS OF RS.14.15 LACS BEING PEA K OF PURCHASES MADE FROM 3 SUSPICIOUS ENTITIES. THE PRIMARY REASON TO MAKE THE ADDITION WAS THE FACT THAT NOTICES ISSUED U/S 133(6 ) DID NOT ELICIT SATISFACTORY RESPONSE AND THE ASSESSEE FAILED TO SU BSTANTIATE THE PURCHASE TRANSACTIONS. THE ASSESSEE ALSO FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSACTION. CONSEQUENTLY, PENALTY PROCEEDINGS WERE INITIATED IN QUANTUM ASSESSMENT ORDER AND THE ASSESSEE WAS SADDLED WITH IMPUGNED PENALTY U/S 271(1)(C) FOR RS. 4.57 LACS VIDE PENALTY ORDER DATED 29/09/2015. UPON FURTHER APPEAL , LD. CIT(A) DELETED THE PENALTY BY NOTING THAT THERE WAS ADHOC DISALLOW ANCE AND CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS HAS NOT BEEN ESTABLISHED BY LD. AO. AGGRIEVED, THE REVENUE IS UNDER FURTHER APPEAL BEFORE US. 5. SINCE THE PRELIMINARY OBJECTION RAISED BY THE AS SESSEE QUESTION THE VERY MAINTAINABILITY OF REVENUES APPEAL, WE TAKE U P THE SAME AT THE THRESHOLD. UNDOUBTEDLY, THE QUANTUM OF PENALTY UNDE R DISPUTE IS RS.4.57 LACS AND THE SAME IS CERTAINLY BELOW THE THRESHOLD LIMIT OF RS.50 LACS AS PROVIDED IN LATEST LOW TAX EFFECT CIRCULAR NO.17/20 19 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 ITA NO.5722/MUM/2018 DEVJI J. PATEL ASSESSMENT YEAR :2009-10 4 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 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 ITA NO.5722/MUM/2018 DEVJI J. PATEL ASSESSMENT YEAR :2009-10 5 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. -/01 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.