INCOME TAX OFFICER 12(1) |(1), MUMBAI V. AMI RIDDHI CHEM. PRIVATE LIMITED , MUMBAI

ITA 5748/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7926 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Question of law; Difference of opinion; Tax effect; Onus to prove; Revised return; Set aside
• Section: 271(1)(c); 142(1); 133(6); 143(1); 143(2); 13; 22; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO S.5748 TO 5750 /MUM/201 9 ( / ASSESSMENT YEAR S : 20 09 - 10, 2011 - 12 & 2012 - 13 ) ITO - 12(1)(1) ROOM NO.226, 2 ND FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400020 . / VS. M/S. AMI RIDDHI CHEM PVT. LTD. OFFICE NO.3, GIKUL APARTMENTS, HARIDAS NAGAR, SHIMPOLI ROAD, BORIVALI WEST, MUMBAI - 400092. ./ ./ PAN/GIR NO. : AAGCA7111H ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 02 / 06 /20 21 /DATE OF PRONOUNCEMENT: 09 / 07 / 20 2 1 / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE ABOVE MENTIONED APPEAL S AGAINST THE ORDER DATED 22.05.2019 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 20 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y S . 2009 - 10, 20 1 1 - 1 2 & 2012 - 13 IN WHICH THE PENALTY LEVIED BY THE AO HAS BEEN ORDERED TO BE DELETED . ITA. NO.5748 /MUM/201 9 2. THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 22 .05.201 9 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 20 , REVENUE BY : SHRI BRAJENDRA KUMAR (DR) ASSESSEE BY: SHRI AJAY SINGH (AR) ITA NOS. 5748 TO 5750 /M/201 9 A.Y.20 09 - 10, 2011 - 12 & 2012 - 13 2 MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.20 09 - 10 . 3 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - ' 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE L.D. CIT (A) ERRED IN DELETING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961, OF RS.8,76,981/ - WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE CLAIMED BOGUS PURCHASES IN ITS RETURN OF INCOME AND THUS FURNISHED INACCURA TE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961'. 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE ITAT IS REQUESTED TO ENTERTAIN THIS APPEAL THOUGH THE TAX EFFECT IS BELOW THE MONETARY LIMIT PRES CRIBED IN THE CBDT INSTRUCTION NO.17 OF 2019 DATED 08.08.2019 AND EARLIER INSTRUCTION NO.3/2018 DATED 11.07.2018 AS AMENDED ON 20.08.2018 AS THE CASE FALLS IN THE EXCEPTION PROVIDED IN PARA 10(E) OF THE SAID INSTRUCTION IN AS MUCH AS THE ADDITION IS BA SED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES, NAMELY, SALES TAX AUTHORITIES'. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED '. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY'. ' 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 28.03.2014 DECLARI NG A TOTAL INCOME OF RS.5,97,240 FOR THE A.Y.2 009 - 10 . THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 31.12.2009 DECLARING TOTAL INCOME OF RS.5,97,270/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE I. T. ACT, 1961. THEREAFTER THE CASE OF THE ASSESSEE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAD CLAIMED THE BOGUS PURCHASES IN SUM OF RS. 3,56,01,590/ - . NOTICE U/S 147 /148 OF THE ACT ITA NOS. 5748 TO 5750 /M/201 9 A.Y.20 09 - 10, 2011 - 12 & 2012 - 13 3 WAS GIVEN TO THE ASSESSEE. SUBSEQUENTLY, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ALSO GIVEN. THEREAFTER, THE INCOME OF THE ASSESSEE WAS ASSESSED IN SUM OF RS.4,27,27,969 / - . THE AO ISSUED THE NOTICE S U/S 133(6) TO THE PARTIES WHICH WERE RETURNED UNSERVED AND ASSESSEE FAILED TO PRODUCE THESE PARTIES ALSO . DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND DURING APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED DOCUMENTARY EVIDENCES SUCH AS PAYMENT RECEIVED AGAINST SUCH SALES, RECEIPT OF MATERIAL PURCHASES, ACCOUNT PAYEE CHEQUE. THE PENALTY PROCEEDING WAS INITIATED . FEE LING A GGRIEVED, THE ASS ESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO RESTRICTED THE ADDITION TO THE EXTENT OF 8 % . THEREAFTER, THE PENALTY PROCEEDING WAS INITIATED AND THE AO LEVIED THE PENALTY. ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DELETED THE PENALTY. FEELING AGGRIEVED, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 5. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE REVENUE AND HAS GONE THROUGH THE CASE CAREFULLY. BEFORE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD: - 5 .1 I HAVE CONSIDERED THE RIVAL CONTENTIONS. I FIND THAT THE SUM OF RS.28,48,127 IN RESPECT OF WHICH THE PENALTY WAS IMPOSED WAS BASED ON ESTIMATE. I FIND THAT THE AO FAILED TO BRING ANY CONCRETE 'EVIDENCE TO PROVE THAT I THE SUM OF RS.28,48,12 7/ - ACTUALLY REPRESENTED INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAD BEEN FURNISHED BY THE APPELLANT. I FIND THAT THE FACTS IN THE CASE SHRI DEEPAK GOGRI VS. ITO IN ITA NO. 1396/MUM/2017 CITED BY THE APPELLANT IS SIMILAR TO THE FACTS OF THE APPEL LANT'S CASE. IN THAT CASE, THE HON'BLE ITAT HELD AS UNDER: '6. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN SO FAR AS THE PENALTY LEVIED ON ESTIMATION OF PROFIT ELEMENT ON PURCHASES IS CONCERNED, WE ARE OF THE VIEW TH AT ASSESSING OFFICER HAD MADE ONLY ADHOC ESTIMATION OF PROFIT ON CERTAIN PURCHASES TREATED AS UNEXPLAINED EXPENDITURE. ASSESSING OFFICER DID NOT DOUBT THE ITA NOS. 5748 TO 5750 /M/201 9 A.Y.20 09 - 10, 2011 - 12 & 2012 - 13 4 SALES MADE BY THE ASSESSEE FROM OUT OF SUCH PURCHASES. ASSESSING OFFICER BASED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SIMIT P. SETH [355 ITR 451] ESTIMATED THE PROFIT ELEMENT IN SUCH PURCHASES AT 12.5% AND BY REDUCING THE GROSS PROFIT ALREADY DECLARED BY THE ASSESSEE. IN THE CIRCUMSTANCES, WE HOLD THAT THERE IS NO CONCEALM ENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS AS THE PROFIT ELEMENT WAS DETERMINED BY WAY OF ADHOC ESTIMATION. COMING TO THE INTEREST, THE ASSESSEE FURNISHED COMPLETE DETAILS IN THE RETURN OF INCOME AND MADE A CLAIM AND SIMPLY BECAUSE THE CLAIM IS DENIED AND CANNOT LEAD TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. NO ALLEGATION BY ASSESSING OFFICER THAT THE ASSESSEE FAILED TO DISCLOSE THE PARTICULARS RELATING TO ITS CLAIM IN THE RETURN OF INCOME. THUS WE HOLD THAT THERE IS NO CO NCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THUS WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT.' 5.2 I ALSO FIND THAT THE FACTS IN THE CASE OF HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P& H) IS SIMILAR TO THE FACTS OF THE APPELLANT'S CASE. IN THAT CASE, THE QUESTION OF LAW BEFORE THE HON'BLE COURT WAS WHETHER PENALTY IS ATTRACTED UNDER SECTION 271(1)(C) OF THE ACT WHERE INCOME IS ASSESSED PURELY ON ESTIMATE BASIS AND ADDITIONS ARE MADE IN T HE DECLARED INCOME ON THAT BASIS. IN THAT CASE, THE HONIBLE HIGH COURT OF PUNJAB & HARYANA HELD AS UNDER: '3. IN ORDER TO ATTRACT CLAUSE (C) OF SECTION 271(1), IT IS NECESSARY THAT THERE MUST BE CONCEALMENT BY THE ASSESSEE OF THE PARTICULARS OF HIS INCOME OR IF HE FURNISHES INACCURATE PARTICULARS OF SUCH INCOME. WHAT IS TO BE SEEN IS WHETHER THE ASSESSEE IN THE PRESENT CASE HAD CONCEALED HIS INCOME AS HELD BY THE ASSESSING OFFICER AND THE TRIBUNAL. HE HAD NOT MAINTAINED ANY ACCOUNTS AND HE FILED HIS RETURN OF INCOME ON ESTIMATE BASIS. THE ASSESSING OFFICER DID NOT AGREE WITH THE ESTIMATE OF THE ASSESSEE AND BROUGHT HIS INCOME TO TAX BY INCREASING IT TO RS. 2,07,500. THIS, TOO, WAS ON ESTIMATE BASIS. THE TRIBUNAL AGREED THAT THE INCOME OF THE ASSESSEE HAD TO BE ASSESSED ON AN ESTIMATE OF THE TURNOVER BUT WAS OF THE VIEW THAT THE ESTIMATE AS MADE BY THE ASSESSING OFFICER WAS HIGHLY EXCESSIVE AND IT FIXED THE TOTAL INCOME OF THE ASSESSEE AT RS. 1,50,000 FOR THE YEAR UNDER APPEAL. IT IS, THUS, CLEAR THAT THERE WA S A DIFFERENCE OF OPINION AS REGARDS THE ESTIMATE OF THE INCOME OF THE ASSESSEE. SINCE THE ASSESSING OFFICER AND THE TRIBUNAL ADOPTED DIFFERENT ITA NOS. 5748 TO 5750 /M/201 9 A.Y.20 09 - 10, 2011 - 12 & 2012 - 13 5 ESTIMATES IN ASSESSING THE INCOME OF THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE HAD 'CONCEALED THE PARTIC ULARS OF HIS INCOME' SO AS TO ATTRACT CLAUSE (C) OF SECTION 271(1). THERE IS NOT EVEN AN IOTA OF EVIDENCE ON THE RECORD TO SHOW THAT THE INCOME OF THE ASSESSEE DURING THE YEAR UNDER APPEAL WAS MORE THAN THE INCOME RETURNED BY HIM. ADDITIONS IN HIS INCOME W ERE MADE, THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THERE HAS TO BE A POSITIVE ACT OF CONCEALMENT ON HIS PART AND THE ONUS TO PROVE THIS IS ON THE DEPARTMENT. WE ARE ALSO OF THE CONSIDERED VIEW THAT THE TRIBUNAL GROS SLY ERRED IN LAW IN RELYING ON EXPLANATION 1(8) TO SECTION 271(1)(C) TO RAISE A PRESUMPTION AGAINST THE ASSESSEE. THE ASSESSEE HAD JUSTIFIED HIS ESTIMATE OF INCOME ON THE BASIS OF HOUSEHOLD EXPENDITURE AND OTHER INVESTMENTS MADE DURING THE RELEVANT PERIOD. IT IS NOT THE CASE OF THE REVENUE THAT HE HAD, IN FACT, INCURRED EXPENDITURE IN EXCESS OF WHAT HE HAD STATED. IN THIS VIEW OF THE MATTER, IT CANNOT BE SAID THAT THE EXPLANATION FURNISHED BY THE ASSESSEE HAD NOT BEEN SUBSTANTIATED OR THAT HE HAD FAILED TO PROVE THAT SUCH EXPLANATION WAS NOT BONA FIDE.' 5.3 IN VIEW OF THE DECISIONS DISCUSSED ABOVE, THE PENALTY IMPOSED IS NOT SUSTAINABLE. ACCORDINGLY, I DIRECT THE AO TO DELETE THE PENALTY OF RS. 8,76,981/ - . IN THE RESULT, GROUND OF APPEAL NO.1 IS TREATED AS A LLOWED. 6. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE FIND THAT THE CIT(APPEALS) HAS DELETED THE PENALTY ON THE BASIS OF THIS FACT WHEN THE PROFIT WAS ESTIMATED THEN NO PENALTY WAS LEVIABLE. THE CIT(A) HAS RELIED UPON THE DECISION OF THE HONBLE PUNJ AB & HARYANA HIGH COURT IN THE CASE OF HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P&H) IN WHICH THE PENALTY WAS NOT HELD JUSTIFIABLE IN CASE OF WHERE THE INCOME WAS ASSESSED ON ESTIMATION BASIS. WE ALSO FIND SUPPORT OF THE DECISION OF THE HONBLE GUJARAT H IGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT 2001 164 CTR 2009 (GUJ) IN WHICH IT IS HELD THAT THE PENALTY IS NOT LEVIABLE WHEN THE PROFIT WAS ESTIMATED ON ESTIMATION BASIS. AFTER THE CONSIDERING THE SAID DECISIONS AND OTHER DECISIONS WHICH HAVE BEEN RELIED BY CIT(A) IN HIS ITA NOS. 5748 TO 5750 /M/201 9 A.Y.20 09 - 10, 2011 - 12 & 2012 - 13 6 DECISIONS MENTIONED ABOVE, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE PENALTY. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE D WITH AT THIS APPELLATE STAGE. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ITA. NOS. 5749 & 57 50 /MUM/201 9 7 . ALL THE APPEALS ARE ON SIMILAR GROUND CONTAINING SIMILA R FACTS OF THE CASE, THEREFORE, THE FINDING GIVEN ABOVE WHILE DECIDING THE APPEAL BEARING IT A. NO.5748 /M UM/2019 IS QUITE APPLICABLE TO THE FACTS OF ALL CASES AS MUTATIS MUTANDIS. ACCORDINGLY, WE DELETE THE PENALTY IN THESE APPEALS ALSO AND ALLOWED THE APPE ALS OF THE ASSESSEE. 8 . IN THE RESULT, THE APPEAL S FILED BY THE REVENUE ARE HEREBY D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 / 07 / 202 1 SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 09 / 07 / 2021 VIJAY PAL SINGH (SR. PS) ITA NOS. 5748 TO 5750 /M/201 9 A.Y.20 09 - 10, 2011 - 12 & 2012 - 13 7 / COPY OF THE ORDER FORWARDED TO : 1. / TH E 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