ACIT -32(3), MUMBAI, MUMBAI V. SHRI VIJAY K PATEL , MUMBAI

ITA 5769/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3465 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 06-09-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Set aside
• Section: 271(1)(c); 143(3); 142(1); 133(6); 143(1); 250; 143(2); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 5769/MUM/2019 (A.Y: 2010-11) ACIT 32(3) R NO. 732, 7 TH FLOOR, KAUTILYA BHAVAN, BKC, BANDRA EAST, MUMBAI 400051. VS. SHRI VIJAY K PATEL 901-A, NEEL TOWER, DIVIDAS LANCE, BORVIVALI (W), MUMBAI 400092. ./ ./ PAN/GIR NO. : ADGPC4531K APPELLANT .. RESPONDENT APPELLANT BY : SMT. USHA GAIKWAD, SR. DR RESPONDENT BY : NONE DATE OF HEARING 24 .0 3 .2021 DATE OF PRONOUNCEMENT 26 .0 3 .2021 / O R D E R PER PAVAN KUMAR GADALE, JM: THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 46, MUMBAI, PASSED U/S. 271(1)(C) AND 250 OF THE INCOME TAX ACT, 1961. AT THE TIME OF HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE AND WE HEARD THE LD.DR. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. ITA NO 576 9/MUM/2019 SHRI VIJAY K. PATEL,, MUMBAI - 2 - 1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE 14. CIT (A) ERRED IN DELETING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961, OF RS.3,50,000/- WITHOUT APPRECIATING TH E FACTS THAT THE ASSESSEE CLAIMED BOGUS PURCHASES IN ITS RETURN OF INCOME AND THUS FURNISHED INACCURATE 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 E FFECT IS BELOW THE MONETARY LIMIT PRESCRIBED IN THE CBDTS CIRCULAR NO. 17/2019 DATED 08.08.2019 READ WITH CIRCULAR NO.3/2018 DATED 11.07 .2018 AS AMENDED ON 20.08.2018 AS THE CASE FALLS IN THE EXCE PTION PROVIDED IN PARA 10(E) OF THE SAID INSTRUCTION IN AS MUCH AS TH E ADDITION IS BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES IN TH E NATURE OF LAW ENFORCEMENT AGENCIES, NAMELY, SALES TAX AUTHORITIES '. 3 'THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED'. 4 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY'. 2. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESS EE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION WORKS AND FILED THE RETURN OF INCOME FOR THE A.Y 2010-11 ON 24.09.2010 DISCLOSING THE TOTAL INCOME OF RS. 89,84,964/- AND THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS RE- OPENED U/S 147 OF THE ACT, THE A.O. HAS RECEIVED TH E INFORMATION FROM THE SALE TAX & DGIT (INV) WING, MUMBAI THAT THE ASSESSEE HAS OBTAINED PURCHASE BILLS FROM NINE BOGUS PARTIES AGGREGATING TO RS. ITA NO 576 9/MUM/2019 SHRI VIJAY K. PATEL,, MUMBAI - 3 - 89,07,477/-.THEREFORE, THE A.O HAS REASON TO BELIEV E THAT, THE INCOME HAS ESCAPED ASSESSMENT AND ISSUED NOTICE U/S 148 OF THE ACT. SUBSEQUENTLY, THE NOTIC E U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN COMPLIANCE THE LD.AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND SUBMITTED THE DETAILS. THE A.O CONSIDERED THE MATERIAL ON RECORD AND OBSERVED THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TRANSACTION OF PURCHASES. FURTHER THE A.O HAS ISSUE D NOTICE U/S 133(6) OF THE ACT ON THE PARTIES, TO CRO SS VERIFY THE CLAIM OF THE ASSESSEE. BUT THE SAID NOTI CES WERE RETURNED US-SERVED BY THE POSTAL AUTHORITIES. HENCE, THE A.O DEALT ON THE DISPUTED ISSUE OF BOGUS PURCHASES AND MADE ADDITION BY ESTIMATION THE INCOME/GROSS PROFIT @12.5% OF THE BOGUS PURCHASES WHICH WORKED OUT TO RS.11,13,434/-AND ASSESSED THE TOTAL INCOME OF RS.98,98,398/- AND PASSED THE ORDER U/S 143(3) R.W.S 147 OF THE ACT ON 09.03.2016. SUBSEQUENTLY, THE A.O HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE A.O RELIE D ON THE FINDINGS IN THE SCRUTINY ASSESSMENT AND THE SUBMISSIONS MADE BY THE ASSESSEE IN THE COURSE OF HEARING. ON PERUSAL OF THE FACTS AND EXPLANATIONS, THE A.O WAS NOT SATISFIED WITH THE REPLY AS THE ASSESSE E ITA NO 576 9/MUM/2019 SHRI VIJAY K. PATEL,, MUMBAI - 4 - HAS INDULGED IN OBTAINING THE BOGUS PURCHASE BILLS FROM HAWALA OPERATORS AND THEREFORE LEVIED PENAL TY OF RS.3,50,000/-AND PASSED ORDER U/S 271(1)(C) OF T HE ACT DATED 27.09.2016. 3. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A), THE CIT(A) CONSIDE RED THE GROUNDS OF APPEAL, FINDINGS OF THE A.O AND THE SUBMISSIONS OF THE ASSESSEE AND OBSERVED THAT THE A.O HAS ESTIMATED THE GROSS PROFIT/INCOME @ 12.5% O F THE BOGUS PURCHASES IN THE SCRUTINY ASSESSMENT U/SEC143(3) R.W.S SEC147 OF THE ACT AND FURTHER TH E A.O HAS LEVIED THE PENALTY U/SEC 271(1)(C) OF THE A CT ON ESTIMATED INCOME. THE CIT(A) DEALT ON THE PROVISIONS OF SEC. 271(1)(C) OF THE ACT AND RELIED ON THE COORDINATE BENCH OF HONBLE TRIBUNAL AND THE HONBLE HIGH COURT DECISIONS AND OBSERVED THAT NO PENALTY CAN BE LEVIED ON ESTIMATED INCOME AND DIRECTED THE A.O TO DELETE THE PENALTY AND ALLOWED THE ASSESSEES APPEAL. AGGRIEVED BY THE ORDER OF THE CIT(A),THE REVENUE HAS FILED AN APPEAL WITH THE HONBLE TRIBUNAL. 4. AT THE TIME OF HEARING, THE LD. DR SUBMITTED THA T THE CIT(A) ERRED IN DELETING THE PENALTY, WHEREAS T HE ITA NO 576 9/MUM/2019 SHRI VIJAY K. PATEL,, MUMBAI - 5 - A.O HAS RECEIVED THE INFORMATION THAT, THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS AND THE SAME COULD NOT BE OVERLOOKED AND PRAYED FOR ALLOWING THE REVENUES APPEAL. NONE APPEARED ON BEHALF OF THE ASSESSEE. 5. WE HEARD THE LD.DR SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE CRUX OF THE DISPUTED ISSUE AS ENVISAGED BY THE LD. DR THAT THE CIT(A) HA S ERRED IN DELETING THE PENALTY OVERLOOKING THE FACTS OF BOGUS PURCHASES. WHEREAS, THE LD.CIT(A) CONSIDERING THE FACTS AND CIRCUMSTANCES OBSERVED THAT THE PENAL TY CANNOT BE LEVIED ON ESTIMATED INCOME. WE FIND THAT THE A.O HAS ESTIMATED INCOME/ GROSS PROFIT ON BOGUS PURCHASES. WE ARE OF THE OPINION THAT WHEN THE ADDITION IS MADE ON ESTIMATED BASIS, PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE LEVIED ON SUCH ADHOC ESTIMATED INCOME. THE LD.DR COULD NOT CONTROVERT TH E FINDINGS OF THE CIT(A) WITH ANY NEW COGENT EVIDENCE S OR INFORMATION. ACCORDINGLY, WE ARE NOT INCLINED T O INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND UPHEL D THE SAME AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE . ITA NO 576 9/MUM/2019 SHRI VIJAY K. PATEL,, MUMBAI - 6 - 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.03.2021 SD/- SD/- (SHAMIM YAHYA) (PAVAN KUMAR GAD ALE) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 26.03.2021 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. '#$%&&' , )* , / DR, ITAT, MUMBAI 6. %-./0 / GUARD FILE. / BY ORDER, '& //TRUE COPY// 1. ( ASST. REGISTRAR) ITAT, MUMBA I