ACIT - CIRCLE- 6(2)(1), MUMBAI V. DEEPCHAND CHEMICALS PVT. LTD., MUMBAI

ITA 5774/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6131 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 08-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAKSHMI NAYAKLD
• Assessee Lawyers: SANJAY R BHATT LD
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c); 143(3)

Judgement Text

ITA NO.5774MUM/2018 M/S. DEEPCHAND CHEMICALS PRIVATE LTD. ASSESSMENT YEAR :2011-12 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.5774/MUM/2018 ( / ASSESSMENT YEAR: 2011-12) A CIT - CIRCLE - 6(2)(1) ROOM NO.504, 5 TH FLOOR AAYKAR BHAVAN, M.K. ROAD MUMBAI-400 020. / VS. M/S. DEEPCHAND CHEMIC ALS PVT.LTD. 11/1, AMBEDKAR NAGAR NEAR CHUNABHATTI STATION, SION MUMBAI-400 022. ! ./ ./PAN/GIR NO. AAACD-5403 B ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : SHRI SANJAY R. BHATT- LD. AR REVENUE BY : MS. JYOTI LAKSHMI 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] 2011-12 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME- TAX (APPEALS)-12, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-12/DCIT-6(2)(1)/C-1/17-18 DATED 02/07/2018 QUA DELETION OF PENALTY U/S 271(1)(C) FOR RS.1.01 LACS AS LEVIED BY LD. AO VIDE PENALTY ORDER DATED 20/03/2017. ITA NO.5774MUM/2018 M/S. DEEPCHAND CHEMICALS PRIVATE LTD. ASSESSMENT YEAR :2011-12 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. 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 ADDITION OF RS.2.95 LACS, BEING NON-GENUINE PU RCHASES STATED TO BE MADE BY THE ASSESSEE FROM AN ENTITY NAMELY M/S NEO COMMERCIAL ITA NO.5774MUM/2018 M/S. DEEPCHAND CHEMICALS PRIVATE LTD. ASSESSMENT YEAR :2011-12 3 CORPORATION. THE PRIMARY REASON TO MAKE THE ADDITIO N WAS THE FACT THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE PURCHASE TR ANSACTIONS. CONSEQUENTLY, PENALTY PROCEEDINGS WERE INITIATED IN QUANTUM ASSESSMENT ORDER AND THE ASSESSEE WAS SADDLED WITH IMPUGNED PENALTY U/S 271(1)(C) FOR RS.1.01 LACS VIDE PENALTY ORDER D ATED 20/03/2017. UPON FURTHER APPEAL, LD. CIT(A) DELETED THE PENALTY BY RELYING UPON THE DECISION OF THIS TRIBUNAL RENDERED IN EARTHMOVING EQUIPMENT SERVICES CORPORATION V/S ITO. 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.1.01 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 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 ITA NO.5774MUM/2018 M/S. DEEPCHAND CHEMICALS PRIVATE LTD. ASSESSMENT YEAR :2011-12 4 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 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, ITA NO.5774MUM/2018 M/S. DEEPCHAND CHEMICALS PRIVATE LTD. ASSESSMENT YEAR :2011-12 5 / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.