ITO-32(2)(4), MUMBAI, MUMBAI V. M/s. NISHA TRADING CO, MUMBAI

ITA 5782/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9804 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 06-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: THARIAN OOMMEN
• Keywords: Bogus purchase; Tax effect; Reason to believe; Set aside
• Section: 271(1)(c); 143(3); 142(1); 133(6); 250; 143(2); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 5782/MUM/2019 (A.Y: 2011-12) ITO 32(2)(4) 718, 7 TH FLOOR, KAUTILAY BHAVAN, C-41, TOC-43, G-BLOCK, BKC, BANDRA, EAST 400051. VS. M/S. NISHA TRADING CO. A/903, JAYARAM HEIGHTS, KANDARPADAHISAR LINK ROAD ABOVE MC. DONALDS, MUMBAI 400092. PAN/GIR NO. : AAHFN6067B APPELLANT .. RESPONDENT APPELLANT BY : SHRI THARIAN OOMMEN , DR RESPONDENT BY : NONE DATE OF HEARING 08 .0 6 .2021 DATE OF PRONOUNCEMENT 11 .0 6 .2021 / O R D E R PER PAVAN KUMAR GADALE, JM: THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) -44 MUM BAI, PASSED U/S. 271(1)(C) AND 250 OF THE INCOME TAX ACT , 1961. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. ITA NO. 5782/MUM/2019 NISHA TRADING CO., MUMBAI - 2 - CIT(A) ERRED IN DELETING THE PENALTY BY THE A.O U/S 271(1)(C) OF RS. 77,324/- WITHOUT APPRECIATING THE FACTS THAT TH E ASSESSEE CLAIMED BOGUS PURCHASES IN ITS RETURN OF INCOME THE REBY MAKING HERSELF LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HONBLE ITAT IS REQUESTED TO ENTERTAIN THIS APPEAL THROUGH THE TAX EFFECT IS BELOW THE MONETARY LIMIT PRESCRIBED IN TH E CBDT CIRCULAR NO. 17/2019 DATED 08.08.2019 R.W CIRCULAR 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 CIRCULAR IN AS MUCH AS THE ADDITION IS BASED IN INF ORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES, NAMELY, SALE 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 AO BE REST ORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESS EE IS A REGISTERED PARTNERSHIP AND IS ENGAGED IN THE BUSINESS OF TRADING/DEALER. THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE A.Y 2011-12 ON 30.09.2011 DISCLOSING THE TOTAL INCOME OF RS.2,39,8810/-.THE A.O. HAS RECEIVED THE INFORMATION FROM THE SALES TA X & DGIT (INV) WING, MUMBAI THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS FROM FIVE PARTIES AGGREGATING TO RS. 20,01,929/-.THEREFORE, THE A.O H AS REASON TO BELIEVE THAT, THE INCOME HAS ESCAPED ITA NO. 5782/MUM/2019 NISHA TRADING CO., MUMBAI - 3 - ASSESSMENT AND ISSUED NOTICE U/S 148 OF THE ACT. SUBSEQUENTLY, THE NOTICE U/S 143(2) AND 142(1) OF THE ACT WAS 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 REC ORD AND OBSERVED THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TRANSACTION OF PURCHASES. FURTHE R THE A.O HAS ISSUED NOTICE U/S 133(6) OF THE ACT ON THE PARTIES, TO CROSS VERIFY THE CLAIM OF THE ASSESSEE. BUT THE SAID NOTICES WERE RETURNED UNSERVED BY THE POST AL AUTHORITIES. HENCE, THE A.O. HAS DEALT ON THE DISPU TED ISSUE AND MADE ADHOC ADDITION BY ESTIMATING INCOM E @12.5% OF BOGUS PURCHASES AND PASSED THE ORDER U/S 143(3) R.W.S 147 OF THE ACT ON 22.01.2016. SUBSEQUENTLY, THE A.O HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE A.O. FOUN D THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENE SS OF THE TRANSACTIONS. THE A.O. HAS PROVIDED OPPORTUNITY TO SUBMIT EXPLANATIONS BUT THE ASSESSEE FOR VARIOUS REASONS COULD NOT APPEAR IN THE PENALTY PROCEEDINGS. THE A.O RELIED ON THE FINDINGS IN THE SCRUTINY ASSESSMENT THAT THE ASSESSEE HAS INDULGED IN OBTAINING THE BOGUS PURCHASE BILLS. FINALLY LEV IED ITA NO. 5782/MUM/2019 NISHA TRADING CO., MUMBAI - 4 - PENALTY OF RS.77,234/-AND PASSED ORDER U/S 271(1)(C ) OF THE ACT DATED 27.07.2016. 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 MADE ADDITION OF 12.5% BOGUS PURCHASES IN THE SCRUTINY ASSESSMENT U/SEC143(3) R.W.S SEC147 OF THE ACT. WHEREAS THE A.O HAS LEVIED THE PENALTY U/S EC 271(1)(C) OF THE ACT ON ESTIMATED INCOME IN THE PENALTY PROCEEDINGS. 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 PARTLY ALLOWED THE ASSESSEE 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 NONE APPEARED ON BEHALF O F THE ASSESSEE. CONTRA, THE LD.DR SUBMITTED THAT THE CIT(A) ERRED IN DELETING THE PENALTY, WHEREAS THE A .O ITA NO. 5782/MUM/2019 NISHA TRADING CO., MUMBAI - 5 - HAS RECEIVED THE INFORMATION THAT, THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS AND THE SAME COULD NOT BE OVERLOOKED AND PRAYED FOR ALLOWING THE REVEN UE APPEAL. 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 @ 12.5% ON BOGUS PURCHASES. WE ARE OF THE OPINION THAT WHEN THE ADDITION IS ON ESTIMATED BASIS, PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE LEVIED ON SUCH ADHOC ESTIMATED INCOME. THE DISALLOWANCE OF PURCHASES ON AD-HOC BASIS DOES NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME UNDER THE PROVISIO NS OF SECTION 271(1) (C) OF THE ACT. THE LD.DR COULD N OT CONTROVERT THE FINDINGS OF THE CIT(A) WITH ANY NEW COGENT EVIDENCES OR INFORMATION. ACCORDINGLY, WE A RE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE ITA NO. 5782/MUM/2019 NISHA TRADING CO., MUMBAI - 6 - LD.CIT(A) AND UPHELD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE . 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.06.2021 SD/- SD/- ( SHAMIM YAHYA ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 11.06.2021 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. () * + / GUARD FILE. / BY ORDER, ! //TRUE COPY// 1. ( ASST. REGISTRAR) ITAT, MUMBA I