ITO 31 (2)(3), MUMBAI V. MUKESH M. PARMAR, MUMBAI

ITA 5785/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6124 (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: 2010-2011
• Appeal Filed On: 08-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAKSHMI NAYAKLD
• Assessee Lawyers: JATIN CHAWLALD
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c); 143(3); 133(6)

Judgement Text

ITA NO.5784-86/MUM/2018 MUKESH M. PARMAR ASSESSMENT YEARS :2009-10 TO 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.5784/MUM/2018 ( / ASSESSMENT YEAR: 2009-10) & ./ I.T.A. NO.5785/MUM/2018 ( / ASSESSMENT YEAR: 2010-11) & ./ I.T.A. NO.5786/MUM/2018 ( / ASSESSMENT YEAR: 2011-12) INCOME TAX OFFICER - 31(2) (3) ROOM NO.104,1 ST FLOOR C-13, PRATYAKSHKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E), MUMBAI-400 051. / VS. SHRI MUKESH M. PARMAR , B-16, SHREYAS INDUSTRIAL ESTATE NEAR JAY COACH GOREGAON(E) MUMBAI-400 063. ! ./ ./PAN/GIR NO. AAEPP-2846-H ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : SHRI JATIN CHAWLA-LD. AR REVENUE BY : MS. JYOTILAKSHMI NAYAK-LD. DR / DATE OF HEARING : 11/02/2020 / DATE OF PRONOUNCEMENT : 11/02/2020 / O R D E R PER BENCH 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR S [IN SHORT REFERRED TO AS AY] 2009-10 TO 2011-12 CONTEST COM MON ORDER DATED 28/06/2018 PASSED BY LD. COMMISSIONER OF INCOME-TAX (APPEALS)-42, ITA NO.5784-86/MUM/2018 MUKESH M. PARMAR ASSESSMENT YEARS :2009-10 TO 2011-12 2 MUMBAI, [IN SHORT REFERRED TO AS CIT(A)] DELETING PENALTY U/S 271(1)(C) FOR RS.3.17 LACS FOR AY 2009-10, RS.2.69 LACS FOR A Y 2010-11 & RS.7.36 LACS FOR AY 2011-12. 2. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE ( AR), AT THE OUTSET, RAISED A PRELIMINARY ISSUE BY SUBMITTING TH AT THE APPEALS ARE 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 PENALTIES WERE TO BE CONFIRMED AND LD. CIT(A) E RRED IN DELETING THE IMPUGNED PENALTIES. 4. WE HAVE CAREFULLY HEARD RIVAL SUBMISSIONS AND PE RUSED RELEVANT MATERIAL ON RECORD. FROM THE PERUSAL OF CASE RECORD S FOR AY 2009-10, IT ITA NO.5784-86/MUM/2018 MUKESH M. PARMAR ASSESSMENT YEARS :2009-10 TO 2011-12 3 EMERGES THAT THE ASSESSEE WAS ASSESSED U/S 143(3) R .W.S. 147 WHEREIN IT WAS SADDLED WITH ADDITIONS OF RS.55.63 LACS BEIN G AGGREGATE OF ALLEGED BOGUS PURCHASES STATED TO BE MADE FROM 2 SU SPICIOUS ENTITIES. THE PRIMARY REASON TO MAKE THE ADDITION WAS THE FAC T THAT NOTICES ISSUED U/S 133(6) DID NOT ELICIT SATISFACTORY RESPONSE AND THE ASSESSEE FAILED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. THE ASSESSE E ALSO FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSAC TION. UPON FURTHER APPEAL, LD. CIT(A) RESTRICTED THE ADDITIONS ON ESTI MATED BASIS TO RS.8.75 LACS. CONSEQUENTLY, PENALTY PROCEEDINGS WERE INITIA TED IN QUANTUM ASSESSMENT ORDER AND THE ASSESSEE WAS SADDLED WITH IMPUGNED PENALTY U/S 271(1)(C) FOR RS.3.17 LACS VIDE PENALTY ORDER D ATED 24/03/2017. HOWEVER, UPON FURTHER APPEAL, LD. CIT(A) DELETED TH E PENALTY, INTER-ALIA, BY NOTING THAT THE ADDITIONS WERE PURELY ON ESTIMAT ED BASIS AND THEREFORE, THE PENALTY DESERVE TO BE DELETED. ACCOR DINGLY, THE PENALTY LEVIED BY LD. AO WAS DELETED. AGGRIEVED, THE REVENU E IS UNDER FURTHER APPEAL BEFORE US. SIMILAR ARE THE FACTS IN AYS 2010 -11 & 2011-12 AND THE IMPUGNED ORDER IS COMMON ORDER FOR ALL THE THRE E YEARS. 5. SINCE THE PRELIMINARY OBJECTION RAISED BY THE AS SESSEE QUESTION THE VERY MAINTAINABILITY OF REVENUES APPEALS, WE TAKE UP THE SAME AT THE THRESHOLD. UNDOUBTEDLY, THE QUANTUM OF PENALTY FOR ALL THE THREE YEARS IS CERTAINLY BELOW THE THRESHOLD LIMIT OF RS.50 LACS A S PROVIDED IN LATEST LOW TAX EFFECT CIRCULAR NO.17/2019 DATED 08/08/2019 ISS UED 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 ITA NO.5784-86/MUM/2018 MUKESH M. PARMAR ASSESSMENT YEARS :2009-10 TO 2011-12 4 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, ALL THE THREE APPEALS ARE LIABLE TO BE DISMISSED IN TERMS OF LATEST LOW TAX EFFECT C IRCULAR ISSUED BY CBDT. THE SAME WOULD OBVIATE THE NEED TO DELVE INTO THE M ERITS OF THE CASE AND ACCORDINGLY, WE REFRAIN FROM DOING SO. 8. HAVING SAID SO, A LIBERTY IS GIVEN TO REVENUE TO SEEK RECALL OF ANY OF THE APPEALS, IF AT A LATER STAGE, IT IS FOUND THAT THE MATTER IS COVERED BY ANY EXCEPTIONS PROVIDED IN ANY OF THE CIRCULAR OR I N CASE THE TAX EFFECT AS AGITATED BY REVENUE EXCEEDS THE PRESCRIBED MONETARY LIMIT, IN ANY OF THE APPEAL. 9. RESULTANTLY, ALL THE APPEALS STAND 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.5784-86/MUM/2018 MUKESH M. PARMAR ASSESSMENT YEARS :2009-10 TO 2011-12 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.