ITO 31 (1)(5), MUMBAI V. HASMUKH PRAYAGRAJ JAIN, MUMBAI

ITA 5789/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3496 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 08-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Keywords: Bogus purchase; Accommodation entries; Tax effect
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI RAVISH SOOD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5789/MUM/2018 ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER 31(1)(5), ROOM NO.307, C-13, 3 RD FLOOR, BKC, BANDRA (E), MUMBAI-400051. VS. HASMUKH PRAYAGRAJ JAIN, 224/15, SURVY NIWAS, ROAD NO.14, JAWAHAR NAGAR, GOREGAON (W), MUMABI-400104. PAN NO. AFLPJ4324C REVENUE BY : SHRI V. VINOD KUMAR, DR ASSESSEE BY : NONE. DATE OF HEARING : 07/11/2019 DATE OF PRONOUNCEMENT : 11/11/2019 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2010-11. THE APPEAL IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)-42, MUMBAI [IN SHORT CIT(A )] AND ARISES OUT OF PENALTY LEVIED U/S. 271(1)(C)OF THE INCOME TAX ACT 1961, (THE ACT). 2. THOUGH THE APPEAL WAS FIXED PER HEARING ON 07.11 .2019, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE TRIBUNAL ON THE ABOVE DATE. BECAUSE OF NON-COMPLIANCE BY THE ASSESSEE, WE ARE PROCEEDING TO DISPOSE OF THIS APPEAL AFTER EXAMININ G THE MATERIALS AVAILABLE ON RECORD AND HEARING THE LD. DEPARTMENTA L REPRESENTATIVE (DR). APPELLANT RESPONDE NT ITA NO 5789/MUM/2 018/A.Y. 2010-11 HASMU KH PRAYAGRAJ JAIN 2 3. THE GROUND OF APPEAL FILED BY THE REVENUE READS AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) HAS ERRED IN CANCELLING THE PENALTY WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD INFLATED HIS PURCHASES BY OBT AINING ACCOMMODATION BILLS FROM THE HAWALA PARTIES, AS DETECTED BY THE S ALES TAX AUTHORITIES AND AS SUCH HAD FILED INACCURATE PARTICULARS OF HIS INCOME. THE TAX EFFECT IS BELOW MONETARY LIMIT. BUT IT IS COVERED WITHIN EXCEPTION PROVIDED IN CBDT CIRCULAR NO. 3/2018 DATED 11/07/20 18 AS FURTHER AMENDED BY CBDT LETTER DATED 20/08/2018. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2010-11 ON 20.09.2010 DECLARING TOTAL INCOME OF RS.2,57,990/-. THE ASSESSEE TRADES IN IRON & STE EL. ON RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA THAT THE ASSESSEE HAD MADE BOGUS PURCHASES FROM FOUR PARTIES DURING THE FINANCIAL YEAR 2009-10 RELEVANT TO THE AY 2010-11, AMOUNTING TO RS.37,03,846/-, THE ASSESSING OFFICER (AO) REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S.148 OF THE ACT. HOWEVER, IN THE ASSESSMENT ORDE R DATED 04.03.2016 PASSED U/S. 143(3) R.W.S 147, THE AO BY FOLLOWING T HE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CIT V. SIMIT P. SHETH (ITA NO.553 OF 2012) AND CIT V. BHOLANATH POLY FAB (P) LTD . [ITA NO. 63 OF 2012) ESTIMATED THE PROFIT @12.5% OF THE DISPUTED PURCHASE OF RS.37,03, 846/- AND IT COMES TO RS.4,62,980/-. THEREAFTER, THE AO INITIATED PROCEEDINGS U/S. 271( 1)(C ) OF THE ACT. OBSERVING THAT THE ASSESSEE HAD UNDERSTATED PROFIT TO THE TUNE OF RS. 4,62,980/- AND THEREBY FURNISHED INACCURATE PARTICU LARS LEADING TO ITA NO 5789/MUM/2 018/A.Y. 2010-11 HASMU KH PRAYAGRAJ JAIN 3 CONCEALMENT OF INCOME, THE AO LEVIED A MINIMUM PENA LTY OF RS.1,13,807/- U/S.271(1)(C) OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 26.06.2018, THE LD. CIT(A) OBSERVED THAT THE ADDITION HAS BEEN MADE PURELY ON ESTIMATE BASIS. RELYING ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI DEEPAK GOGRI V. ITO , IN ITA NO. 1396/MUM/2017 DATED 23.11.2017, HE HELD THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME AS THE PROFIT ELEMENT WAS DETERMINED BY WAY OF AD HOC ESTIMATION. THUS, THE LD. CIT(A) DELETED THE PENALTY OF RS.1,13,807/- LEV IED BY THE AO U/S.271(1)(C) OF THE ACT. 6. BEFORE US, THE LD. DR SUBMITS THAT AS THE ASSESS EE INDULGED IN BOGUS PURCHASES BY OBTAINING ACCOMMODATION ENTRIES WITHOU T ACTUAL DELIVERY OF GOODS, PENALTY U/S.271(1)(C) IS LEVIABLE THOUGH THE AO HAS ESTIMATED THE PROFIT. EXPLAINING THAT THIS IS A CASE WHERE NOT ON LY THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME BUT ALSO CONCEALED ITS INCOME, THE LD. DR SUBMITS THAT THE ORDER PASSED BY THE CIT(A) BE SET- ASIDE AND THE PENALTY LEVIED BY THE AO BE RESTORED. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVAN T MATERIALS AVAILABLE ON RECORD. IT IS WELL-SETTLED THAT PENALT Y PROCEEDINGS ARE INDEPENDENT AND SEPARATE. IN JAIN BROS V. UNION OF INDIA , (1970) 77 ITR 107, 116 (SC), IT IS HELD BY THE HONBLE SUPREME CO URT THAT ALTHOUGH PENALTY HAS BEEN REGARDED AS AN ADDITIONAL TAX IN C ERTAIN SENSE AND FOR CERTAIN PURPOSES, IT IS NOT POSSIBLE TO HOLD THAT P ENALTY PROCEEDINGS ARE ITA NO 5789/MUM/2 018/A.Y. 2010-11 HASMU KH PRAYAGRAJ JAIN 4 ESSENTIALLY A CONTINUATION OF THE PROCEEDINGS RELAT ING TO ASSESSMENT WHERE A RETURN HAS BEEN FILED. IN THE INSTANT CASE, THE AO HAS SUMMARILY FOLLOWED THE ASSESSMENT ORDER AND LEVIED PENALTY U/S. 271(1)(C) FORGETTING THAT PENALTY PROCEEDINGS ARE INDEPENDENT AND SEPARATE. ALL THE MORE, THE PROFIT ARRIVED AT BY THE AO IN THE ASSESSMENT ORDER IS ON ESTIMATION. THEREFORE, WE AFFIRM THE ORDER OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.11.2019 SD/- SD/- (RAVISH SOOD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNT ANT MEMBER MUMBAI; DATED: 11/11/2019 S. SAMANTA P.S.(ON TOUR) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) ITAT, MUMBAI