JENIL STEEL INDIA , MUMBAI V. INCOME TAX OFFICER -19(1) (2) , MUMBAI

ITA 5889/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3464 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 13-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Set aside
• Section: 271(1)(c); 143(3); 143(1); 250; 143(2); 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. 5889/MUM/2019 (A.Y: 2009-10) JENIL STEEL INDIA 56/64 1 ST FLOOR, OFFICE NO. 2, NANUBHAI DESAI ROAD, MUMBAI - 400004 VS. ITO 19(1)(2) MATRU MANDIR, TARDEAO ROAD, MUMBAI 400007. PAN/GIR NO. : BEPPS6198B APPELLANT .. RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SMT. USHA GAIKWAD , SR. DR DATE OF HEARING 25 .0 3 .2021 DATE OF PRONOUNCEMENT 30 .0 3 .2021 / O R D E R PER PAVAN KUMAR GADALE, JM: THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -30 MUM BAI, PASSED U/S. 271(1)(C) AND 250 OF THE INCOME TAX ACT , 1961. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT ERRED IN CONFIRMING THE ORDER OF THE AO THAT PENALTY LEVIED ON OUR APPELLANT IS IN ORDER. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT FAILED TO APPRECIATE THAT THERE IS NEIT HER ITA NO. 5889/MUM/2019 JENIL STEEL INDIA, MUMBAI - 2 - CONCEALMENT OF PARTICULARS OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT ERRED IN IGNORING THE FACTS THAT ADDITI ON IS MADE ONLY ON ESTIMATED BASIS ON ACCOUNT OF DIFFERENCE IN GROSS MARGINS EARNED FROM SALE AGAINST PURCHASE FROM PART Y ALLEGED TO BE NON-GENUINE. AN ADDITION WHICH IS MADE PUREL Y ON AN ESTIMATE BASIS, IT CANNOT BE SAID THERE IS CONCEALM ENT OF INCOME. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, DELETE OR MODIFY ANY OR ALL OF THE ABOVE REFERRED GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESS EE IS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND N ON- FERROUS METALS. THE ASSESSEE HAS FILED THE RETURN O F INCOME FOR THE A.Y 2009-10 ON 28.07.2009 WITH TOTAL INCOME OF RS. 2,97,518/-.THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. THE A.O HAS RECEIV ED INFORMATION FROM DGIT (INV.) WING, MUMBAI THAT THE ASSESSEE HAS ENTERED INTO BOGUS PURCHASE TRANSACTIO NS WITH SEVERAL PARTIES WHO ARE PROVIDING ACCOMMODATIO N BILLS. AS PER THE INFORMATION OF SALE TAX DEPARTMEN T, GOVT OF MAHARASHTRA THE ASSESSEE IS ONE OF THE BENEFICI ARY AND OBTAINED BOGUS BILLS AGGREGATING TO RS.19,23,104/-F ROM 3 PARTIES AND BASED ON THE SAID INFORMATION THE A.O. HAS ISSUED NOTICE U/S 148 OF THE ACT. THE ASSESSEE HAS FILED A LETTER TO TREAT THE RETURN OF INCOME FILED ON 28.07 .2009 AS DUE COMPLIANCE TO THE NOTICE. SUBSEQUENTLY, THE NOT ICE ITA NO. 5889/MUM/2019 JENIL STEEL INDIA, MUMBAI - 3 - 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 THE CASE WAS DISCUSSED. THE A.O CONSIDE RING THE FACTS AND DETAILS SUBMITTED BY THE ASSESSEE HAS DEALT ON THE DISPUTED ISSUE AND REQUIRED THE ASSESSEE TO PROVE THE PURCHASE TRANSACTIONS ARE GENUINE. IN COMPLIANC E THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS ON 20.01.201 5 BUT THE A.O. WAS NOT SATISFIED WITH THE REPLY AND SUPPO RTING DOCUMENTS. FINALLY THE A.O. HAS ESTIMATED PROFIT EL EMENT ON NON-GENUINE PURCHASES @ 12.5% WHICH WORKS OUT TO RS2,40,388/-AND ASSESSED THE TOTAL INCOME OF RS. 5,37,906/- AND PASSED THE ORDER U/S 143(3) R.W.S 14 7 OF THE ACT ON 05.03.2015. SUBSEQUENTLY, THE A.O. HAS INITIATED PENALTY PROCEE DINGS U/S271(1)(C) OF THE ACT, SINCE ASSESSEE HAS ENTERED INTO BOGUS PURCHASE TRANSACTIONS, THE A.O RELIED ON THE FINDINGS IN THE SCRUTINY ASSESSMENT AND ALSO OBSERV ED THAT IN SPITE OF PROVIDING OPPORTUNITY OF HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE AND NO DETAILS W ERE FILED IN THE PENALTY PROCEEDINGS. THEREFORE, THE A .O. HAS LEVIED PENALTY BASED ON THE ADDITION MADE IN THE SC RUTINY ASSESSMENT, WHICH WORKED OUT TO RS.74,279/- AND PAS SED THE ORDER U/S 271(1)(C) OF THE ACT ON 30.09.2015. ITA NO. 5889/MUM/2019 JENIL STEEL INDIA, MUMBAI - 4 - 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 AND THE SUBMISSIONS OF THE ASSESSEE BUT THE CONFIRMED THE ACTION OF THE A.O I N LEVY OF PENALTY AND DISMISSED THE APPEAL. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED AN APPE AL WITH THE HONBLE TRIBUNAL. 4. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. THE LD.DR RELIED ON THE ORDERS OF LOW ER AUTHORITIES. 5. WE HEARD THE LD.DR SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE CRUX OF THE DISPUTED I SSUE IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT BY THE A.O BASED ON THE ASSESSMENT ORDER UNDE R SECTION 143 R.W.S 147 OF THE ACT. WE FIND THE A.O H AS MADE ADHOC DISALLOWANCE OF BOGUS PURCHASES ON ESTIMATION OF INCOME BUT HAS ACCEPTED THE SALES IN THE BOOKS OF ACCOUNTS. WE ARE OF THE OPINION, THAT WHER E THE ADDITION IS SUSTAINED ON THE ESTIMATED BASIS NO PENALTY U/S 271(1)(C) OF THE ACT CAN BE LEVIED. ACCORDINGLY, WE CONSIDERING THE FACTS, CIRCUMSTANCE S AND JUDICIAL DECISIONS SET ASIDE THE ORDER OF THE C IT(A) ITA NO. 5889/MUM/2019 JENIL STEEL INDIA, MUMBAI - 5 - AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENA LTY AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.2021 SD/- SD/- (SHAMIM YAHYA) (PAVAN KUMAR GAD ALE) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30.03.2021 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. () * + / GUARD FILE. / BY ORDER, ! //TRUE COPY// 1. ( ASST. REGISTRAR) ITAT, MUMBA I