MR.MOHD. ISMAIL ZAMEER SIDDIQUI, MUMBAI V. INCOME TAX OFFICER-26(2)(3), MUMBAI

ITA 5939/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5908 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 19-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKASH KR AGARWAL
• Keywords: Bogus purchase
• Section: 271(1)(c)

Judgement Text

, ,, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ./ ITA NO.5939/MUM/2017 ( / ASSESSMENT YEAR :2009-2010) MR. MOHD. ISMAIL ZAMEER SIDDIQUI, FLAT NO.9/10, HARRON MANZIL, PLOT NO.214, OLD AGRA ROAD, KURLA WEST, MUMBAI- 400070 VS. ITO-26(2)(3), MUMBAI ./PAN NO. : AMNPS 2371 P ( /APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : NONE /REVENUE BY : SHRI VIKASH KR. AGARWAL, CITDR / DATE OF HEARING : 02/01/2019 /DATE OF PRONOUNCEMENT 15/01/2019 / O R D E R PER SHRI RAJESH KUMAR, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE CIT(A) 38, DATED 12.06.2015, FOR THE A.Y. 2009-2010. 2. AT THE OUTSET, WE WOULD LIKE TO MENTION THAT NEI THER THE AR OF THE ASSESSEE NOR THE ASSESSEE HIMSELF APPEARED WHEN THE CASE WAS CALLED FOR HEARING TODAY, THEREFORE, WE ARE DECIDING THE A PPEAL AFTER HEARING THE LD.DR AND CONSIDERING THE MERITS OF THE CASE. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE PRE SENT APPEAL IS WITH REGARD TO CONFIRMATION OF LEVY OF PENALTY BY THE CI T(A) AS LEVIED U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.3,96,350/- BY THE AO, ON THE ADDITION WHICH WAS MADE BY ESTIMATING INCOME @ 12.5% ON THE BOGUS PURCHASES. IN THE ASSESSMENT PROCEEDINGS, THE ASSES SEE PRAYED BEFORE THE AO THAT IT IS NOT THE ENTIRE PURCHASES BUT SOM E REASONABLE INCOME ON ITA NO.5939/17 2 THE BOGUS PURCHASE TO BE ESTIMATED AND ADDED. IN TH E ASSESSMENT ORDER DATED 03.03.2015 PASSED U/S.143(3) R.W.S.147 OF THE ACT THE AO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT FOR TH E REASONS THAT THE ASSESSEE HAS CONCEALED/FURNISHED INACCURATE PARTICU LARS OF INCOME, WHEREAS IN THE PENALTY ORDER DATED 28.09.2015, THE LD. AO HAS IMPOSED THE PENALTY ON THE CONCEALED INCOME OF RS.11,33,492 /- IN RESPECT WHICH INACCURATE PARTICULARS HAVE BEEN FILED BY THE ASSES SEE TO EVADE THE TAX WITHIN THE MEANING OF EXPLANATION 1 TO SECTION 271( 1)(C) OF THE ACT AND, THUS, LEVIED PENALTY EQUAL TO 100% WHICH WORKS OUT TO RS.3,96,348/- .PERTINENT TO STATE THAT THE ASSESSEE DID NOT FILE ANY QUANTUM APPEAL. 4. LD. CIT(A) IN THE APPELLATE PROCEEDINGS CONFIRME D THE ORDER OF AO ON THE GROUND THAT THE ASSESSEE DURING THE ASSESSME NT PROCEEDINGS HAS OFFERED BEFORE THE AO THAT INCOME OF THE ASSESSEE M AY BE ESTIMATED @12.5% FOR THE REASONS IT IS ONLY THE PROFIT EARNED BY THE ASSESSEE ON THE BOGUS PURCHASE ARE TO BE TAXED AND NOT ON THE ENTIR E PURCHASE. THE D CIT(A) CONCLUDED THAT SINCE THE ASSESSEE OWN ADMISS IONS AMOUNTS TO CONFESSION THAT THE ASSESSEE HAS CONCEALED THE INCO ME TO THAT EXTENT. 5. AFTER HEARING THE SUBMISSIONS OF LD.DR AND PERUS ING THE FACTS ON RECORD, WE FIND THAT IN THIS CASE THE PENALTY HAS B EEN LEVIED FOR CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PART ICULARS OF INCOME, WHEREAS THE PENALTY WAS LEVIED FOR CONCEALMENT OF I NCOME TO THE TUNE OF RS.11,33,492/- STATING THE SAME TO BE ON ACCOUNT OF INACCURATE PARTICULARS FILED TO EVADE TAXES WITHIN THE MEANI NG OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. IT IS CLEAR FROM THE ABOVE CAREFUL PERUSAL OF ITA NO.5939/17 3 ASSESSMENT AND PENALTY ORDER THAT THE AO HAS FAILED TO SPECIFY ONE OF THE TWO SPECIFIC LIMB ON WHICH PENALTY WAS PROPOSED TO BE LEVIED RATHER THE AO LEVIED PENALTY BY INVOKING EXPLANATION 1 TO SECT ION 271(1)(C) OF THE ACT. LD.CIT(A) SIMPLY CONFIRMED THE PENALTY ORDER ON THE GROUND THAT THE ASSESSEE HAS OFFERED INCOME AT 12.5% ON BOGUS PUR CHASES. THE CASE OF THE ASSESSEE IS COVERED BY THE DECISION IN THE C ASE OF SHRI DEEPAK GOGRI VS. ITO, ITA NO.1396/MUM/2017 FOR THE ASSESSM ENT YEAR 2011- 2012, ORDER DATED 23.11.2017, WHEREIN IT HAS BEEN H ELD THAT NO PENALTY CAN BE IMPOSED IN THE CASE OF ESTIMATION OF PROFIT/ INCOME AND THE RELEVANT PORTION OF THE SAID ORDER IS REPRODUCED BE LOW :- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF THE AUTHORITIES BELOW. IN SO FAR AS THE PENALTY LEVIED ON ESTIMATION OF PROFIT ELEMENT ON PURCHASES IS CONCERNED, WE ARE OF THE VIEW THAT ASSESSING OFFICER HAD MADE ONLY ADHOC ESTIMATION OF PROFIT ON CERTAIN PURCHASES TREATED AS UNEXPLAINED EXPENDITUR E. ASSESSING OFFICER DID NOT DOUBT THE SALES MADE BY THE ASSESSE E FROM OUT OF SUCH PURCHASES. ASSESSING OFFICER BASED ON THE DECI SION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SI MIT P. SETH [356 ITR 451] ESTIMATED THE PROFIT ELEMENT IN SUCH PURCH ASES AT 12.5% AND BY REDUCING THE GROSS PROFIT ALREADY DECLARED B Y THE ASSESSEE. IN THE CIRCUMSTANCES, WE HOLD THAT THERE IS NO CONC EALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS AS T HE PROFIT ELEMENT WAS DETERMINED BY WAY OF ADHOC ESTIMATION. COMING T O THE INTEREST, THE ASSESSEE FURNISHED COMPLETE DETAILS I N THE RETURN OF INCOME AND MADE A CLAIM AND SIMPLY BECAUSE THE CLAI M IS DENIED AND CANNOT LEAD TO FURNISHING OF INACCURATE PARTICU LARS OR CONCEALMENT OF INCOME. NO ALLEGATION BY ASSESSING O FFICER THAT THE ASSESSEE FAILED TO DISCLOSE THE ITA.NO.1396/MUM/201 7 (A.Y: 2011- 12) SHRI DEEPAK GOGRI PARTICULARS RELATING TO ITS C LAIM IN THE RETURN OF INCOME. THUS WE HOLD THAT THERE IS NO CONCEALMEN T OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THU S WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. THE CASE OF THE ASSESSEE ALSO FINDS SUPPORT FORM TH E DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF TRI STAR INTECH (P) LTD. VS. ACIT, ITA NO.1457/DEL/2010, ORDER DATED 07.09.2015 FOR THE ASSESSMENT ITA NO.5939/17 4 YEAR 2006-2007, WHEREIN THE AO HAS INVOKED THE EXPL ANATION 1 TO SECTION 271(1)(C) OF THE ACT AND THE TRIBUNAL HELD THAT THE PENALTY CAN BE LEVIED ON ACCOUNT OF CONCEALED INCOME AND NOT FOR FURNISHI NG INACCURATE PARTICULARS OF INCOME, WHEREAS IN THE PRESENT CASE BEFORE US THE AO HAS REFERRED BOTH THE LIMBS OF THE SECTION 271(1) AND THUS, THIS IS A MECHANICAL APPLICATION OF LAW WITHOUT ANY APPLICATI ON OF MIND. UNDER THESE CIRCUMSTANCES, WE ARE NOT IN AGREEMENT WITH T HE CONCLUSION DRAWN BY THE LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY SO L EVIED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 15/01/2019. SD/- (RAM LAL NEGI) SD/- (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 15/01/2019 . . /PRAKASH KUMAR MISHRA , SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI 1. / THE APPELLANT- 2. / THE RESPONDENT- 3. ( ) / THE CIT(A), MUMBAI 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//