INCOME TAX OFFICER 13(2) (3), MUMBAI V. SWAR CREATIVE ART PVT LTD , MUMBAI

ITA 5992/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3757 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 19-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARTI SINGH
• Keywords: Bogus purchase
• Section: 271(1)(c); 69C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI , , $ BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTNT MEMBER . 5992 //2019 (. . 2009-10 ) ITA NO.5992/MUM/2019 (A.Y.2009-10) ITO-13(2)(4), R. NO. 146B, 1 ST FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. ...... - / APPELLANT VS. M/S SWAR CREATIVE ART PVT. LTD. 303, A DHEERAJ VALLEY, SAI BABA COMPLEX, CIBA ROAD, GOREGAON(E), MUMBAI-400063. PAN: AAMCS5447G ..... .0/ RESPONDENT - 1/ APPELLANT BY : MS. BHARTI SINGH .0 1/ RESPONDENT BY : NONE 2 / DATE OF HEARING : 18/03/2021 2 / DATE OF PRONOUNCEMENT : 21/05/2021 / ORDER PER VIKAS AWASTHY, J.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-21, MUMBAI [HEREINAFTER REF ERRED TO AS THE CIT(A)] 2 . 5992 //201 9 (. .2009-10 ) ITA NO.5992/MUM/2019 (A.Y.2009-10) DATED 21.05.2019, DELETING PENALTY LEVIED UNDER SEC TION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2. MS. BHARTI SINGH REPRESENTING THE DEPARTMENT SUB MITTED THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS AMOUNTIN G TO RS. 17,56,910/- DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR (AY) UND ER APPEAL. THE ASSESSEE COULD NEITHER PROVE GENUINENESS OF THE DEALERS NOR THE GE NUINENESS OF THE PURCHASES. THE AO AFTER EXAMINING THE FACTS DISALLOWED 25% OF THE BOGUS PURCHASES UNDER SECTION 69C OF THE ACT AND MADE ADDITION OF RS. 4,3 9,228/-. FURTHER, THE AO LEVIED PENALTY OF RS. 1,40,000/- UNDER SECTION 271(1)(C) O F THE ACT VIDE ORDER DATED 20.03.2018 FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IN APPEAL BY THE ASSESSEE, THE CIT(A) DELETED PENALTY. THE DR SUBMIT TED THAT THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO PROVE GENUINENESS OF THE PURCHASES AND THE QUANTUM ADDITION WAS CONFIRME D BY THE TRIBUNAL IN APPEAL BY THE ASSESSEE IN ITA NO. 880/MUM/2017 DECIDED ON 21.08.2017. 3. WE HAVE HEARD THE SUBMISSIONS MADE BY LD. DR AND HAVE EXAMINED THE ORDERS OF AUTHORITIES BELOW. IT IS AN UNDISPUTED FA CT THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN LEVIED IN RESPECT OF ESTIMATED ADDITIONS MADE ON BOGUS PURCHASES. THE ASSESSEE HAS ALLEGEDLY OBTAINE D BOGUS PURCHASE BILLS TO THE TUNE OF RS. 17,56,910/- FROM HAWALA OPERATORS, THE AO HAS DISALLOWED 25% OF SUCH BOGUS PURCHASES ON MERE ESTIMATIONS AND MADE A DDITION OF RS. 4,39,228/-. THERE IS NO DEFINITE FINDING OF FURNISHING INACCURA TE PARTICULARS OF INCOME TO THE EXTENT OF RS. 4,39,228/- BY THE ASSESSING OFFICER. THE TRIBUNAL AND VARIOUS HONBLE HIGH COURTS HAVE REPEATEDLY HELD THAT NO PENALTY UN DER SECTION 271(1)(C) OF THE ACT IS ATTRACTED, WHERE THE ADDITIONS ARE MADE MERE LY ON ESTIMATIONS. 3 . 5992 //201 9 (. .2009-10 ) ITA NO.5992/MUM/2019 (A.Y.2009-10) 4. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AERO TRADERS PVT. LTD. REPORTED AS 322 ITR 326 HAS HELD THAT NO PENALTY UN DER SECTION 271(1)(C) OF THE ACT CAN BE IMPOSED WHERE INCOME IS DETERMINED ON ES TIMATE BASIS. PENALTY BEING QUASI CRIMINAL PROCEEDINGS, DUTY IS CAST UPON THE A O TO ESTABLISH GUILT OF THE ASSESSEE IN CONCEALING THE INCOME OR FURNISHING INA CCURATE PARTICULARS OF SUCH INCOME. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. SUBHAS TRADING CO. REPORTED AS 221 ITR 110 HAS HELD THAT WHERE THE AO AFTER REJECTING ACCOUNTS OF THE ASESSEE HAS ASSESSED THE INCOME BY APPLYING EST IMATED GROSS PROFIT (GP) RATE, NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE. SIM ILAR VIEW HAS BEEN TAKEN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. S .P. BHATT REPORTED AS 97 ITR 440. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CAS E OF CIT VS. SANGRUR VANASPATI MILLS LTD. REPORTED AS 303 ITR 53 HAS HEL D THAT WHERE AN ADDITION HAS BEEN MADE ON THE BASIS OF ESTIMATIONS AND NOT ON AC COUNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, PENALTY UNDER SECTION 271( 1)(C) OF THE ACT IS NOT LEVIABLE. THERE ARE OTHER CATINA OF JUDGMENTS BY HONBLE DIF FERENT HIGH COURTS TAKING SIMILAR VIEW. THE DIFFERENT BENCHES OF THE TRIBUNAL IN SEVERAL DECISIONS HAVE HELD THAT PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVI ED, WHERE THE ADDITIONS HAVE BEEN MADE ON ESTIMATIONS. 5. THUS, IN VIEW OF OUR ABOVE FINDINGS, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER DELETING PENALTY LEVIED UNDER SECTION 271(1)( C) OF THE ACT ON ESTIMATED 4 . 5992 //201 9 (. .2009-10 ) ITA NO.5992/MUM/2019 (A.Y.2009-10) BOGUS PURCHASES. THE IMPUGNED ORDER IS UPHELD AND A PPEAL OF THE REVENUE IS DISMISSED, SANS MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY , THE 21 ST DAY OF MAY, 2021. SD/ SD/- ( M. BALAGANESH) (VIKAS AWASTHY) /ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, 6/ DATED: 21/05/2021 SK, PS . 7 . 7 . 7 . 7 COPY OF THE ORDER FORWARDED TO : 1. - / THE APPELLANT , 2. .0 / THE RESPONDENT. 3. 8 ( )/ THE CIT(A)- 4. 8 CIT 5. . , . . . , / DR, ITAT, MUMBAI 6. ; / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI