ACIT-31(1), MUMBAI V. SHRI ABDUL ANWAR HAJI ABDUL GANI, MUMBAI

ITA 602/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6690 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 602/MUM/2019 (ASSESSMENT YEAR: 2009-10) A C I T 31(1) C-11, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E) MUMBAI 400051 VS. SHRI ABDUL ANWAR HAJI ABDUL GANI 9 SHOP NO. 5, ASHOK RAJ BULDG. S.V. ROAD, GOREGAON (W) MUMBAI 400062 PAN AADPG6168J APPELLANT RESPONDENT APPELLANT BY: SHRI ANOOP HIWASE RESPONDENT BY: NONE DATE OF HEARING: 29.01.2020 DATE OF PRONOUNCEMENT: 05.02.2020 O R D E R PER R.C. SHARMA, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)- 42, MUMBAI FOR A.Y. 2009-10, IN THE MATTER OF DELET ION OF PENALTY, WHICH WAS IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF TH E INCOME TAX ACT, 1961 (HEREINAFTER 'THE ACT'). 2. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES B ELOW AND FOUND THAT THE ASSESSEE IS ENGAGED IN TRADING OF FURNITUR E. THE AO GOT INFORMATION REGARDING ASSESSEE TAKING ACCOMMODATION BILLS OF PURCHASES. THE AO REOPENED THE ASSESSMENT AND THEREAFTER ADDED THE ENTIRE BOGUS PURCHASES IN ASSESSEES INCOME, WHICH WAS CONFIRMED BY THE CIT(A). HOWEVER, THE TRIBUNAL RESTRICTED THE ADDITION TO TH E EXTENT OF 12.5% OF THE BOGUS PURCHASES. THE AO ALSO LEVIED PENALTY UNDER S ECTION 271(1)(C) OF THE ACT WITH RESPECT TO THE ADDITION UPHELD ON ACCOUNT OF BOGUS PURCHASE. BY THE IMPUGNED ORDER THE CIT(A) DELETED THE PENALTY B Y OBSERVING THAT THE ADDITION HAS BEEN MADE PURELY ON ESTIMATE BASIS AND AFTER CONSIDERING THE JUDICIAL PRONOUNCEMENT IN THE CASE OF DEEPAK GOGRI VS. ITO IN ITA NO. ITA NO. 602/MUM/2019 SHRI ABDUL ANWAR HAJI ABDUL GANI 2 1396/MUM/2017 DATED 23 RD NOVEMBER, 2017. THE PRECISE OBSERVATION OF THE CIT(A) IS AS UNDER: - 8.5 IN THE PRESENT CASE, THE ASSESSMENT IS BASED ON THE INFORMATION RECEIVED FROM DGIT(LNV.), MUMBAI THAT THE APPELLANT HAS MADE BOGUS PURCHASES / TAKEN ACCOMMODATION ENTRIES FROM CERTAIN HAWALA OPERATORS WHO HAVE INDULGED IN ISSUING BOGUS SALE/PURCHASE BILLS WITHOUT ACTUAL DELIVERY OF GOODS. THE APPELLA NT HAD SUBMITTED VARIOUS EVIDENCES IN THE FORM OF PURCHASE BILL, BAN K STATEMENT HIGHLIGHTING PAYMENTS MADE FOR PURCHASE AND DETAILS OF MATERIALS AND ITS UTILISATION IN THE MANUFACTURING PROCESS AN D DETAILS OF FINISHED GOODS AND THAT THE AO HAS ACCEPTED THE SAL ES FIGURE, HOWEVER, THE AO TOOK THE VIEW THAT THE ASSESSEE FAI LED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS CARRIED OUT WIT H THE SAID ALLEGED PARTY / PARTIES, WHICH WAS CONFIRMED BY THE CIT (A) ALSO FINDING THAT THE GOODS DECLARED PURCHASED FROM THE BOGUS HAWALA DEALERS HAVE NOT BEEN CONSUMED OR UTILIZED BY THE APPELLANT IN I TS BUSINESS. HOWEVER, THE HON'BLE ITAT MUMBAI HAS FOUND THAT THE APPELLANT IN THE LETTER DATED 22/01/2014 ADDRESSED TO THE AO HAS PRODUCED THE BILLS OF PURCHASES DETAILS, PAYMENT OF THESE PURCHA SES VIDE BY ACCOUNT PAYEE CHEQUES, DETAILS OF MATERIALS AND ITS UTILISATION IN THE MANUFACTURING PROCESS AND DETAILS OF FINISHED GOODS AND FINDING THAT THE AO HAS ACCEPTED THE SALES FIGURE AND THERE IS N O EVIDENCE THE PURCHASE CONSIDERATION HAS BEEN RECEIVED BACK BY TH E ASSESSEE RESTRICTED THE ADDITION ON ESTIMATED BASIS @ 12.5% OF THE ALLEGED PURCHASES FINDING. THUS, APART FROM THE FACT THAT T HE ASSESSING OFFICER DISBELIEVED THE APPELLANT'S EXPLANATION FOR THE REASON THE PARTIES WHO HAVE GIVEN PURCHASE INVOICES TO THE APP ELLANT WERE NOT TRACEABLE AT THE ADDRESSES GIVEN IN THE INVOICES, T HERE IS NO OTHER MATERIAL TO SHOW THAT THE PARTICULARS DISCLOSED BY THE APPELLANT ARE NOT TRUTHFUL THE APPELLANT WAS IN POSSESSION OF VIT AL EVIDENCE TO PRIMA FACIE SUBSTANTIATE HIS PURCHASES TO SOME EXTENT. ME RELY BECAUSE THE SUPPLIERS COULD NOT BE TRACED AT THE GIVEN ADDRESSE S COULD NOT AUTOMATICALLY LEAD TO A CONCLUSION THAT THERE WAS C ONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS BY T HE APPELLANT. THE APPELLANT HAS OFFERED AN EXPLANATION, WHICH COULD N OT BE TERMED AS NOT BONA FIDE AND THE SAME WAS COUPLED WITH DOCUMEN TARY EVIDENCE HOWEVER THE SAME REMAINED INCONCLUSIVE FOR WANT OF CONFIRMATION FROM SUPPLIERS THUS, IN THIS CASE IT CAN BE CONCLUD ED FROM THE ABOVE DISCUSSION THAT THE APPELLANT HAS OFFERED AN EXPLAN ATION, WHICH COULD NOT BE TERMED AS NOT BONA FIDE, IN THIS REGARD, IT MAY BE RELEVANT TO REFER TO THE DECISION OF THE HON'BLE ITAT. MUMBAI I N THE CASE OF DCIT 24(2), MUMBAI VS. UNISYNTH CHEMICALS, MUMBAI IN ITA NO. 5967/ MUM/2014 DATED 11/01/2017 WHEREIN IT IS HELD AS UND ER: ON AN APPRECIATION OF THE MATERIAL ON RECORD WE ARE INCLINED TO CONCUR WITH THE VIEW OF THE CIT(A) THAT THE A PLAU SIBLE ONE, IN AS MUCH AS THE CIRCUMSTANCES ON WHICH THE ADDITIONA L INCOME OFFERED WAS BECAUSE THE DISPUTED PARTIES WITH WHOM THESE TR ANSACTIONS WERE ITA NO. 602/MUM/2019 SHRI ABDUL ANWAR HAJI ABDUL GANI 3 MADE WERE NON-COOPERATIVE AND THE ASSESSEE HAVING N O CONTROL OVER THOSE PARTIES WAS, THEREFORE, NOT ABLE TO SUBSTANTI ATE ITS CLAIM WITH NECESSARY MATERIAL EVIDENCE. 8.6 THUS, IT CAN ONLY BE CONCLUDED IN THIS CASE TH AT EXCEPT FOR REJECTION OF THE EXPLANATION FURNISHED BY THE ASSES SEE, THERE IS NO MATERIAL TO SUSTAIN THE PLEA OF CONCEALMENT. 8.7 FURTHER, THE ADDITION HAS BEEN MADE PURELY ON ESTIMATE BASIS. UNDER IDENTICAL CIRCUMSTANCES, THE HON'BLE ITAT MUM BAI IN THE CASE OF SHRI DEEPAK GOGRI V. ITO 25(3)(2) IN ITA NO. 139 6/MUM/2017 DATED 23/11/2017, HAS HELD THAT THERE IS NO CONCEAL MENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME A S THE PROFIT ELEMENT WAS DETERMINED BY WAY OF ADHOC ESTIMATION 8.8 FOR THE ABOVE REASONS, IN MY CONSIDERED OPINION , THE LEVY OF PENALTY IS ENTIRELY UNCALLED FOR. THE SAME IS ACCOR DINGLY DELETED. 3. DETAILED FINDINGS SO RECORDED BY THE CIT(A) ARE AS PER MATERIAL ON RECORD. AFTER APPLYING THE JUDICIAL PRONOUNCEMENTS APPLICABLE TO THE FACTS OF THE INSTANT CASE, HE REACHED TO THE CONCLUSION T HAT ADDITION IS ON ESTIMATED BASIS, SINCE THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, PENALTY UNDER SECTION 271(1 )(C) WAS UNCALLED FOR. I DO NOT SEE ANY REASON TO INTERFERE IN THE FINDINGS OF THE CIT(A). ACCORDINGLY ORDER OF THE CIT(A) IS UPHELD. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2020. SD/ - (R.C. SHARMA) ACCOUNTANT MEMBER MUMBAI, DATED: 05 TH FEBRUARY, 2020 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -42, MUMBAI 4. THE PR.CIT - 31, MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.