RAJSHREE ELECTRIC & HARDWARE, MUMBAI V. INCOME TAX OFFICER 26(2)(5), MUMBAI

ITA 6112/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6579 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Accommodation entries; Set aside
• Section: 271(1)(c); 143(1); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 6112 TO 6114 / MUM/ 20 1 7 ( / ASSESSMENT YEAR: 2009 - 10 , 2010 - 11 & 2011 - 12 ) M/S. RAJSHREE ELECTRIC & HARDWARE SHOP NO. 6/A, VIJAY SHOPPING CENTER, OPP, PENINSULA HOTEL, GHATKOPAR LINK ROAD, SAKI NAKA, ANDHERI (E), MUMBAI - 400072 . / VS. ITO 26(2)(5) BANDRA KURLA COMPLEX, MUMBAI ./ ./ PAN/GIR N O. : AAKFR 4100 L ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 04 .0 2 .201 9 / DATE OF PRONOUNCEMENT : 20. 02 .2019 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE ABOVE MENTION APPEAL S AGAINST THE DIFFERENT ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 38 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2009 - 10, 2010 - 11 & 2011 - 12 WHERE IN THE PENALTY LEVIED BY THE AO HAS BEEN ORDERED TO BE CONFIRMED . ITA. NO. 6112/M/2017 ASSESSEE BY : SHRI JITENDRA SAWANT REVENUE BY: SHRI D. G. PANSARI (SR. AR) ITA. NO S.6112 TO 6114 /M/201 7 A.Y. 20 09 - 10, 2010 - 11 & 2011 - 12 2 2. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 27.07.2017 PASSED BY THE CO MMISSIONER OF INCOME TAX (APPEALS) - 38 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2009 - 10 WHERE IN THE PENALTY LEVIED BY THE AO HAS BEEN ORDERED TO BE CONFIRMED 3 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1 IN THE FACTS A ND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE PENALTY OF RS..64,393/ - LEVIED BY INCOME TAX OFFICER U/S 271(1)(C) WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. THE APPELLANT PRAYS TO DELETE THE PENALTY OF RS. 64,393/ - LEVIED U/S 271(1)(C). 3. THE APPELLANT CRAVES, LEAVE TO ADD, TO AMEND, AND OR TO ALTER ANY OR ALL OF THE GROUND OF APPEALS, IF NEED BE. ' 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.09.2009 DECLARING TOT AL INCOME TO THE TUNE OF RS.1,72,140/ - . THEREAFTER, THE ASSESSMENT WAS COMPLETED U/S 143(1) OF THE ACT. THE ASSESSMENT OF THE ASSESSEE WAS REOPENED U/S 147 OF THE I.T. ACT ON RECEIPT OF INFORMATION FROM SALES TAX DEPARTMENT THROUGH THE DGIT(INV.), MUMBAI S TATING THEREIN THAT THE ASSESSEE HAS OBTAINED THE ACCOMMODATION ENTRIES FROM 8 PARTIES TOTAL IN SUM OF RS.16,67,192/ - . THEREAFTER, AN AMOUNT OF RS.16,67,192/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. THEREAFTER, THE PENALTY PROCEEDING WAS INITIATED AND PEN ALTY IN SUM OF RS.64,393/ - WAS LEVIED. FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ITA. NO S.6112 TO 6114 /M/201 7 A.Y. 20 09 - 10, 2010 - 11 & 2011 - 12 3 DISMISSED THE APPEAL OF THE ASSESSEE , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NOS. 1 & 2 5 . UNDER THESE ISSUES THE A SSESSEE HAS CHALLENGED THE CONFIRMATION OF THE PENALTY BY THE CIT(A) IN SUM OF RS.64,393/ - LEVIED BY THE AO . THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE PENALTY HAS BEEN LEVIED BY THE AO ON ACCOUNT OF THE ESTIMATION OF PROFIT UPON THE ALLEGE D BOGUS PURCHASE WHICH IS NOT JUSTIFIABLE, THEREFORE, THE PENALTY IS NOT LIABLE TO BE SUSTAINABLE IN VIEW OF THE LAW SETTLED IN GUJARAT HIGH COURT IN THE CASE TITLED AS NATIONAL TEXTILES VS. CIT 2001 164 CTR 2009 (GUJ). HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. TAKING INTO ACCOUNT, ALL THE FAC TS AND CIRCUMSTANCES AND PERUSING THE RECORD, W E FIND THAT THE CASE OF THE ASSESSEE WAS REOPENED U/S 148 OF THE ACT ON THE BASIS OF THE INFORMATION RECEIVED F ROM THE DGIT (INV.), MUMBAI IN WHICH IT WAS CONVEYED THAT THE SALES TAX DEPARTMENT HAS INFORMED ABOUT THE BOGUS PURCHASE OF THE ASSESSEE FROM 8 PARTIES. THEREAFTER, THE 12.5% OF THE BOGUS PURCHASE TOTAL IN SUM OF RS.16,67,192/ - WAS ADDED TO THE INCOME OF T HE ASSESSEE ON ESTIMATED PROFIT EMBEDDED TO THE BOGUS PURCHASE . THE BOOKS OF ACCOUNT OF THE ASSESSEE HAS NOT BEEN REJECTED. THE PROFIT ELEMENT IN THE PURCHASE HAS BEEN TAXED. THE FACTUAL SITUATION NOWHERE LEADS TO CONCEALMENT OF INCOME OR FURNISHING THE IN ACCURATE PARTICULARS OF INCOME . I T IS NOT ITA. NO S.6112 TO 6114 /M/201 7 A.Y. 20 09 - 10, 2010 - 11 & 2011 - 12 4 GROUND TO LEVY THE PENALTY. MOREOVER, IT IS A CASE WHERE THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED AND TO LEVY OF PENALTY MERELY ON ACCOUNT OF DISALLOWANCE OF EXPENSES IS NOT LIABLE TO BE CONSIDERED AS CONCE ALMENT OF ANY PARTICULARS OF INCOME OR CONCEALMENT OF INCOME OR MALA - FIDE INTENTION TO REDUCE THE TAXABLE INCOME. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT HIGH COURT IN THE CASE TITLED AS NATIONAL TEXTILES VS. CIT 2001 164 CTR 2009 (GUJ) HAS H ELD THAT THE SECTION 68 OF THE ACT PERMITS THE AO TO TREAT THE UNEXPLAINED CASH CREDIT AS INCOME OF THE ASSESSEE BY MAKING CERTAIN ADDITION IF ANY , IF THERE I S FAILURE OF THE ASSESSEE TO GIVE ANY EXPLANATION THEN THE ADDITION MADE ON THIS ACCOUNT AUTOMATIC ALLY CANNOT BE A JUSTIFIABLE GROUND TO LEVY THE PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, IN VIEW OF THE LAW SETTLED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES (SUPRA), WE ARE OF THE VIEW THAT THE PENALTY ON ACCOUNT OF SUSTAINING T HE ADDITION U/S 68 OF THE ACT OF BOGUS PURCHASE IS NOT JUSTIFIABLE, THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THESE ISSUES AND DELETE THE PENALTY. ACCORDINGLY, WE DECIDE THESE ISSUES IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE . ITA. NOS. 6113/ M/2017 & 6114/M/2017 6. THE FACTS OF THE PRESENT CASE ARE QUITE SIMILAR TO THE FACTS OF THE PRESENT CASE AS NARRATED ABOVE WHILE DECIDING IN ITA. NO.6112/M/2017, THEREFORE, THERE IS NO NEED TO REPEAT THE SAME. ITA. NO S.6112 TO 6114 /M/201 7 A.Y. 20 09 - 10, 2010 - 11 & 2011 - 12 5 HOWEVER, THE FIGURE IS DIFFERENT. THE MATTER O F CONTROVERSY IN THESE APPEALS IS ALSO THE SAME IN WHICH THE PENALTY LEVIED BY THE AO IS ON THE BASIS OF SUSTAINING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES. THE FINDING GIVEN IN ITA. NO.6112/M/2017 IS QUITE APPLICABLE TO THE FACT S OF THE PRESENT CASE A S MUTATIS MUTANDIS. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) ON THESE ISSUES AND DELETE THE PENALTY. 7 . IN THE RESULT, THE APPEAL S FILED BY THE ASSESSEE ARE HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 20. 0 2 .2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 20. 02 .2019 . V IJAY / 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// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI