SHRIM BHANU CONSTRUCTION PVT. LTD. , MUMBAI V. ACIT, CIRCLE, 27(1), MUMBAI, MUMBAI

ITA 6121/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2926 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 27-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Bogus purchase; Initiation of penalty proceedings
• Section: 271(1)(c); 143(3); 250; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI S. RIFAUR RAHMAN (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA NO. 6121/MUM/2019 ASSESSMENT YEAR: 2010-11 SHRIM BHANU CONSTRUCTION PRIVATE LIMITED (FORMERLY KNOWN AS BHANU CONSTRUCTION, A PARTNERSHIP FIRM), 811, NEELKANT CORPORATE PARK, KIROL ROAD, VIDYAVIHAR (WEST), MUMBAI - 400086. VS. ACIT, CIRCLE 27(1), 4 TH FLOOR, ROOM NO. 415, 6 TH TOWER, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI-400703. PAN NO. AAPCS 6963 E APPELLANT RESPONDENT ASSESSEE BY : MR. DEVENDRA JAIN, AR REVENUE BY : MR. VIJAY KUMAR MENON, DR DATE OF HEARING : 01/04/2021 DATE OF PRONOUNCEMENT : 1 5/06/2021 ORDER PER S. RIFAUR RAHMAN, A.M. THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-25, MUMBAI [IN SHORT CIT(A)] FOR THE ASSESSMENT YEAR 2010-11 DATED 10.06.2019 AND ARISES OUT OF PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE BRIEF FACTS ARE, THE ASSESSEE FILED ITS RETU RN OF INCOME ON 29.09.2010 FOR THE ASSESSMENT YEAR 2010-11 DECLARING TOTAL INC OME AT RS.20,07,780/-. THE ASSESSMENT YEAR WAS COMPLETED U/S 143(3) OF THE ACT , ON 18.03.2013 SHRIM BHANU CONSTRUCTION ITA NO. 6121/M/2019 2 DETERMINING THE TOTAL INCOME AT RS.1,10,41,140/-. T HE ADDITION WAS MADE ON ACCOUNT OF BOGUS PURCHASES AMOUNTING TO RS.90,33,36 2/-. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A)-25, MUMBA I AND LD. CIT(A) CONFIRMED THE ADDITION ON THE BASIS OF ESTIMATION @ 25% OF TH E BOGUS PURCHASE FOR RS.22,58,340/-. SUBSEQUENTLY, ASSESSING OFFICER INI TIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND ISSUED THE RELEVANT NO TICES. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, ASSESSING OFFICER LEVI ED THE PENALTY U/S 271(1)(C) OF THE ACT. CONSIDERING THE CASE OF THE ASSESSEE TH AT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND ACCORDINGLY IT IS A FIT C ASE TO LEVY PENALTY U/S 271(1)(C) OF THE ACT. 3. AGGRIEVED WITH THE ABOVE ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE, LD. CIT(A) DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER WITH THE FOLLOWING OBSERVATIONS: 13. THE ISSUES INVOLVED IN THE PRESENT APPEAL ARE IDENTICAL TO THE ISSUES INVOLVED IN THE APPEAL NO. CIT(A)-25/IT-20/18-19 IN THE ASSE SSEE'S OWN CASE FOR A.Y. 2010-11. THE ASSESSEE HAS ALSO MADE THE SAME SUBMISSIONS. IN VIEW OF THE SAME, THE OBSERVATIONS GIVEN IN THE CONTEXT OF THE ISSUES UND ER CONSIDERATION IN THE APPELLATE ORDER FOR A-Y. 2010-11 SHALL APPLY MUTATIS MUTANDIS IN THE PRESENT APPEAL ALSO. IT IS NOTED THAT THERE IS A DIFFERENCE IN FACTS IN THIS Y EAR. THE AO HAD INITIALED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AS MENT IONED IN THE ASSESSMENT ORDER DATED 23.3.2014. HOWEVER, THE PENALTY HAS BEEN LEVI ED U/S 271(1)(C) FOR CONCEALMENT OF PARTICULARS OF INCOME. THIS IS AN INCURABLE DEFE CT. IN THE CASE OF CIT V. MANJUNATHA COLTON & GINNING FACTORY [20I3] 35 TAXMANN.COM 250 (KARNATAKA) IT HAS BEEN CLEARLY HELD AS UNDER:- 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, TH AT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENC ES AND IN SOME CASES THERE MAY BE OVERTOPPING OF THE TWO OFFENCES BUT IN SUCH CASES THE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFEN CES. BUT DRAWING UP PENALTY PROCEEDINGS FOR ONE OFFENCE AND FINDING THE ASSESSES GUILTY OF ANOTHER SHRIM BHANU CONSTRUCTION ITA NO. 6121/M/2019 3 OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. THE DECISION IN GT VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA) HAS IMPLICITLY BEEN THE SUPREME COURT IN THE CASE OF CIT VS. SSA'S EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 (SC). 13.1 IT IS TO BE NOTED THAT THE COURTS HAVE REGULAR LY DELETED SUCH PENALTY ORDERS WHERE THE AO HAD PROCEEDED TO INITIATE PENALTY PROC EEDINGS ON ONE LIMB BUT FOUND THE ASSESSEE GUILTY OF ANOTHER LIMB- SUCH ORDERS WE RE HELD TO BE BAD IN LAW. IN THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS . SAMSON FERINCHERY IN ITA NO. 1154, 953, 1097 AND 1226 OF 2014 THE FACTS WERE THA T THE PENALTY PROCEEDINGS WERE INITIATED 'FOR FURNISHING INACCURATE PARTICULARS OF THE INCOME' BUT THE PENALTY WAS LEVIED FOR 'CONCEALMENT OF INCOME. FURTHER THE CON CERNED ASSESSING OFFICER HAS NOT SPECIFIED IF THE NOTICE WAS ISSUED FOR ''CONCEALMEN T OF THE PARTICULARS OF INCOME' OR 'FURNISHING INACCURATE PARTICULARS OF SUCH INCOME'. THUS, THE INITIATION WAS DONE UNDER ONE LIMB OF THE PROVISIONS OF THE ACT AND PEN ALTY WAS LEVIED ON ANOTHER LIMB OF THE SECTION 271(1)(C) OF THE ACT. UNDER THESE CIRCU MSTANCES THE HIGH COURT HAD DISMISSED THE APPEAL OF THE REVENUE. IT WAS CITED T HAT THE SUPREME COURT IN ASHOK PAI VS. CIT 292 ITR 11 HAD CATEGORICALLY OBSERVED THAT CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN S ECTION 271(1)(C) OF THE ACT CARRY DIFFERENT MEANINGS/ CONNOTATIONS. THEREFORE, THE SA TISFACTION OF THE AO WITH REGARD TO ONLY ONE OF THE TWO BREACHES MENTIONED UNDER SEC TION 271(1)(C) OF THE ACT, FOR INITIATION OF PENALTY PROCEEDINGS WILL NOT WARRANT/ PERMIT PENALTY BEING IMPOSED FOR THE OTHER BREACH. THIS ORDER OF SAMSON PERINCHERY ( SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT ASSESSES. 4. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERR ED AN APPEAL BEFORE US RAISING FOLLOWING GROUNDS OF APPEAL : 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F AO OF LEVYING PENALTY OF RS.6,97,900/- U/S 271(1)(C) IN RESPECT OF 25% OF AD DITION TO THE TUNE OF RS.22,58,340/- RETAINED BY THE THEN CIT(A) IN QUANT UM APPEAL ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F AO OF LEVYING PENALTY OF RS.6,97,900/- INSPITE OF THE FACT THAT VARIOUS DECI SIONS OF HIGH COURTS AND ITATS IN FAVOUR OF THE APPELLANT WERE KEPT ON RECORD WHERE T HE PENALTY OF HAWALA PURCHASES WAS DELETED. SHRIM BHANU CONSTRUCTION ITA NO. 6121/M/2019 4 5. ON THE OTHER HAND, THE LD. DR RELIED ON ORDERS P ASSED BY LOWER AUTHORITIES. 6. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS IT APPEARS, THE ASSESSING OFFICER IMPOSED PENALTY U NDER SECTION 271(1)(C) OF THE ACT ON ADHOC BASIS WITHOUT ADDUCING ANY EVIDENCE O N RECORD FOR CONCEALMENT OF INCOME. PENALTY UNDER SECTION 271(1)(C) OF THE A CT IS LIABLE TO BE IMPOSED ONLY WHERE THE ASSESSEE HAS CONCEALED ITS PARTICULA RS OF INCOME OR FURNISHED INACCURATE PARTICULARS. ACTION OF MAKING ADDITION O N ADHOC BASIS DOES NOT RESULT INTO IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT AND HENCE CANNOT BE TERMED AS EITHER CONCEALMENT OR FURNISHING OF INACC URATE PARTICULARS OF INCOME. WE FIND SUPPORT FROM THE SERIES OF DECISIONS BY DIF FERENT HIGH COURTS AS WELL THE DECISION OF THE COORDINATE BENCHES OF THE TRIB UNAL, WHEREIN IT WAS HELD THAT WHEN ADDITION IS MADE ON ESTIMATE BASIS, PENAL TY IS NOT SUSTAINABLE IN THE EYES OF LAW. IN SUPPORT OF THIS CONTENTION, FOLLOWI NG CASE LAWS ARE RELIED UPON:- I) CIT V/S NORTON ELECTRONICS SYSTEMS (P) LTD. [2014] 41 TAXMANN.COM 280 (ALLAHABAD HC); II) ACIT V/S VISION RESEARCH MANAGEMENT (P) LTD., [2015] 63 TAXMANN.COM 8 (LUCKNOW) (TRIB.); III) PREM CHAND V/S ACIT, [2014] 52 TAXMANN.COM 95 (CHANDIGARH) (TRIB.); IV) CIT V/S PHI SEEDS INDIA LTD., [2008] 301 ITR 0 013 (DEL); AND V) DILIP N. SHROFF V/S JCIT [2007] 291 ITR 519 (S C). 7. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES AND WHILE CONSIDERING THE SERIES OF JUDGMENTS AS MENTIONED AB OVE, WE ARE OF THE VIEW THAT THERE IS NO ACTIVE CONCEALMENT OF INCOME ON THE PAR T OF THE ASSESSEE AND ADDITIONS MADE ON ESTIMATION BY THE AO DO NOT CALLE D FOR INITIATION OF PENALTY. SHRIM BHANU CONSTRUCTION ITA NO. 6121/M/2019 5 THUS, IN OUR VIEW, THE PENALTY LEVIED BY AO AND CON FIRMED BY LD. CIT(A) IS HEREBY DELETED. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE NET RESULT, THE APPEAL FILED BY THE ASSES SEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/06/2021. SD/- SD/- (RAVISH SOOD) ( S. RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 15/06/2021 RAHUL SHARMA, SR. P.S. 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./ASSISTANT REGISTRAR) ITAT, MUMBAI